Mega Genomics (6667) H1 2024 earnings summary

Executive summary

• H1 2024 revenue rose 8.5% YoY to RMB107.3 million and net profit rose 5.3% to RMB37.0 million, as consumer genetic testing growth offset a sharp contraction in cancer screening.

• More than 21 million tests had been performed since 2016; average monthly testing volume exceeded 400,000 in H1 2024.

Financial highlights

• Gross profit increased 6.6% YoY to RMB69.6 million; profit before tax rose 1.7% to RMB43.0 million.

• Selling and distribution expenses fell 17.6% to RMB13.6 million and administrative expenses fell 27.5% to RMB17.5 million, partly reflecting lower share-based payment expense.

• Other income and gains fell 55.7% to RMB3.4 million, mainly due to lower government grants; finance costs rose 252.3% to RMB0.9 million as borrowing interest increased.

• Basic and diluted EPS were both RMB0.18, versus RMB0.16 in H1 2023; income tax expense declined 15.5% to RMB6.1 million.

Outlook and guidance

• Plans include expanding consumer genetic testing through new products, wider channels, medical-institution education and cooperation with industry experts to help establish standards.

• Priorities include developing lower-cost home-testing products, recruiting R&D staff, advancing digestive-cancer blood-methylation screening and automating production.

• ApoE and folate kits are expected to receive registration certificates in H2 2024; colorectal and gastric cancer qPCR kits are targeted for registration by 2025.

• Plans include building a manufacturing laboratory to extend coverage, shorten reporting cycles and reduce costs; selective acquisitions may complement internal growth.