Guotai Junan Securities·2024-04-28 01:32Investment Rating - The investment rating for the company is "Buy" with a target price of 27.44, maintaining the previous rating of "Buy" [1]. Core Views - The report highlights an improvement in new order signing, with expectations for sequential performance recovery. The integrated transformation logic continues to be validated, supporting a positive long-term growth outlook for the company [1]. Summary by Sections Financial Performance - In Q1 2024, the company's revenue was 26.71 billion yuan, a decrease of 1.95% year-on-year, while the net profit attributable to shareholders was 2.31 billion yuan, down 33.80% year-on-year. Adjusted net profit was 3.39 billion yuan, reflecting a decline of 22.7% year-on-year. The performance met expectations despite a one-time loss from the integration and closure of a laboratory in Shanghai, increased employee costs, and a decrease in the fair value of biological assets [1]. - The company expects EPS for 2024-2026 to be 0.98, 1.13, and 1.35 yuan, respectively, maintaining the target price of 27.44 yuan [1]. Business Segments - The laboratory services segment generated revenue of 16.05 billion yuan, down 2.9%, with a gross margin of 44.14%, a decrease of 0.34 percentage points. The new order growth rate improved to over 20% [1]. - The small molecule CDMO business revenue was 5.82 billion yuan, down 2.7%, affected by project delivery schedules, with a gross margin of 27.90%, down 5.05 percentage points. The clinical research services revenue was 3.92 billion yuan, up 4.6%, primarily due to overseas clinical trial contributions [1]. Client and Project Growth - The company has steadily expanded its client base, with over 800 new clients added, including process validation and commercialization projects. Active clients increased to over 2,800, with 29 active clients in clinical phase III services [1]. - The company has successfully completed on-site inspections and compliance checks for its formulation workshop, indicating that backend capabilities are expected to gradually materialize [1]. Market Position - The company is recognized as the second-largest pharmaceutical R&D service platform in China and one of the top three drug discovery service providers globally, with a revenue growth rate of 37.9% as of 2018 [3].