EBSCN·2024-03-19 16:00Investment Rating - The investment rating for the company is "Buy" for both A-shares and H-shares, maintained from previous assessments [2][3]. Core Views - The company has demonstrated steady business development, with a total revenue of 40.34 billion yuan in 2023, reflecting a year-over-year increase of 2.51%. The net profit attributable to shareholders reached 9.607 billion yuan, up by 9.00% year-over-year, and the adjusted net profit was 9.748 billion yuan, marking a 16.81% increase [2][3]. Summary by Sections Financial Performance - In Q4 2023, the company achieved a revenue of 10.799 billion yuan, a decrease of 1.47% year-over-year, while the net profit attributable to shareholders was 1.530 billion yuan, an increase of 6.58% year-over-year. The adjusted net profit for the same quarter was 2.038 billion yuan, up by 0.5% [2]. - For the full year, the chemical business generated 29.17 billion yuan in revenue, a 1.1% increase year-over-year, with a 36.1% increase when excluding COVID-19 commercialization projects. The testing business saw a revenue of 6.540 billion yuan, up 14.36%, while the biological business generated 2.553 billion yuan, a 3.13% increase. The CTDMO business achieved 1.310 billion yuan, a slight increase of 0.12%, while DDSU revenue fell by 25.08% due to business transformation [2]. Business Segments - The chemical CDMO business showed strong growth, with drug discovery-related revenue increasing by 6% year-over-year, despite a 25.3 percentage point decline in growth rate compared to 2022. The revenue from process development and production services decreased by 0.1%, but excluding COVID-19 projects, it increased by 55.1% due to the addition of 1,255 new molecules and an increase in commercial projects from 50 in 2022 to 61 in 2023. The new molecule business revenue grew by 64.4% to 3.41 billion yuan, with a backlog of orders increasing by 226% [2][3]. Profitability and Valuation - The company is positioned as a leading one-stop CXO service provider, with steady earnings growth. The net profit forecasts for 2024 and 2025 have been adjusted downwards to 10.95 billion yuan and 12.76 billion yuan, respectively, reflecting a decrease of 6% and 14%. The 2026 net profit forecast is set at 14.41 billion yuan, indicating year-over-year growth of 14.01%, 16.52%, and 12.89% for 2024, 2025, and 2026, respectively. The corresponding P/E ratios for A-shares are projected at 14, 12, and 10 times for 2024 to 2026, maintaining a "Buy" rating [3][4].