The company achieved revenue of 4.3 billion yuan in 2021, +17175% year-on-year; net profit of 19.01 billion yuan and net profit of 1.8 billion yuan after deducting non-return net profit of 1.8 billion yuan, turning a loss into a profit over the previous year. 2022Q1 achieved revenue of 499 million yuan, +6.98% year-on-year; realized net profit of 121 million yuan, and realized net profit of 82 million yuan not deducted from parent. Overall, it was slightly lower than expected, mainly due to lower COVID-19 vaccine prices and increased competition in overseas markets. We lowered our net profit forecast for 2022-2023 to 788 million/1,537 million yuan, and gave the company a valuation of 60X PE in 2022, corresponding to a target price of about 191 yuan per share, maintaining the “buy” rating.

There is still huge room in the domestic COVID-19 sequential vaccination market. According to data from the National Health and Health Commission, between February 18 and April 27, 2022, a total of 229.61 million people were vaccinated with booster doses in China, of which 29.558 million were sequentially vaccinated, with a sequential vaccination rate of 12.87% (of which the proportion of sequential vaccinations during booster doses from February 18 to March 24 was 8.01%, and the proportion of sequential vaccinations during booster doses from March 25 to April 27 was 22.46%). As of April 27, the total number of people vaccinated in China was 1,285 million, and the potential demand for booster vaccination was 3-5 billion, of which the potential number of sequential vaccinations was 70 million to 100 million people. At an average price of 30 yuan (estimated according to the National Health Insurance Administration's disclosure of vaccine costs of more than 120 billion yuan), the potential market space for sequential vaccination is still close to 20-30 billion yuan. The company's recombinant adenovirus vector COVID-19 vaccine was approved for sequential booster vaccination on February 19, 2022. In addition to the domestic homologous booster market, domestic market sales are still expected to have a lot of market space.

The WHO EUL continues to advance, and there is still unsatisfied market space abroad. Currently, less than 60% of people worldwide (7.87 billion people) have been fully vaccinated, and the proportion of low- and middle-income countries (3.33 billion people) is less than 52%. Compared with the vaccination rate of over 75% in high-income countries, there is still huge market potential. In March 2022, the company received GMP certification from the World Health Organization (WHO) and is currently undergoing a follow-up review process to include Kwaza in the Emergency Use List (EUL). After receiving the WHO EUL, the company's COVID-19 vaccine is expected to enter more countries and markets with a higher cost performance advantage, and it is expected that overseas sales will continue to expand.

MCV2 and MCV4 began sales volume this year. MCV2 has now completed entry work in 20 provinces and cities, with a unit price of 168 yuan/dose. MCV4 is actively carrying out provincial and municipal entry work. The unit price is 420 yuan/dose, and it is expected that release will begin in Q2 2022. Sales of MCV2 and MCV4 for the full year of this year are expected to be 3-5 billion yuan, and the sales scale is expected to reach 10-15 billion yuan next year. MCV4 is the first quadrivalent meningococcal conjugate vaccine in China, and it is expected that sales agents with Pfizer will quickly seize market share.

The R&D pipeline is rich, and multiple varieties are expected to become new growth points in performance. Currently, the company's COVID-19 vaccine inhalation dosage form is in phase III clinical stage. The inhaled dosage form can obtain triple protection from mucosal immunity, cellular immunity, and humoral immunity, and has higher safety and immunogenicity. The inhaled dosage form is smaller, production capacity is higher, no syringes are required, and there are no local adverse effects of intramuscular injection, and it is expected to become a new major variety. At the same time, the company's COVID-19 mRNA vaccine was approved for clinical use on April 6, 2022. Compared with the COVID-19 vaccine developed on the basis of the prototype strain, preliminary studies have shown that it can induce neutralizing antibodies with high titers against various important variants identified by WHO (including the currently prevalent strain omicron). Furthermore, PCV13i entered phase III clinical phase in April 2021. Enrollment with 3 doses was completed at the end of that year. There is still a need to complete booster doses 18 months later. It is expected to be reported to the NDA next year.

Risk factors: Sales of the COVID-19 vaccine (adenovirus vector) fell short of expectations, risks related to vaccine research and development, commercialization, and sales; risks related to operations, etc.

Investment suggestions: Cansino is a leading innovative vaccine enterprise in China. The company brings together senior experts and top experts in the vaccine industry, and has excellent management level and strong R&D capabilities; the company has laid out 17 innovative vaccine product pipelines in 13 indications; in the short term, the recombinant adenovirus vector COVID-19 vaccine, MCV4/MCV2, has great commercial value, and the inhalation form is full of imagination; in the medium to long term, PCV13i/PBPV, component 100 breakout series. The tuberculosis-enhanced vaccine all focus on clinical pain points, the market power is huge, and the mRNA technology is expected to be developed More vaccine varieties; Production capacity release progress in 2021 fell slightly short of expectations, while COVID-19 vaccine price cuts and overseas supply oversupply also exceeded our expectations. We lowered our 2022-2023 net profit forecast to 788 million/1,537 million yuan1, referring to industry-comparable company valuation levels (according to Wind's unanimous forecast, as of April 29, 2022, Zhifei Biotech PE is 21 times, Watson Biotech's PE is 21 times, Watson Biotech is 36 times, and the average value is 40 times), considering the company's R&D pipeline Abundant (the company has laid out a total of 17 innovative vaccine product pipelines in 13 indications), gave the company a valuation of 60X PE in 2022, corresponding to a target price of about 191 yuan per share, maintaining a “buy” rating.