Center Laboratories, Inc. announced its first-quarter financial report on the 13th, with revenue of 360 million yuan and an operating profit of approximately 42 million yuan, a significant increase of 248% compared to the same period last year. However, the price of financial assets held by the company still fluctuated due to international political and economic influences, resulting in a valuation loss of 550 million yuan. The net loss after tax for the first quarter was 540 million yuan, with a loss per share of 0.78 yuan.
Center Laboratories's revenue mainly comes from its pharmaceutical business and probiotics business (its subsidiary, Glac Biotech). In the pharmaceutical business, the main product is prescription aqueous drugs, which showed steady growth after the epidemic, contributing about 70% of the revenue in the first quarter. As for the probiotics business, Glac Biotech has benefited from the increasing demand for functional probiotics in the consumer market. The first-quarter orders and profitability have grown significantly, with revenue increasing by approximately 10.4% compared to the same period last year, gross profit increasing by 76.7%, EBITDA increasing substantially by 283.6%, and the post-tax loss converging to 2.58 million yuan, poised to turn losses into profits.
In April, Center Laboratories's consolidated revenue for the month was 141 million yuan, a year-on-year increase of 45.68% and a month-on-month increase of 20.82%. Cumulative revenue reached a six-year high, and the group is expected to continue to grow at a double-digit rate throughout the year.
Chairman Wang Su-chi of Center Laboratories stated that the main investment losses recognized this quarter include equity method investment losses of 140 million yuan and financial asset valuation losses of 550 million yuan, and these recognized investment losses do not affect cash flow.
Center Laboratories's core business group, with a shareholding of more than 20%, is recognized using the equity method, with profits and losses of each company accounted for. Among the core business group, TOT BIOPHARM and BioGend Therapeutics performed well this quarter. TOT BIOPHARM is headquartered in Suzhou, China, and is a comprehensive CDMO company. In addition to its own products, it also provides one-stop CDMO services and has a place in the ADC field. Its revenue in the first quarter reached 1 billion yuan, a year-on-year increase of 68%, turning losses into profits for the first time, with a net profit of about 33 million yuan, and its future prospects are optimistic.
On the other hand, BioGend Therapeutics also performed well, benefiting from the continued increase in sales of its antibiotics and knee joint repair products. Its performance has continued to grow at a three-digit rate since the beginning of this year. As of April, cumulative revenue has exceeded the level of the second quarter of last year, and the annual loss is expected to converge significantly, with the possibility of turning losses into profits next year.
In addition, Center Laboratories's equity method recognized holdings also have high technological barriers and high explosive potential. The capital market is also optimistic about the future growth prospects of such companies and has given them high evaluations. For example, due to the smooth progress of clinical trials, the market value of Shun Pharmaceutical soared by more than 30 billion yuan in the first quarter. However, Center Laboratories holds only 33.4% of Shun Pharmaceutical. Due to the equity method of recognition, its market value cannot be reflected in the financial report. Overall, the book value of Center Laboratories's equity method assets cannot fully reflect their potential market value, which has exceeded tens of billions. On the other hand, companies in which Center Laboratories holds less than 20% are recognized as financial assets and are accounted for based on market value, which is greatly affected by stock price fluctuations. This quarter, the recognition of financial asset valuation losses amounted to 550 million yuan.
Looking ahead, Wang Su-chi said that in addition to the above-mentioned companies such as Glac Biotech, TOT BIOPHARM, and BioGend Therapeutics reporting good news one after another, Center Laboratories will usher in the unblinding of Phase 2b clinical trials of Shun Pharmaceutical in the second half of the year, initiate licensing negotiations, complete the privatization of Saiso Pharmaceuticals, with disposal investment income expected to reach 600 million yuan, and with the registration of the new weight loss drug, Omengya, on the GEM board and other positives, combined with the soaring revenue of the pharmaceutical and probiotics businesses, the group will enter a period of rapid growth.
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