The company is an innovative biopharmaceutical R&D company dedicated to developing biopharmaceuticals with differentiated competitive advantages. It focuses on the development and industrialization of biopharmaceutical products in various fields of treatment and prevention, such as malignant tumors, self-immunity, infectious diseases, and genetic diseases, and has independently developed diverse and unique biopharmaceutical product pipelines such as monoclonal antibodies, recombinant proteins, and innovative vaccines. The company has approved 4 products for marketing, namely: recombinant factor 8 to treat haemophilia A, CD20 monoclonal to treat lymphoma, bevacizumab to treat solid tumors, and adalimumab to treat spontaneous diseases; in addition, 3 COVID-19 recombinant protein vaccines have been urgently authorized; and a PD-1 monoclonal antibody has been declared for marketing. The company also has a number of innovative products in clinical or pre-clinical stages.

The eight factors of restructuring have obvious competitive advantages. After listing, the import monopoly was broken, and volume was quickly expanded. The eight factors of restructuring independently developed by the company were approved for listing in 2021. It is the first domestic restructuring with eight factors. It broke the import monopoly, rapidly expanded after listing, and ranked first in the H1 market share in 2023. The number of domestic patients in the hemophilia A market has reached 144,000, less than 50,000 people have been treated, and the per capita usage is far less than the amount used for preventive treatment. In the future, as reimbursement policies for hemophilia patients improve and patients' awareness of prevention and treatment increases, the domestic eight factor market is expected to continue to rise. We believe that the short-term domestic 8-factor market is still dominated by the short-acting restructured 8-factor market, and Shenzhou Cell has significant advantages in terms of production capacity, quality, and sales strategy. The company is also actively expanding overseas markets. Currently, it has signed contracts with partners in 15 overseas countries, and it is expected that it will be listed in overseas markets one after another starting in 2025. According to our estimates, the peak sales of the eight factors of the company's restructuring is expected to reach 6 billion yuan.

The world's first 14-valent HPV vaccine has entered phase III clinical trials. Currently, the HPV vaccine penetrates less than 20% among women aged 9-45. Compared with the penetration rate in the US, there is still room for penetration. Furthermore, there is still an empty market for domestic male indications, which has great potential for development. Five HPV vaccines have been marketed in China, mainly the bivalent HPV vaccine, the quadrivalent HPV vaccine, and the nine-valent HPV vaccine. The SCT1000 product independently developed by the company is the world's first 14-valent HPV vaccine to enter clinical research. It covers all 12 high-risk carcinogenic HPV virus types and the 2 HPV virus types that mainly cause genital warts. Compared with the lower-cost HPV vaccine, the high-cost vaccine has a higher protection efficiency. Currently, the company's 14-valent HPV has entered phase III clinical phase.

First coverage, giving a “buy” rating. The company is expected to achieve operating income of 18.87/26.96/3685 billion yuan in 2023-2025, +84.5%/+42.8%/+36.7% year-on-year, and net profit due to mother of -396 million yuan in the 2023 performance report. We expect the company to start to achieve profit in 2024 and 2025, net profit of 294 million yuan and 626 million yuan, respectively. The current stock price corresponds to 2024-2025 PE is 65X/30X. Using the P/S relative valuation method, it was determined that the market value of Shenzhou Cell is 29.6 billion, which has 63% upside compared to the current market value (March 28). It was covered for the first time, giving it a “buy” rating.

Risk warning: Risk of sales falling short of expectations, risk of R&D failure, and competitive risk due to technology iteration.