Core viewpoints

In the first three quarters of 2023, the company achieved operating income of 1.219 billion yuan, an increase of 9.98% over the same period last year, and a net profit of 288 million yuan, an increase of 37.24% over the same period last year. 2023Q3 realized revenue of 534 million yuan, an increase of 14.52% over the same period last year, an increase of 66.59% over the previous year, and a net profit of 154 million yuan, an increase of 46.38% and 455.17%, respectively. In terms of products, the vaccine revenue of 2023Q3 pig market increased by 31% compared with the same period last year, of which the income of foot-and-mouth disease vaccine increased by more than 17% compared with the same period last year; the income of non-foot-and-mouth disease vaccine increased by 49% over the same period last year. Among the non-foot-and-mouth disease vaccines, the total income of round ring vaccine and round branch vaccine increased by about 180 million yuan, 43% and 54% respectively, and that of brucellosis vaccine exceeded 90 million yuan, up 177%. In 2023, the company's "non-five" strategy has achieved remarkable results, and the proportion of products has been increasing continuously. Getting rid of the dependence on foot-and-mouth disease vaccine has contributed to the high growth of the company's performance against the trend. At the same time, the company has actively laid out the research and development of new products, and large products are expected to promote the continuous growth of the company's performance.

Event

The company disclosed that in the first three quarters of 2023, the company realized operating income of 1.219 billion yuan, an increase of 9.98% over the same period last year, and a net profit of 288 million yuan, an increase of 37.24% over the same period last year. 2023Q3 realized revenue of 534 million yuan, an increase of 14.52% over the same period last year, an increase of 66.59% over the same period last year, and a net profit of 154 million yuan, an increase of 46.38% and 455.17% over the same period last year.

Brief comment

1. Non-foot-and-mouth disease vaccine is growing rapidly, and the company's performance goes against the trend of high growth. According to the product, 2023Q3 pig market vaccine income increased by 31%, of which, foot-and-mouth disease vaccine revenue increased by more than 17%. Non-foot-and-mouth disease vaccine revenue increased by 49%. Among non-foot-and-mouth disease vaccines, the total income of circus and round branch vaccine was about 180 million yuan, that of pig ring vaccine was 43%, and that of round branch vaccine was 54%. The income of brucellosis vaccine exceeded 90 million yuan, an increase of 177% over the same period last year.

In terms of profit margin, the company's gross sales margin was 60.08% (year-on-year + 6.58pcts) and net sales margin was 23.44% (year-on-year + 4.99pcts) in the first three quarters of 2023. 2023Q3's gross profit margin is 63.24% (year-on-year + 7.12pcts, month-on-month + 8.00pcts), and net sales margin is 28.72% (year-on-year + 6.79pcts, month-on-month + 21.85pcts). It is mainly the company's efforts to promote new products, increase the proportion of high gross margin products, and reduce costs and increase efficiency.

In terms of expenses, 2023Q3's sales expenses are 97.862 million yuan (year-on-year + 16.51%), management expenses are 34.0675 million yuan (year-on-year-0.64%), financial expenses are-14.2075 million yuan (year-on-year-28.86%), and R & D expenses are 44.7017 million yuan (year-on-year + 27.61%).

2. Further promote the diversification strategy, continue to increase the R & D layout of new products, and achieve remarkable results in the product diversification strategy, forming a model of common growth of multiple blockbuster products supported by foot-and-mouth disease. Cultivate a needle of three prevention, porcine ring disease, porcine mycoplasma pneumonia, porcine blue ear, brucellosis vaccine and other explosive products to get rid of the over-dependence on a single foot-and-mouth disease product. Non-foot-and-mouth disease vaccine revenue accounted for more than 52% in the first three quarters of 2023, an increase of about 16pcts over the same period last year, reaching the company's planned 2025 target ahead of schedule, promoting the company to achieve high growth against the trend under the influence of factors such as the depressed downstream breeding market, intensified competition in the industry and shrinking political adoption. In terms of new product layout and main products, the company's listed live brucellosis vaccine (Rev.1 strain), round branch vaccine, Brucella gene deficient live vaccine (M5Mu90 △ 26 strain) and other products will continue to increase next year. New product layout, including live bovine mycoplasma vaccine, bovine nodular dermatosis inactivated vaccine (NMG strain, suspension culture), classical swine fever E2 protein subunit vaccine and so on are all large single product layout. The African classical swine fever subunit vaccine is currently in the process of declaration. In addition, the company actively arranges the pet section and carries out all aspects of the layout of vaccines, health products and chemicals. Cat Sanlian is currently in the stage of emergency evaluation. The company continues to deepen its cooperation with leading scientific research institutions and industrial companies, and the company is expected to accelerate the outbreak of new products next year, thus promoting continuous growth.

3. Profit forecast and rating: in 2023, the company's "non-five" strategy has achieved remarkable results, and the proportion of products has been increasing continuously, which has got rid of the over-reliance on a single foot-and-mouth disease vaccine, helping the company's performance to grow against the trend. At the same time, the company is actively laying out new product research and development, and large products are expected to promote the company's continuous growth. Considering the pulling effect of the company's diversified product strategy on performance, under the expectation of the rebound of pig prices in the lower reaches of Q4, we raise the company's revenue and profit forecast. It is estimated that the company's operating income in 2023-2025 will be 2.784 billion yuan (the previous value is 19.42 shock 2.2708 billion yuan), and the mother net profit is 3.98 billion yuan / 577 million yuan (the previous value is 402pm 503 million yuan). The EPS is 0.35, 0.43 and 0.51 respectively, and the corresponding PE is 25.38x/21.14x/17.50x, maintaining the "buy" rating.