On January 16, MGI (688114) released its 2024 annual performance forecast. According to the company's preliminary estimates, it is expected to achieve a net profit attributable to the parent company of -670 million yuan to -554 million yuan in 2024, and a net profit of -730 million yuan to -603 million yuan after deducting non-profits. Based on the full-year profit forecast, the company's fourth-quarter 2024 results are expected to narrow the loss at the highest value.

According to MGI's performance forecast, the main reason for the change in the company's performance in 2024 is the increase in the difficulty of market expansion, and the company actively adjusted its marketing strategy and increased market expansion efforts, resulting in an increase in related sales expenses. In addition, fluctuations in the exchange rates of foreign currencies such as the US dollar and the euro led to a year-on-year increase in foreign exchange losses incurred by MGI in foreign currency monetary projects.

At present, MGI's overseas market expansion is still in the investment period, and the construction of international marketing outlets and the use of infrastructure projects have led to an increase in fixed costs. In addition, in order to maintain its competitive advantage in the market and improve the level of technological innovation, MGI has always adhered to the independent and controllable core technology, continuously promoted product innovation and iteration, and continuously consolidated the strategic layout of patents, with R&D investment of up to 590 million yuan in the first three quarters, accounting for 31.6% of operating revenue. Under the combined effect of these factors, MGI's overall performance in 2024 will be under great pressure.

Although the external environment in 2024 is more complex, from the perspective of core business in the second half of the year, MGI's gene sequencer achieved revenue of 530 million yuan in the third quarter, of which the revenue in Europe and Africa was 90 million yuan, an increase of 10% quarter-on-quarter, showing a growth recovery trend; The revenue of the Americas region was 30 million yuan, a year-on-year increase of 29%.

In the first three quarters, MGI's revenue mainly came from strategic cooperation customers and channel providers. After years of running-in and trust, MGI's partners have a certain degree of continuity and stability, and the company has established long-term and stable cooperation with a number of partners in China, including core users in clinical application fields such as Geyinga, Beikang Medical, Golden Key Medical, and Shihe Gene. In addition, in recent years, MGI has established good cooperative relations with technology service companies such as Novo Zhiyuan and Xuzhenda Biotechnology. Overseas, MGI is committed to strengthening its localized business and has established a stable cooperative relationship through direct sales and agency.

At the 2024 third quarter results meeting, MGI said that on the whole, both platform construction and reagent procurement have continued stability.

Despite the short-term fluctuations in demand and the increase in risks and challenges in the global market, MGI is still committed to improving its R&D capabilities and product technology competitiveness, and its market position has been steadily improved, ranking first in many dimensions of the gene sequencing industry. According to the data of Bidi's bidding network, in the first three quarters of 2024, MGI's market share among the winning brands of gene sequencer equipment reached 55.05%, ranking first.

In the field of gene sequencers, MGI's product matrix of "short read length + long read length" has achieved remarkable market results. In November last year, the nanopore sequencer CycloneSEQ-WT02 exceeded 100 units in just two months after its release. During the same period, MGI's 1,000th DNBSEQ-G99 gene sequencer rolled off the production line.

Recently, MGI's DNBSEQ-E25, the world's first gene sequencer based on the biochemical principle of self-luminescence sequencing, was approved by the National Medical Products Administration (NMPA) for medical device registration and clinical application in the domestic market. This not only means that MGI's DNBSEQ gene sequencers have achieved clinical scene coverage in both "excitation" and "self-illumination" routes, but also expanded the number of DNBSEQ gene sequencers that can be used for clinical testing in China to 23, but also marks another new breakthrough in MGI's product accessibility and qualification completeness. On this basis, MGI has added 20 new ecosystem partners based on E25 cooperation intentions, covering infection prevention and control, reproductive health, precision medicine, animal diseases, forensic science and other fields.

It is reported that the annual epidemic spread of influenza virus is also a key application scenario of gene sequencing equipment. The CDC in many places in China has started to strengthen influenza surveillance and research using MGI's respiratory microbial genome sequencing product portfolio.

Under the current trend of domestic substitution, domestic support policies have also continued to increase. In December last year, the Ministry of Finance issued a favorable policy to give domestic products a 20% price review discount compared with non-domestic products in government procurement activities. Industry insiders pointed out that the introduction of this policy has provided development space for domestic manufacturers such as MGI.