Cat Sanlian passed the emergency evaluation, and the company's product quality advantages are remarkable

The triple inactivated vaccine for feline panleukopenia-calicitis-calicitis-rhinotracheitis (708 strains +60 strains +64 strains) jointly developed by the company and its wholly-owned subsidiary Huizhong Animal and others passed the emergency evaluation organized by the Ministry of Agriculture and Rural Affairs on December 6, 2023. All three strains of the vaccine are selected from hundreds of popular strains isolated in China, and have good immunogenicity and immune cross-protection. Compared with several other domestic vaccines, the company's cat triplets can also produce antibodies on the 7th day after the second exemption. At the same time, the vaccine is valid for 27 months, which can meet customer needs for product efficacy, safety and ease of use, further demonstrating the company's innovative strength.

The launch of the triple cat vaccine still needs to go through a temporary veterinary drug product approval number application process. The company expects to go public early next year, enhancing the competitiveness of the pet sector.

Or break the situation where imported vaccines are alone and open up the blue ocean market for pet vaccines. Currently, China's domestic cat triple vaccine is still a blank market. Miao Sanduo from Shuo Teng in the US is the only domestic special vaccine that has received official approval from the Ministry of Agriculture. It used to be “hard to find a single dose” in domestic supply due to transportation problems, so there is no time to delay domestic substitution. Currently, the overall penetration rate of domestic pet vaccines is less than 3%, which is a big gap with 40% of overseas developed countries. The number of domestic pet cats in 2022 is 65.36 million. According to the average increase of more than 6 million cats per year over the past four years, we assume that the number of pet cats in the future will be 70 million, and the number of kittens born every year will be 6 million. Based on this estimate, when the penetration rate increases to 40%, the market size of the triple cat vaccine is expected to increase dramatically to about 1.3 billion yuan. The first batch of companies to launch products will be the first to complete a breakthrough in import substitution, increasing vaccine penetration and market share Dividends are reaped under the dual effects of preemption.

Integrate pet business assets to bring comprehensive capabilities to a new level

In order to efficiently integrate resources and promote business collaboration with pet vaccines, pharmaceuticals, and non-drug health products, the company purchased and sold assets related to the pet business in July 2023, including the acquisition of 100% of Leppet Health's shares at 23.5 million yuan (90% from Century Mengbang, 10% from Jidi Biotech); the acquisition of 100% of Hippet Network's shares at a price of 470,000 yuan (all from Century Mengbang); and the sale of 30% of Century Mengbang's shares at a price of 3.456 million yuan (all from Century Mengbang) (all from Century Mengbang). After the transaction is completed, the company will no longer hold shares in Century Mengbang, and Happy Pet Health and Hip Pet Network will become a wholly-owned subsidiary of the company. Among them, Lepong Health is mainly engaged in R&D, production and sales of pet non-drug health products and prescription food. After nearly three years of development, current revenue growth has accelerated, showing a good development trend. Hippet's network business is mainly pet smart products and related network services, and the pet vaccine and drug business carried out by Huizhong Dongbao, a wholly-owned subsidiary of the company, has a high degree of overlap with sales channels and end customers.

Investment advice

Net profit is expected to be 217/3.02/363 million yuan from 2023 to 2025, respectively, with a year-on-year increase of 24.43%/39.56%/20.12%, respectively, and corresponding PE of 37/27/22 times, respectively. Considering that the company's P3 laboratory review is imminent, the expansion of the Nanjing avian influenza vaccine production line is about to release production capacity, and at the same time, the non-plague vaccine is progressing in an orderly manner in the emergency rating process, it is expected that the new cycle will show greater flexibility and maintain the “buy” rating.

Risk warning: animal disease outbreak; product development process falls short of expectations; downstream demand falls short of expectations