GemPharmatech (SH:688046) GF SECURITIES·2024-02-25 16:00Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 19.85 CNY per share, indicating an expected performance that exceeds the market by more than 10% over the next 12 months [3][20]. Core Insights - The company reported its 2023 annual performance, achieving a revenue of 622 million CNY (+20.45% year-on-year) and a net profit attributable to shareholders of 159 million CNY (-3.46% year-on-year). The fourth quarter of 2023 saw a revenue of 167 million CNY (+28.46% year-on-year) and a net profit of 41 million CNY (+10.81% year-on-year). The decline in profit is attributed to new capacity investments, overseas sales network development, and increased R&D expenses, with overall performance meeting expectations [1][2]. - The company continues to launch innovative mouse models in non-tumor areas such as autoimmune diseases, cardiovascular and metabolic diseases, and neurodegenerative diseases, driving rapid growth in related functional drug efficacy services. The international strategy is being advanced with deep cooperation with key clients in Europe, North America, and the Asia-Pacific region, leading to high growth in overseas business [1][2]. - The increase in expenses has temporarily pressured profits, primarily due to ongoing large-scale R&D projects and the expansion of the R&D team. New production capacity in subsidiaries has also led to higher labor costs and lower gross margins during the ramp-up phase [1][2]. - Earnings per share (EPS) forecasts for 2023-2025 are 0.39 CNY, 0.50 CNY, and 0.63 CNY, respectively. Given the company's leadership in model animals and ongoing capacity construction and market expansion, a 40x PE valuation for 2024 is applied, corresponding to a reasonable value of 19.85 CNY per share [1][3]. Financial Summary - Revenue (in million CNY) for 2021A, 2022A, and 2023E is 394, 517, and 622, respectively, with growth rates of 50.3%, 31.2%, and 20.3% [1]. - Net profit (in million CNY) for the same years is 125, 165, and 159, with growth rates of 63.4%, 31.8%, and -3.3% [1]. - EPS for 2021A, 2022A, and 2023E is 0.35, 0.42, and 0.39, with corresponding P/E ratios of 57.26, 34.90, and 27.31 [1].