Revenue was basically the same in 2022, with net profit returning to the mother -16% year on year

The company announced 2022 revenue, net profit returned to the mother, and deducted 18.3, 5.2, 450 million yuan from non-return to the mother, compared to -0.2%, -16%, and -23%. The revenue side was basically flat mainly due to the sharp disturbance in the 4Q22 prevention and control policy. Excluding impairment, which affected the net profit of the mother's net profit fell 11%, mainly due to an increase in sales expenses. Based on the high influenza epidemic expectations for the whole year (people are expected to be less immunized, influenza vaccine sales are high in 1Q23), which is expected to drive influenza vaccine sales. We expect the company's net profit to the mother in 2023-25 to be 9/1,19/15 billion yuan, an increase of 74%/31%/26% over the previous year.

We gave the company a 23-year PE valuation of 25x (comparable company Wind agreed that the average PE valuation was 24x, considering that influenza had marginal changes, and vaccine sales had a certain upward elasticity, a certain premium), a target price of 56.52 yuan (previous value of 50.06 yuan) to maintain the “buy” rating.

Influenza vaccine: Influenza popularity is expected to rise in '23. Optimistic that demand for vaccination will recover 2022 influenza vaccine revenue of 1.82 billion yuan (-0.4% yoy), sales volume of 14.54 million (-6% yoy), changes in epidemic prevention policies and increased movement of people have raised influenza epidemic expectations in 2023. We expect influenza vaccine sales to exceed 20 million doses in 2022:1) In 2022, the company IIV4 adults, IIV4 children, and IIV3 will issue 77, 14, and 12 batches respectively. We estimate that the number of batches issued will be issued in batches of about 1950, respectively. , 350, 3 million doses; 2) The prevalence of influenza is expected to increase in 23 years: the popularity of the past two years plus the low vaccination rate caused the population to be underimmunized. After COVID-19 weakened in 1Q23, influenza A rose rapidly, and the combined increase in population activity caused the spread in many places; 3) Demand is expected to rise sharply: high epidemic expectations+emphasis on disease control are expected to drive vaccination; 4) IIV4 prices for children are high, and efforts to develop school vaccinations in 23 years are expected to increase company profits.

New products are expected to contribute incrementally, and the research pipeline continues to advance

1) The Vero cytomaniac vaccine and tetanus vaccine 2M23 were approved. The former has fewer DNA residues and is safer, and has a 4-dose and 5-dose method. The latter is purified first and then detoxified and has better immunogenicity. The two vaccines are expected to grow collaboratively into large varieties through product quality, pricing systems, and blood product sales resources. In 23, we expect MenAC to enter production and achieve phase III clinical trials for dTAP; 3) The company will establish an mRNA R&D platform to actively explore mRNA influenza Vaccine research and development is currently in the early stages of research and development; 3) Promoting COVID-19 vaccine research and development.

The implementation of equity incentives is expected to stimulate business vitality

The company's equity incentive has been granted for the first time (3.4 million shares were granted for the first time, accounting for 0.85% of the company's total share capital, with another 600,000 shares reserved). The award targets 28 directors, executives and core executives, with a grant price of 24.42 yuan. The performance assessment target is based on 2021. The growth rate of net profit after deducting non-net profit from 2023 to 25 will not be less than 40%/80%/100%, that is, after deducting non-net profit of 82/10.5/1.17 billion yuan from 23 to 25. We believe that the company's equity incentive plan is set up reasonably, covers the main core core, and is expected to help the company develop in the long term.

Risk warning: The prevalence of influenza and product sales fall short of expectations, R&D progress falls short of expectations, the development of COVID-19 and the risk of changes in prevention and control policies.