Adicon Holdings (9860) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 32.2% YoY to RMB3,297.8m as COVID-19 testing demand declined; non-COVID revenue grew 16%.

• Adjusted EBITDA was RMB675.8m and adjusted net income RMB355.0m, down 32.9% and 41.6%, respectively; reported profit for the year was RMB262.3m.

• Gross margin improved to 43.5% from 39.0%, supported by cost controls and a richer esoteric-testing mix.

Financial highlights

• Revenue was RMB3,297.8m vs RMB4,860.6m; gross profit was RMB1,434.1m vs RMB1,896.2m in FY2022.

• Profit before tax was RMB349.4m and total profit RMB262.3m, vs RMB820.8m and RMB684.9m, respectively, in FY2022; profit attributable to owners was RMB234.9m vs RMB680.8m.

• Adjusted EBITDA was RMB675.8m, down 32.9%; adjusted net income was RMB355.0m, down 41.6% YoY.

• Cost of sales declined 37.1% to RMB1,863.7m; selling and marketing expenses fell 12.3% to RMB485.2m, while finance costs rose 12.4% to RMB86.3m.

• Basic/diluted EPS was RMB0.34/RMB0.31 vs RMB1.04/RMB0.96 in FY2022.

Outlook and guidance

• Plans call for one provincial lab, 1–2 secondary labs, and 2–3 technical-service or regional testing centers annually, with focus on lower-tier markets and underdeveloped regions.

• Priorities include expanding test methods, applying innovative technologies and AI, improving service quality and efficiency, and pursuing selective strategic investments and alliances.

• Management expects cash conversion to normalize after the 2023 transition year.