Introduction to this report:
The company's 2023 performance is in line with expectations. With the construction of new pulping stations one after another, pulping volume has entered a new cycle of growth and maintained an increase in holdings rating.
Key points of investment:
Maintain an increase in holdings rating. In line with the influenza vaccination trend, the 2024-2025 EPS forecast was slightly lowered to 0.88/1.04 yuan (originally 0.97/1.19 yuan), and the 2026 predicted EPS was added to 1.17 yuan. The 2024 target PE was given 31X according to the reference sector center, maintaining the target price of 27.28 yuan, and maintaining the increase rating.
The performance was in line with expectations. The company achieved revenue of 5.342 billion yuan in 2023 (+18.3% YoY, same below), net profit of 1,482 billion yuan (+37.7%) after deducting non-net profit of 1,267 million yuan (+41.8%); 2023Q4 achieved revenue of 1,429 million yuan (+56.2%), net profit of 414 million yuan (+136%), net profit of 361 million yuan (+167%). 2023Q4 growth mainly comes from influenza vaccine and blood products business revenue of about 737 million yuan in 2023Q4 ( +13.5%), which was basically the same from month to month.
Pulp harvesting has entered a new growth cycle. Blood products had revenue of 2,926 billion yuan (+9.2%) in 2023, and gross margin increased 2.04pp to 54.34% year-on-year, driven by demand. The company currently has 32 pulp stations. With 25 old pulp stations excavated and 4 new pulp stations opened one after another, the Dengzhou pulp mill reached 1,342 tons (+19.6%) in 2023. The Dengzhou pulp station was certified in February 2024. The Xiangcheng and Qi County pulp stations are expected to be completed in the first half of 2024, and the pulping volume is expected to maintain a high growth rate. The new plant with a production capacity of 1,860 tons is undergoing equipment installation and commissioning. After completion, it is expected to match the company's pulp harvesting potential and help the blood products business enter a new growth cycle.
Recoverability of influenza vaccines has increased, and there is great potential to increase vaccination rates. The vaccine business achieved restorative growth in 2023, with revenue reaching 2.405 billion yuan (+32.3%). Compared with the influenza vaccination rate of 50% or more in developed countries, China is only about 3%, and the market potential is huge. As a domestic influenza vaccine leader, the company is expected to fully grasp the opportunities brought by market growth. Newly approved tetanus and rabies are also expected to contribute to the increase.
Risk warning: Terminal demand falls short of expectations, and the increase in pulp collection falls short of expectations