Hualan Vaccine Co., Ltd. announced the results of the 2023 semi-annual report: in the first half of 2023, it achieved operating income of 150 million yuan, a year-on-year decrease of 85.89%; net profit of 108 million yuan, a year-on-year decrease of 63.71%; net profit after deducting non-return net profit of 58 million yuan, a year-on-year decrease of 78.23%; net cash flow from operating activities was 389 million yuan, an increase of 823.57% year-on-year.

Key points of investment

Sales and revenue declined sharply due to delays in issuing influenza vaccine batches. Optimistic about influenza vaccine sales volume in the second half of the year

In 2023H1, the company achieved operating income of 150 million yuan, a year-on-year decrease of 85.89%; net profit for the mother was 108 million yuan, a year-on-year decrease of 63.71%. The main reason was due to factors such as changes in influenza prevalent strains in the northern hemisphere in 2023. The issuance of product batches by domestic influenza vaccine companies, including the company, was delayed by more than one month compared to the previous year, which had a great impact on the company's business performance in the second quarter of 2023. In 2023 H1, 3 batches of the company's quadrivalent influenza vaccine were issued, a 95% decrease compared to 64 batches in the same period last year. The company has sufficient production capacity for influenza vaccines, and has ranked first in China for many years. According to public data from the Central Inspection Institute, since the beginning of 2023, the company's influenza vaccine has been issued in batches of 72 batches, and the number of batches issued continues to be the highest in the country. With the fall and winter influenza vaccine being distributed all over the country, and optimistic about the company's influenza vaccine sales volume in the second half of the year, the company's performance is expected to recover and grow rapidly.

New products have been launched one after another, contributing to the new volume, and the research pipeline has gradually been enriched. Relying on its own core technology platform, the company has set up a diverse R&D pipeline. Among them, the freeze-dried human rabies vaccine (Vero cell) and adsorbed tetanus vaccine both obtained a “drug registration certificate” in 2023 and are currently undergoing production and sales; the freeze-dried group A group C meningococcal polysaccharide conjugate vaccine is expected to be declared for production in 2023; and the adsorbed cell-free 100 (three-component) leukoplasty vaccine is expected to undergo phase III clinical trials in 2023. In addition, the company is actively developing various mRNA vaccines, such as the influenza virus mRNA vaccine. As new products continue to be launched, it will continue to contribute additional volume to the company's performance.

Profit forecasting

Recommended logic: (1) The domestic influenza vaccination rate is low, and the vaccination rate during the 2021-2022 influenza epidemic season is less than 3%. As awareness of influenza prevention increases and relevant policies are promoted and supported, the influenza vaccination rate will continue to rise, and the domestic influenza vaccine space is vast; furthermore, the influenza virus is a highly variable variety, and people need to get a new vaccine every year, so they are optimistic about the sustainable development of the influenza vaccine race track; (2) The company's influenza vaccine continues to have the highest market share in the domestic market, has a clear first-mover advantage, and is expected to maintain a leading position in the market to ensure the company's revenue growth; (3) With the approval and listing of the company's long-term single type, the driving factors for performance growth are gradually increasing .

We predict that the company's annual revenue for 2023E-2025E will be 26.85, 34.53 billion yuan, and 4.384 billion yuan, respectively, net profit of 942, 12.28, and 1,585 million yuan, EPS of 1.57, 2.05, and 2.64 yuan respectively. The current stock price corresponds to PE 18.6, 14.3, and 11.1 times, respectively, covering it for the first time, and giving it a “buy” investment rating.

Risk warning

Risks such as the product structure being relatively single risk, vaccine batch issuance falling short of expectations, risk of vaccine sales falling short of expectations, risk of increased market competition, and falling short of expectations in research and development.