After trading on January 16, MGI (688114. SH) announced its 2024 annual results. 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.

In 2024, due to the impact of the macro environment, market competition and other aspects, companies in the biotechnology industry will face the dual challenges of capital and market. Despite the difficulties, MGI still adheres to technological innovation and market development, and under the refined management of various expenses, the company has achieved high-quality development results, and its single-quarter performance has shown a steady growth trend.

The increase in expenses is due to market expansion and other factors, and remains stable in the downward environment

According to MGI's performance forecast, the company's performance changes in 2024 are mainly due to the increase in the difficulty of market expansion, the company actively adjusted its marketing strategy and increased market expansion efforts, resulting in an increase in related sales expenses. In addition, the fluctuation of foreign currency exchange rates such as the US dollar and the euro led to a year-on-year increase in the exchange loss of the company's foreign currency monetary items.

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 a competitive advantage in the market and improve the level of technological innovation, the company has always adhered to the independent and controllable core technology, continued to promote 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 of 2024, accounting for 31.6% of operating income. Under the combined effect of these factors, the company's overall performance in 2024 is under great pressure.

Despite the complex external environment in 2024, MGI still demonstrated strong development resilience with its deep technical background, flexible strategic layout and strong team execution. From the perspective of core business in the second half of the year, the revenue of gene sequencer in the third quarter was 530 million yuan, of which the revenue in Europe and Africa was 90 million yuan, an increase of 10% from the previous 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, the company'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 sustainability 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, the company has also established good cooperative relations with scientific and technological service companies such as Nuohe Zhiyuan and Xuzhenda Biotechnology. Overseas, the company is committed to strengthening localized business construction, and has established stable cooperative relations through direct sales and agency.

The company said at the third quarter of 2024 performance meeting that on the whole, both platform construction and reagent procurement have continued stability.

Climbed to the top of the list of the most influential brands of sequencers, and the domestic bidding rate ranked first

Despite the short-term fluctuations in demand and the increase in risks and challenges in the global market, the company 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 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 addition, according to the statistics of third-party institutions based on sales in the domestic market, MGI ranked first in the "2024 Most Influential Brand List of Gene Sequencers" and the "List of the Most Influential Domestic Brands of Gene Sequencers in 2024", and "dominated" the list with an absolute advantage in the domestic market.

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. At the same time, MGI's 1,000th DNBSEQ-G99 gene sequencer rolled off the production line, making MGI the fastest to achieve 1,000 mass production sequencers, empowering more and more users in scientific research and clinical fields around the world with its fast and excellent performance.

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, the company has added 20 new ecological partners based on E25 cooperation intentions, covering a wide range of fields, such as 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. The introduction of this policy has provided a broad space for the development of domestic manufacturers such as MGI. With the recovery of the industry and multiple favorable factors, MGI's domestic business is expected to continue to grow steadily.

According to the China Merchants Securities Research Report, MGI, as a leading domestic gene sequencer supplier, has risen to the challenge in the uncertain external environment, continued to enhance its global competitiveness, and its overseas business has been stable and continuously expanded, and the prospect is worth looking forward to, maintaining MGI's "Highly Recommended" rating.

(This article does not constitute any investment advice, and the information disclosure content is subject to the company's announcement.) Investors act accordingly at their own risk. ）

Text/Li Xue