Key points of investment

Launch an equity incentive plan

Event: On December 11, 2023, it was announced that the 2023 stock options and restricted stock incentive plan (draft) were announced. The 100% exercise conditions are based on 2023. The growth rates of deducted non-net profit in 2024, 2025 and 2026 are not less than 25%, 50%, and 70%, respectively.

Over the past few years, the company's COVID-19 vaccine sales have fluctuated, so it is apparent that revenue and profit growth rates have fluctuated greatly. However, at the same time, the company also has a number of major conventional vaccine products, such as the 13-valent pneumonia vaccine and the human rabies vaccine, which have been approved and are in the commercialization stage. The future research pipeline is rich, and the company's growth driving force is strong, and future performance growth can be expected. At this stage, the company's introduction of equity incentives can, on the one hand, motivate the company's employees, and on the other hand, demonstrate confidence in the company's long-term development.

The human rabies vaccine has been approved to improve the product hierarchy and enhance differentiated competitiveness. On September 15, 2023, the company announced that the freeze-dried human rabies vaccine (human diploid cells) of its subsidiary Minhai Biotech has been approved for sale, including the “5-dose method” and “2-1-1” (four-dose method) immunization procedures. Of these, four doses of the human rabies vaccine can reduce the number of vaccinations, improve patient compliance, and have a differentiated competitive advantage.

With the approval of Kangtai Biotech's human rabies vaccine, Kanghua Biotech and Kangtai Biotech are on the market in China. The market pattern is good, and they are jointly accelerating the product promotion process from rabies vaccine (Vero cells) to rabies vaccine (human diploid cells).

Vaccines go overseas, open space, embark on a new journey

On December 11, 2023, Minhai Biotech, a subsidiary of Kangtai Biotech, and Egyptian vaccine company Gennavax Egypt signed the “Authorized Agent and Technology Transfer Agreement for the 13-valent Pneumococcal Polysaccharide Conjugate Vaccine”. The two sides reached a commercial cooperation on agency licensing and technology transfer for Minhai Biotech's 13-valent pneumonia-conjugated vaccine. They will jointly promote the approval and marketing of the finished vaccine in Egypt and the distribution of the original solution locally.

As the penetration rate of domestic vaccines has increased, domestic vaccine companies are already at the stage of “building on the mainland and focusing on overseas”, raising the market ceiling for their own product lines, and going overseas has become a new increase in the number of leading domestic vaccine companies.

Profit forecasting and valuation

We expect the company's revenue for 2023-2025 to be 33.63/41.96/5.048 billion, up 6.52%/24.76%/20.31% year on year; net profit for 2023-2025 will be 9.37/11.93/1,445 billion respectively, corresponding to current PE 35.05x/27.53x/22.73x; maintaining the “increase in holdings” rating.

Risk warning:

The progress of bidding for new products is uncertain, and the progress of research and development of products under development is uncertain.