PHARMARON(SZ:300759) Soochow Securities·2024-04-01 16:00Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company achieved a total revenue of 11.54 billion yuan in 2023, representing a year-on-year growth of 12.39%. The net profit attributable to shareholders was 1.60 billion yuan, up 16.48% year-on-year, although the performance was below expectations [2][3][4] Summary by Sections Financial Performance - In 2023, the company reported total revenue of 11,538 million yuan, with a year-on-year increase of 12.39%. The net profit attributable to shareholders was 1,601 million yuan, reflecting a year-on-year growth of 16.48%. The adjusted net profit was 1,903 million yuan, up 3.76% [2][4] - The fourth quarter of 2023 saw revenue of 2,978 million yuan, a 3.99% increase, and a net profit of 462 million yuan, which is an 11.74% increase year-on-year [2] Business Segments - The company operates four main business segments, all of which showed strong revenue growth in 2023: 1. Laboratory services generated 6,660 million yuan in revenue (+9.38%), with a gross margin of 44.28%, down 1.25 percentage points year-on-year 2. CMC (small molecule CDMO) services brought in 2,711 million yuan (+12.64%), with a gross margin of 33.68%, down 1.11 percentage points year-on-year 3. Clinical research services achieved 1,737 million yuan (+24.66%), with a gross margin of 17.05%, up 5.59 percentage points year-on-year 4. Large molecule and cell & gene therapy services, still in the investment phase, generated 425 million yuan (+21.06%), with a negative gross margin of -8.30% [3] Future Outlook - The company is enhancing its business platform, with a capital expenditure (CAPEX) of 2,865 million yuan in 2023 to support future growth. Key developments include: 1. Expansion of laboratory services in Xi'an and Beijing, with a new facility in Ningbo expected to be operational in 2024 2. Establishment of a commercial process development department for CMC services, including investments in Singapore 3. Development of an integrated clinical trial service platform in China and a 96-bed early clinical research center in the U.S. 4. Ongoing expansion of large molecule and cell & gene therapy services, with new facilities in Liverpool and Ningbo expected to be operational in 2024 [3][4] Earnings Forecast and Valuation - The earnings forecast has been adjusted downward due to the pressure on profit margins during the expansion phase. The projected net profits for 2024-2026 are 1,716 million yuan, 2,010 million yuan, and 2,420 million yuan, respectively. The current market valuation corresponds to a P/E ratio of 22, 19, and 16 times for 2024-2026 [4]