Net profit for 2022 is in line with our expectations
The company announced its 2022 results: revenue of 1,035 million yuan, a year-on-year decrease of 75.94%; the net profit loss of the mother was 909 million yuan, corresponding to a loss of 368 million yuan per share. Net profit was in line with our expectations.
Development trends
The release of COVID-19 vaccines is under pressure, leading to significant fluctuations in revenue and profit. On a quarterly basis, the company's 1Q/2Q/3Q/4Q revenue was 499/1.30/0.78/327 million yuan respectively. The obvious fluctuations on the revenue side were mainly due to the progress of the epidemic and the impact of epidemic prevention policies in each quarter. Among them, the significant month-on-month increase in 4Q was due to the optimization of domestic epidemic prevention measures and the promotion of the “fourth dose” vaccination, which led to the rapid release of the company's inhaled adenovirus COVID-19 vaccine; 1Q/2Q/3Q/4Q net profit was 1.21/-1.0-4.87/-435 million yuan, respectively. The sharp decline in profit for 3-4Q was the main COVID-19 vaccine Demand declined, investment in R&D and sales continued to increase, and inventories related to COVID-19 vaccines were reduced in price by 802 million yuan. Up to now, the bivalent inhaled adenovirus vector COVID-19 vaccine and bivalent mRNA COVID-19 vaccine developed by the company for the Omicron strain are in the clinical stage. We suggest paying attention to the flexible space for COVID-19 vaccines brought about by future domestic and international epidemic fluctuations.
The commercialization of MCV4 has officially started, and it is recommended to focus on the release of non-COVID-19 vaccines. According to our estimates, the company MCV4 (trade name: Manhaixin) sold about 300,000 doses domestically in 2022. By the end of 2022, MCV4 had completed market entry work in nearly 30 provinces and cities in China, and vaccination work was carried out one after another. At present, the size of the company's commercialization team has gradually expanded, with a sales team of 344 people, and cooperated with professional promoters to further strengthen market coverage.
The R&D pipeline is progressing in an orderly manner, and attention is being paid to the progress of the non-COVID-19 vaccine pipeline. In 2022, the company invested 790 million yuan in R&D (of which 12 million yuan was capitalized), a decrease of 13% over the previous year. The number of R&D personnel reached 452, an increase of 46% over the previous year. The company's core vaccine candidate pipeline is progressing steadily. Among them, the 13-valent pneumococcal conjugate vaccine has completed phase III clinical field work, and the company expects to enter the marketing application stage in 2023; the dTCP and dTCP enhanced vaccines for infants are currently in the clinical preparation stage, and the company plans to start phase III clinical trials in 2023; the broad-spectrum recombinant pneumococcal protein vaccine PBPV has completed the first phase Ib clinical trial enrollment. We expect that in the next 2-3 years, the company will launch more routine vaccine products. Considering that MCV2/4, PCV13, and dTCP varieties are mainly for infants and young children, post-marketing promotion will have economies of scale.
Profit forecasting and valuation
Without considering the revenue contribution of the company's COVID-19 vaccine, we conservatively estimated, lowered the company's 2023 profit forecast to -570 million yuan, and introduced the 2024 profit forecast to -276 million yuan for the first time. According to the DCF model, we maintained that A shares outperformed the industry rating and lowered the target price by 6.5% to $170.55, which has an upward margin of 40.3% compared to the current stock price; H shares maintained its outperformed industry rating and lowered the target price by 14.8% to HK$65.01, which has an upward margin of 36.6% from the current stock price.
risks
Risk of COVID-19 vaccine price reduction. Commercialization falls short of expectations, R&D progress falls short of expectations