The company achieved revenue of 993 million yuan (+234.49%) in a single quarter of 2020 and net profit of 375 million (+1032.98%) after deducting net profit of non-return to the parent. Q4 is expected to continue the volume trend; the new stock option incentive plan shows confidence and sets the tone for the company's medium- to long-term development. PCV13
Key points to support ratings
Net profit for a single quarter increased sharply year over year in Q3, and the smooth release of PCV13 contributed to the increase. The company achieved revenue of 993 million (+234.49%) in a single quarter of 2020Q3 and net profit of 375 million (+1032.98%) after deducting non-return to the parent. The main reason was the smooth sales of PCV13 and the increase in contribution. PCV13 sold about 200,000 units in the first half of the year (PCV13 reported revenue of 112 million, calculated based on the average winning bid price), and PCV13 maintained a rapid growth trend in the Q3 single quarter. Judging from the batch volume issued, the number of Q1-Q3 batches issued was 3.31 million doses, and Q3 was 2.11 million doses. Children in the younger age group will also need a second to fourth dose after receiving the first dose. Moreover, with the arrival of the fall and winter season, the COVID-19 pandemic has raised public awareness of vaccination, demand for the Q4 pneumonia vaccine will further increase, and performance can be expected to continue to grow.
The 2020 Equity Options Incentive Plan shows confidence and invigorates long-term growth. The company announced the 2020 stock option incentive plan: it plans to grant 72.6 million stock options to incentive targets, accounting for 4.70% of the company's total share capital. The incentive targets include the company's directors, executives, core key personnel of the company and holding subsidiaries, and personnel determined by the board of directors to be motivated. In total, there are no more than 170 people. The exercise price of stock options granted in this plan is 75 yuan/share. The performance evaluation indicators for the exercise are: during the first exercise period, the company's cumulative net profit in 2020 and 2021 was not less than 2.2 billion yuan; during the second exercise period, the company's cumulative net profit for the two years of 2021 and 2022 was not less than 27 yuan; during the third exercise period, the company's cumulative net profit for 2021 and 2022 was not less than 2.7 billion yuan. The exercise price of this incentive plan is 75 yuan, which shows the company's confidence in medium- to long-term development compared to the current stock price, which shows the company's confidence in medium- to long-term development; furthermore, this incentive covers a wide range of targets, which is conducive to mobilizing employees' enthusiasm and injecting long-term development vitality.
The R&D pipeline is fully advancing. In 2020, Q1-Q3's R&D expenses were 154 million yuan (+262%). Currently, the company is making every effort to promote the application, production and marketing of the bivalent HPV vaccine, while also speeding up the evaluation of the R&D progress of projects such as the nine-valent HPV vaccine, mRNA COVID-19 vaccine, and recombinant EV17 vaccine
Since the listing of Jiahe Biotech brought about fair value change income, we raised our 2020 EPS forecast to 0.66 (previously 0.59), keeping 2021-2022 EPS 0.89 and 1.17 unchanged. The corresponding net profit was 998 million, 1,344 million, and 1,765 million dollars. The full-year results are expected to continue to exceed expectations and maintain the rating for increasing holdings.
The main risks faced by ratings
Vaccine industry policy risks, risk that competitor products are on the market faster than expected.