Events: The first three quarters of 2023 achieved revenue of 352 million yuan, a year-on-year decrease of 5%; realized net profit of 30.28 million yuan, a year-on-year decrease of 24.6%; 23Q3 achieved revenue of 119 million yuan in a single quarter, a year-on-year decrease of 13.7%; and realized net profit of 1.74 million yuan, a year-on-year decrease of 81%.

Short-term operations are under pressure, and multi-product research and development is progressing smoothly. In 23Q3, the company's revenue was 119 million yuan, down 28.3% month on month and 13.7% year on year. Short-term sales of the company's core product, tetanus vaccine, were under pressure. In February 2023, the company's next core cash flow product, AC-Hib, was accepted. It has now passed on-site verification and is currently undergoing technical review. It is expected that 24Q1 will be approved. It is expected that 24Q1 will be approved, becoming the first domestic listed product of this variety. It is expected to become another billion-grade product for the company after tetanus, providing follow-up impetus for the company's innovative vaccine research and development. In July 2023, the tetanus vaccine pre-encapsulation specification was officially approved and will become the main marketing specification in the future. In terms of traditional vaccine development, the company's influenza vaccine submitted a pre-clinical communication application to the CDE at the end of September 2023. The company's influenza vaccine uses MDCK cell suspension technology. Through large-scale cultivation in bioreactors, the effects of higher production yield, shorter production cycle, and lower production cost can be achieved. In terms of innovative vaccines, the phase III clinical trial of the company's Staphylococcus aureus vaccine has now been enrolled in more than 50 hospitals nationwide, and is expected to be obliterated in the medium term by the end of this year. The group A streptococcal vaccine (GAS vaccine), which the company collaborated with Griffith University in Australia, is a class 1 original innovative drug in the world, and has recently submitted a pre-clinical communication application to CDE.

Staphylococcus aureus phase III clinical trials progressed smoothly, and a major Helicobacter pylori vaccine was added to the pipeline. 23 R&D expenses for the first three quarters were RMB 80.28 million, up 14.4% year on year. In the first half of the year, the company's R&D pipeline was continuously improved, adding pre-clinical product pipelines such as quadrivalent influenza virus lytic vaccine (MDCK cells), group A streptococcus vaccine, and oral recombinant Helicobacter pylori vaccine. Among them, the Helicobacter pylori vaccine is expected to become a super heavy variety comparable to HPV in the future; it is expected that within the next 2 years, these new research and development projects will enter clinical research one after another to form a matrix of superdrug-resistant vaccines for clinical use.

Profit forecasting and valuation suggestions: The company focuses on clinical super-resistant bacterial vaccine research and development, has global innovative attributes, solves global clinical pain points, and will form a research and development matrix for multiple superbacterial vaccines in the future. Currently, the company mainly relies on continuous tetanus release, driving significant revenue growth. Since the company will continue to increase investment in clinical research and development in the future, it will inevitably have a great impact on short-term profit perception data. We expect the company to achieve operating income of 59/8.0/1.14 billion yuan and net profit of 0.5/111/160 million yuan in 2023/2024/2025, and maintain the “buy” rating.

Risk warning: Risk of failure or progress of development of products under development; risk of existing product sales falling short of expectations; risk of inclusion of AC conjugate vaccine and Hib conjugate vaccine in immunization planning; increased risk of market competition.