Key points of investment
Incident: The company's 2023H1 net profit was 134 million yuan, up 28% year on year, excluding non-net profit of 123 million yuan, up 14% year on year; 2023Q2's net profit for a single quarter was 28 million yuan, up 16% year on year, up -74% month on month, net profit after non-return net profit of 223 million yuan, up 23% year on year, and -77% month on month.
The increase in revenue share of non-five vaccines has led to a significant year-on-year recovery in the overall profit level: 2023H1 gross profit margin is 57.6%, year on year +6.0 PCT; 2023Q2 has a quarterly gross profit rate of 55.2%, year-on-year, +7.7 PCT. The sharp recovery in gross profit levels is mainly due to 1) the increase in the share of non-five vaccines with higher gross profit levels, such as high-end vaccine for pigs, etc.; 2) Foot-and-mouth disease vaccine continues to reduce costs and increase efficiency.
There was a slight increase in various expense rates: 2023H1 sales/management/R&D expense ratio was 19.4%/9.1%/9.4%, compared to +2.4%/+1.9%/+1.1%. The overall cost increase is mainly due to the amortization of expenses arising from employee shareholding plans. Seen separately, the increase in sales expenses is due to an increase in sales travel, meetings, etc. activities in the first half of this year, and the increase in R&D expenses is due to the company's continued investment in research and development of novel vaccines.
R&D investment results have been remarkable, and multiple pipelines have progressed: the African swine fever subunit vaccine, bovine nodular skin disease inactivated vaccine, and cat triplet vaccine projects that 2023H1 participated in the development have all submitted emergency evaluation applications; in addition, the company has obtained 3 clinical trial approvals, and product approval number 1. At the same time, vaccine pipelines for swine fever subunit vaccine and sheep cloth disease (Rev.1 strain) have all made phased progress.
Production entity split: 2023H1 Jin Yu Baoling (foot-and-mouth disease vaccine, ruminant vaccine, etc.) had revenue of 440 million yuan, -1.4%, net profit of 83 million yuan, +3.3% year-on-year. The increase in profit level was mainly due to product structure optimization; Yangzhou Youbang's revenue was 135 million yuan, +45.1%, net profit was 49 million yuan, +89.4% over the same period. The sharp increase in revenue and profit was mainly due to the increase in the penetration rate of pig seedlings in the large-scale field, and individual products such as circadian subunit vaccine provided a high growth rate; Avian influenza vaccine, etc.) Revenue 92 million yuan, +6.9% year on year, net profit of 2.68 million yuan, +100.9% year on year, turning loss into profit.
Investment suggestions: We believe that in the future, the company will be listed one after another as new products are listed, and measures such as cost reduction and efficiency are further implemented. It is estimated that in 2023-2025, the company's net profit to parent will be 288, 3.82 million yuan, and 510 million yuan respectively (net profit after excluding equity incentive amortization expenses). Based on the closing price on August 31, 2023, the corresponding PE was 36.6, 27.6, and 20.7 times, maintaining the “increase in holdings” rating.
Risk warning: risk of recurrence of animal disease, risk of increased market competition, product development risk, biosafety risk, product quality risk, risk of policy change.