Mega Genomics (6667) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 3.8% YoY to RMB151.3m; excluding COVID-19 testing, revenue growth was 16.8%. Net profit was RMB30.0m versus a RMB17.6m loss in 2022.

• Profit recovery reflected stronger consumer testing sales, product mix optimization, cost control and improved receivables collection.

Financial highlights

• Gross profit increased 8.0% to RMB88.3m; gross margin expanded 2.3 percentage points to 58.4%.

• Operating expenses included RMB44.5m of administrative expenses, RMB30.7m of selling and distribution expenses, and RMB22.4m of R&D costs.

• Profit before tax was RMB36.2m; income tax expense was RMB6.1m. Basic and diluted EPS was RMB0.14 versus a RMB0.09 loss per share in 2022.

• Adjusted for COVID-19 testing services, consumer genetic testing revenue growth was 68.3% YoY.

Outlook and guidance

• Plans include expanding consumer testing penetration, strengthening medical-institution education and partnerships, and upgrading products as industry standards develop.

• Plans to automate production and advance blood-methylation digestive cancer screening; low-cost fecal occult blood testing products have reached mass production.

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

• Plans include building a manufacturing laboratory, recruiting R&D professionals, developing at-home screening products and considering selective acquisitions.