In 2022, H1 realized revenue of 630 million yuan, down 69.45% from the same period last year; realized net profit of 12.24 million yuan, down 98.69% from the same period last year; and deducted non-return net profit of-56.77 million yuan, down 106.31% from the same period last year.

It is caused by the price changes of COVID-19 vaccine products and the slowdown in the global COVID-19 vaccine coverage rate. COVID-19 pandemic development, vaccine has a sustained demand, while MCV2 and MCV4 product sales volume is expected, rich research and development pipeline, a number of varieties are expected to become new growth points. Taking into account the price reduction of COVID-19 vaccine and the more competitive situation than expected in overseas supply, we downgrade the company's net profit forecast for 2022-2024 to RMB 0.99100,000,000 (originally estimated to be RMB2.125 million), and give the company a valuation of 50X PE in 2023, lowering the target price to RMB1533,191, and maintaining the "Buy" rating.

COVID-19 vaccination dropped sharply, taking into account the loss of falling prices to affect the net profit of the mother. In 2022, H1 realized revenue of 630 million yuan, down 69.45% from the same period last year; realized net profit of 12.24 million yuan, down 98.69% from the same period last year; and deducted non-return net profit of-56.77 million yuan, down 106.31% from the same period last year. This year, the growth rate of global COVID-19 vaccination rate has slowed down, the scale of overseas orders has dropped sharply compared with last year, the sequential vaccination efforts at domestic vaccination sites have been less than expected, and the number of COVID-19 vaccination has dropped sharply compared with the same period last year. During the reporting period, the company calculated a decline in inventory price of 96.62 million yuan for inventory (raw materials, products in process, finished goods, etc.), resulting in a decline in apparent return net profit exceeding the decline in income.

With the development of COVID-19 pandemic infection, the vaccine has a continuous demand. The mutants of BA.4 and BA.5 further confirmed the panfluenza development of COVID-19, which had stronger immune escape ability than BA.2 by adding three key mutations, L452R, F486V and Q493, in the RBD domain of S protein. The transmission ability of BA.4 and BA.5 is slightly stronger than that of BA.1, and the R0 value is about 9.5. According to the data released by WHO on July 20, the critical protection rate of basic immunization of existing vaccines is more than 50%, while the critical protection rate of completing enhanced immunization program is more than 75%, of which the sequential enhanced critical protection rate can reach more than 85%. Compared with homologous reinforcement, sequential reinforcement has a more effective protective effect. At the same time, the inhalation form causes more mucosal reaction than the injection form, which has greater clinical value. On September 4th, the company's inhaled COVID-19 vaccine Keweisayou was approved by NMPA as a strengthening needle for emergency use. The clinical data of the company's inhaled dose form COVID-19 vaccine showed that its safety was significantly better than that of any intramuscular injection form on the market; its immunogenicity was better than that of the original dose form vaccine (Kweisha); and the sequential vaccination of Omicron strain had a good protective effect. After a single dose of inhaled adenovirus vector vaccine, the neutralizing antibody level was 15-16 times that of the inactivated vaccine and 5-6 times that of the recombinant protein. The mRNA COVID-19 vaccine developed by the company is in phase II clinical trials, and preliminary studies have shown that it can induce high titers of neutralizing antibodies against a variety of important variants identified by WHO, including the current epidemic strain omicron.

Sales of MCV2 and MCV4 products continue to expand. At present, MCV2 has completed the access work in 20 provinces and cities, with a unit price of 168yuan per agent, which is the highest price of similar products on the market at present. MCV4 unit price 420 yuan / agent, has completed 10 provinces and cities access, it is expected that the follow-up access work will be faster. In June 2022, after the termination of the cooperation with Pfizer Inc, the first products issued by MCV4 have been approved and officially sold commercially in China. The company expects sales of MCV2 and MCV4 to reach 300-500 million yuan this year and 1-1.5 billion yuan next year.

Rich in R & D pipelines, a number of varieties are expected to become a new growth point of performance. According to the company's report, the company's PCV13i will declare NDA at the end of next year, its immunogenicity is better than Pfizer Inc's product in at least four serotypes, using CRM197 and TT double vectors, higher binding efficiency. We expect the approved nodes to be at the end of 2024 or the first half of 2025. According to the company's announcement, phase III clinical trials of DTcP and DTcP strengthening needles for young children will begin in 2023. Phase Ib clinical trials of the ongoing PBPV will begin by the end of 2022. In addition, there are tuberculosis enhanced vaccines, one combined vaccine under development and four disease-specific vaccines for herpes zoster, meningitis, poliomyelitis and adenovirus.

Risk factors: COVID-19 vaccine (adenovirus vector) sales are not as expected; MCV2, MCV4 sales are not as expected; PCV13i research and development is not as expected; vaccine industry competition aggravates the risk.

Profit forecast, valuation and rating: CANSINOBIO is a leading innovative vaccine company in China, bringing together senior experts and top experts in the vaccine industry, with excellent management level and strong R & D strength; the company has a total of 17 innovative vaccine product lines in 13 indications; in the short term, the recombinant adenovirus vector COVID-19 vaccine and MCV4/MCV2 has great commercial value, and the inhaled dosage form is full of imagination In the medium and long term, PCV13i/PBPV, component diphtheria tetanus series and tuberculosis enhanced vaccine all focus on clinical pain points, and the market potential is huge. MRNA technology platform is also expected to develop more vaccine varieties. However, taking into account the extent of COVID-19 vaccine price reduction and the competitive situation that overseas supply exceeds demand, we lowered the company's net profit forecast for 2022-2024 to 0.99MB 757pm 1.610 billion yuan (the original forecast was 7.88pm 1.537pm 2.125 billion yuan), corresponding to the EPS forecast of 0.40pm 306pm 6.51 yuan. With reference to the industry comparable company valuation level (according to the Wind consensus forecast, as of September 6, 2022, 2022 Zhifei PE is 20 times, Watson biology is 56 times, BG biology is 61 times, with an average of 46 times), taking into account the company's rich R & D pipelines (the company has 17 innovative vaccine product pipelines in 13 indications), the company is valued at 50x PE in 2023, and the target price per share is reduced to about 153RMB (the original 191RMB) per share. Maintain a "buy" rating.