2021H1 realized revenue of 1.35 billion yuan, year-on-year + 135.37%, net profit of 319 million yuan, year-on-year + 419.09%, and non-return net profit of 240 million yuan, + 318.21%. The company's revenue and net profit growth trend is strong, mainly due to the subsidiary Yuxi Watson 13 price pneumonia conjugate vaccine sales volume, performance in line with market expectations; mRNA COVID-19 vaccine if smooth progress is expected to contribute to high performance flexibility, continue to focus on recommendation, maintain the "buy" rating.

Revenue and net profit is growing at a high speed, and the performance is expected to be compound in the market. 2021H1 realized revenue of 1.35 billion yuan, year-on-year + 135.37%, net profit of 319 million yuan, year-on-year + 419.09%, and non-return net profit of 240 million yuan, + 318.21%. The company's revenue and net profit growth trend is strong, mainly from the subsidiary Yuxi Watson 13-price pneumonia vaccine sales volume, performance in line with market expectations.

13-price pneumonia vaccine sales volume, three technical path layout COVID-19 vaccine. Yuxi Watson, a subsidiary of 2021H1, issued 2.67 million doses (+ 122.40%) of 13-valent pneumonia vaccine. The total number of batches issued for Yuxi Watson vaccine products totaled 1.67 million doses (- 24.38%), mainly due to a significant decline in the number of DPT vaccine batches issued. At the end of last year, the bivalent HPV vaccine of Shanghai Zerun, a subsidiary, was included in the priority review list last month, and the relevant review work is currently under way; the nine-valent HPV vaccine is in the preparatory work for phase III clinical study. At the same time, the company's three technology path layout COVID-19 vaccine: jointly developed COVID-19 mRNA vaccine, recombinant novel coronavirus vaccine (chimpanzee adenovirus vector) received the "Drug Clinical trial approval" in June and May this year respectively; 1 COVID-19 mRNA vaccine is in phase III clinical research; 2 Recombinant COVID-19 vaccine (chimpanzee adenovirus vector) is in phase II clinical research. (3) the recombinant COVID-19 vaccine (CHO cell) independently developed by Shanghai Zerun is currently in the stage of phase II clinical research; if the phase III results are approved, it is expected to bring high flexibility for performance.

The 13-price pneumonia vaccine will be actively distributed in overseas markets and continue to promote the issuance and listing of H shares. Vigorously expand the independent vaccine business, continuously explore the market potential through a variety of measures, and open up overseas markets represented by companies with 13-valent pneumonia conjugate vaccine to independently produce vaccine products. At the same time, strengthen cooperation and exchanges with WHO, Gates Foundation, CEPI and other international organizations, and actively promote the registration and export of products in overseas markets. The company's products have been exported to 15 countries, and its subsidiary Yuxi Watson has been steadily supplying AC polysaccharide vaccine products of the Ministry of Health of Egypt for 4 consecutive years for its national expanded immunization program (EPI). In April this year, Yuxi Watson reached a cooperation with Moroccan MarocVaxSarl to import and sell 13-valent pneumonia conjugate vaccine. To promote the implementation of the company's comprehensive internationalization strategy, the company intends to issue overseas listed foreign capital shares (H shares) and apply for listing on the main board of the Hong Kong Stock Exchange Co., Ltd.

Build a new modular vaccine plant and continue to promote the construction of vaccine production base. According to the research and development of vaccine products and clinical progress, we will continue to promote the construction of production bases for modern biotechnology drugs in Yuxi National High-tech Industrial Development Zone, including HPV vaccine industrialization project, vaccine international preparation center construction project, etc., all in accordance with WHO pre-certification and other standards. At present, the HPV industrialization production workshop has been completed, which has laid a solid hardware foundation for the industrialization of the company's HPV vaccine; the international preparation center project is carrying out equipment installation and commissioning, and will undertake the production tasks of a series of meningococcal vaccines and pneumonia vaccines after completion. At the same time, a new vaccine modular plant construction project has been built in Yuxi Industrial Park, and in the future, it will rely on Yuxi Watson's existing vaccine production facilities to quickly realize the production and listing of blockbuster products.

Risk factors: 13-valent pneumonia vaccine sales are not as expected, bivalent and 9-valent HPV vaccine research and development are not as expected, COVID-19 mRNA vaccine research and development in cooperation with Aibo is not as expected, and so on.

Investment suggestion: the company is a leader in the domestic vaccine field, taking into account: (1) the vaccine industry has a high threshold for competition, after the promulgation of the strongest management law, the industry leader is expected to achieve permanent strength; (2) with the aging of the population, the catalysis of the epidemic situation of COVID-19 and the awakening of public health awareness, its future performance has a strong certainty. 3 the cooperation with Suzhou Aibo Biological mRNA COVID-19 Vaccine is expected to bring greater flexibility to the performance. Considering that the progress of mRNA COVID-19 vaccine is slightly lower than expected, we forecast that the net profit for 2021-2022 will be 1.504 million yuan (the original forecast is 1.405 million yuan) and the new net profit for 2023 will be 1.963 billion yuan, corresponding to the EPS forecast of 0.77Universe 1.25 yuan respectively. The current share price corresponds to 100,79,62 times of PE respectively. Considering that the mRNA vaccine partnered with Eber is expected to contribute in 2022, we value 93X PE in 2022 and maintain a "buy" rating corresponding to the target price of 90 yuan per share.