Incident: The company released the “Double Improvement of Quality and Return” action plan, explaining various measures such as historical dividends, R&D investment, and R&D innovation, demonstrating the company's confidence in long-term development.

The value of the platform was highlighted, and cooperation with GSK opened up a second growth curve for the vaccine sector. In October 2023, the company signed an agreement with GSK. GSK will exclusively supply recombinant shingles vaccine to Zhifei Biotech and license Zhifei Biotech to market, promote, import and distribute related products within the cooperative region according to the agreement.

In addition, the agreement also stipulates that GSK will prioritize becoming Zhifei Biotech's exclusive partner in the joint development and commercialization of any RSV vaccine for the elderly within the cooperation region. GSK currently has a rich pipeline of B-group meningitis vaccine (phase III), ABCWY pentavalent meningitis conjugate vaccine (phase III), malaria vaccine (phase II), novel chickenpox vaccine (phase II), Shigella vaccine (phase II), 24-valent pneumonia vaccine (phase II), measles/chickenpox vaccine (phase II), etc. At the same time, global sales of the GSK shingles vaccine and RSV vaccine in '23 were £3.45 billion and £1.24 billion respectively. The in-depth cooperation between MSD and GSK and Zhifei Biotech once again verified Zhifei Biotech's strong sales capabilities and established the company's position in the vaccine industry in China. The possibility of further cooperation in the future is worth looking forward to. We are optimistic about the company's market prospects in the vaccine field.

Start an in-vitro incubation model for equity investment, advance from vaccines to biopharmaceuticals, and open up a long-term ceiling. In November 2023, the company plans to acquire 100% of Chen An Biotech's shares. After the acquisition is completed, the company's business will expand to the field of metabolic diseases such as diabetes and obesity. The company will implement an innovative R&D strategy of “mainly independent research and development, supported by cooperative research and development, and supplement investment incubation”, incubate and cultivate promising preventive and therapeutic biotechnology and innovative products through an in-vitro investment platform, and move towards the goal of a “world-class national biopharmaceutical enterprise”. We are optimistic about the company's layout and growth ceiling other than vaccines.

Profit forecasting and investment advice. The company is the leader in domestic vaccine sales. The HPV vaccine is currently growing rapidly, and considering that the shingles vaccine is expected to gradually contribute revenue and profit after 2024, we expect the company's performance to be 85/110/13.1 billion yuan in 23-25, respectively, corresponding to PE 14/11/9 times, maintaining a “buy” rating.

Risk warning: risk of increased market competition; risk of R&D or production falling short of expectations; risk of product sales falling short of expectations.