Incident: The company released its 2023 annual report, achieving operating income of 1,825 million yuan, +70.30%; net profit to mother of 501 million yuan, +175.98%; net profit after deducting non-return to mother of 493 million yuan, +195.86% year over year; net operating cash flow of 255 million yuan, +540.93% year over year; and EPS 1.21 yuan. The results are in line with market expectations.
Comment:
The herpes zoster vaccine strongly drove growth, and the cash flow situation improved dramatically: 2023Q1-Q4, the company's revenue in a single quarter was 1.79/3.80/6.84/581 million yuan, respectively, +30.21%/25.44%/60.91%/182.65%; net profit to mother was 0.18/0.93/2.20/170 million yuan, +6.15%/65.32%/58.92%/661.07%; net profit after deducting non-return mother of 0.18/0.88/2.19/168 million yuan, same as Ratio +8.33%/61.56%/70.60%/604.01%. The company's sharp increase in revenue and profit in 2023 was mainly due to the approval for marketing of the shingles vaccine and the implementation of access and sales in various regions, achieving operating income of 883 million yuan and a gross profit margin of 97.50%. Net operating cash flow improved substantially, mainly due to an increase in sales repayments.
Continue to invest heavily in R&D to open up future space for innovative vaccines: In 2023, the company invested 199 million yuan in R&D, accounting for 10.89% of revenue. As of the 2023 annual report, the company has a total of 16 research projects, including 6 projects that have been approved for clinical trials and registration. The progress of the main research projects is that the liquid nasal spray influenza vaccine is about to apply for marketing approval, and the progress of the project is basically in line with the company's expectations; rabies monoclonal is undergoing phase I clinical trials; tetanus monoclonal has obtained a “Pharmaceutical Clinical Trial Approval Notice” to prepare for phase I clinical trials. As the company's innovative vaccine research and development work continues to advance, the future product lineup will be richer, laying a solid foundation for the company's long-term performance growth.
Profit forecast, valuation and rating: Considering the increasingly intense competition pattern for some of the company's vaccine varieties, the 2024-2025 net profit forecast was lowered to 6.84/941 million yuan (the original forecast was 715/971 million yuan, down 4%/3%, respectively), and the additional forecast was 1,185 billion yuan for 2026, up 36.55%/37.51%/26.02% year on year. The PE corresponding to the current price was 27/20/16 times, maintaining the “buy” rating.
Risk warning: Risk of product sales falling short of expectations; risk of R&D approval progress falling short of expectations.