1Q23 Achieved deduction of 70 million yuan in non-net profit

The company announced that 1Q23 achieved revenue, net profit returned to the mother, and net profit after deducting non-net profit of 14,90,000 yuan respectively, and 1Q22 revenue, net profit, and net profit after deducting non-net profit were 1,458, -85, and -3.6 million yuan. The sharp increase on the revenue side and the sharp reversal of losses on the profit side were mainly due to the outbreak of influenza A in many places in 1Q23, driving influenza vaccine sales. Based on the high influenza epidemic expectations for the whole year (low expected immunity in the population, high influenza A prevalence in 1Q23), which is expected to catalyze demand for influenza vaccination, we expect the company to return net profit to mothers of 9/1,19/15 billion yuan in 2023-25. We gave the company a 23-year PE valuation of 27x (comparable company Wind unanimously expected an average PE valuation of 25x, given a certain premium considering that the influenza vaccine industry is expected to recover upward and the company's production capacity advantage), with a target price of 61.04 yuan to maintain the “buy” rating.

Influenza vaccine: Sales of the 1Q23 influenza vaccine have increased, and demand may recover the company's 1Q23 influenza vaccine revenue of 140 million yuan (1Q2214.58 million yuan). We expect sales of 1.1 to 1.2 million units. The optimization of epidemic prevention policies and the increase in the movement of people raised influenza epidemic expectations in 2023. We expect influenza vaccine sales to exceed 20 million doses in 23:1) The double low popularity plus vaccination rate in the past two years has caused insufficient pre-immunization of the population. Combined with crowd activity, the influenza weekly report for the 15th week shows that influenza has fallen back to a low level in the north and a high level in the south. We expect the popularity of influenza 2023 to increase; 2) The 1Q23 influenza A epidemic is expected to drive demand for vaccination. We expect high epidemic expectations+disease control to drive attention to vaccination.; 3) Company The annual production capacity of influenza vaccines is 100 million, and production began in February, which is expected to maintain the first-mover advantage.

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.