Core views

On March 8, the company issued the “Notice on the Action Plan for Double Improvement of Quality and Return”. The company is a leading enterprise in the domestic vaccine industry. Sales of products such as PCV13, quadruple vaccine, and hepatitis B vaccine continue to grow, driving the company's performance growth; diploid vaccine will bring additional performance. The company's international business has progressed significantly, and the international market continues to expand.

The company has actively carried out cash dividends and repurchases over the years, and has continued to increase its shares. We are optimistic that the company will continue to enhance investor returns and achieve long-term healthy development while maintaining high-quality development in the future.

occurrences

The company issued the “Notice on the “Double Improvement of Quality Return” Action Plan. On March 8, the company issued the “Notice on the “Double Improvement of Quality Return” action plan, explaining the company's main business, internationalization strategy, operation management, information disclosure, dividends and increase in holdings.

Brief review

The main business is growing steadily, and the product pipeline continues to be rich

As a leading enterprise in the vaccine industry, the company continues to focus on its main business and has developed into an innovative biopharmaceutical enterprise with strong R&D strength, rich product layout, and leading industry scale. The company has a rich product pipeline, including innovative products such as 60 μg recombinant hepatitis B vaccine (Saccharomyces cerevisiae), dual-carrier 13-valent pneumococcal polysaccharide conjugate vaccine (PCV13), acellular haemophilus influenzae type b combined vaccine (quadruple vaccine), and freeze-dried human rabies vaccine (human diploid cells). The company's business continued to develop steadily, with operating revenue of 552 million yuan (2016) since listing to 3.157 billion yuan in 2022, with a compound annual growth rate of 33.73%. Among them, since PCV13 was approved for listing in China in 2021, sales have continued to grow, becoming an important driving force for the company's performance growth.

The company continues to be guided by market demand and R&D innovation, focusing on R&D investment and innovation, and maintaining a high R&D cost rate. The company has a rich research pipeline and has laid out multiple technology platforms and disease types. In particular, it has a leading edge in joint vaccine research and development. In September 2023, the company's freeze-dried human rabies vaccine (human diploid cells) was officially approved for marketing, making it the second approved human diploid vaccine in China. The product uses two immunization procedures, the “5-dose method” and the “2-1-1” (four-needle method), which have good safety, immunogenicity and immunity persistence. The product currently has limited potential competitors, and the competitive landscape is relatively good. In the future, as the products being developed by the company are approved and listed one after another, it will provide an important guarantee for the company's continuous development and further enhance the company's competitive strength.

Continue to step up overseas expansion efforts and steadily advance the internationalization strategy. While deepening the domestic market and continuously optimizing the sales network layout, the company continues to increase its international business expansion efforts and promote the company's products to the international market. Since 2022, the company has successively signed cooperation agreements with partners in more than 10 countries, including Indonesia, Pakistan, Saudi Arabia, Bangladesh, Egypt, and Bahrain, and continues to expand the overseas layout of its products. In October 2023, the company PCV13 obtained Indonesia's “Marketing License”, which indicates that the vaccine has the basic conditions for sale in the Indonesian market. Currently, the company has signed a “Sales Contract” with an Indonesian partner.

Actively carry out cash dividends and repurchases, and continuing to increase holdings reflect confidence in future development. The company has formulated a stable profit distribution policy, actively paid cash dividends, and shared the development results of the enterprise with investors. Since its listing in February 2017, the company has accumulated cash dividends of more than 1.5 billion yuan, accounting for 43.00% of the total cumulative net profit attributable to mother. At the same time, the company increased investor returns by repurchasing the company's shares. From October 2022 to January 2023, the company increased its holdings by a total of 137.57 shares through centralized bidding transactions, with a total increase of 504.967 million yuan, reflecting the company's confidence in future development and recognition of the company's long-term investment value.

Profit Forecasts and Investment Ratings

The company is a leading enterprise in the domestic vaccine industry. It has a rich product layout. Products such as PCV13, quadruple vaccine, and hepatitis B vaccine are expected to rely on their price and quality advantages to achieve continuous sales growth and drive the company's performance growth. Once approved, Diploid Mad is expected to increase the company's performance.

The company's international business has progressed significantly, and the international market is expected to continue to expand. Over the years, the company has actively paid cash dividends, repurchased the company's shares, and continued to increase its holdings, reflecting confidence in future development and recognition of the company's long-term investment value. We are optimistic that the company will continue to enhance investor returns and achieve long-term healthy development while maintaining high-quality development in the future.

We expect the company to achieve revenue of 3.476 billion yuan, 4.284 billion yuan, and 5.220 billion yuan respectively from 2023 to 2025, with year-on-year increases of 10.1%, 23.3% and 21.8%, respectively. Net profit attributable to mother was 898 million yuan, 1,028 million yuan, and 1,286 million yuan, respectively. The equivalent EPS was 0.80 yuan/share, 0.92 yuan/share, and 1.15 yuan/share, respectively. The corresponding PE was 28.5X, 24.9X, and 19.9X, respectively, maintaining the purchase rating.

Risk analysis

1. The speed of release and approval falls short of expectations: The company continues to promote admission after the launch of PCV13. If subsequent admission and release progress falls short of expectations, it will affect the company's expected performance and valuation. The company's Diploid Mad Plant is expected to be officially launched and sold in 2024. If promotion access and sales progress in various regions fall short of expectations, it will affect the company's future expected performance.

2. Risk of product price fluctuations: Prices of listed products may fluctuate. If the price drops significantly, it will affect the company's revenue and profit expectations, which in turn affects valuation.

3. Product safety risk: Vaccines have certain safety risks due to their special biological characteristics. If a vaccine safety incident occurs, it will not only adversely affect the operation and production of the enterprise itself, but may also cause fluctuations in the vaccine industry.