23Q4 profit under pressure, maintaining a “buy” rating
Keqian Biotech released its annual report. In 2023, it achieved revenue of 1,064 million yuan (yoy +6.27%), net profit to mother of 396 million yuan (yoy -3.32%), and deducted non-net profit of 371 million yuan (yoy -2.79%). Among them, Q4 achieved revenue of 237 million yuan (yoy -24.82%, qoq -19.95%) and net profit to mother of 38.5068 million yuan (yoy -69.46%, qoq -67.44%). We expect the company's 2024/25/26 net profit to be 4.52/5.65/ 683 million yuan, corresponding EPS of 0.97/1.21/1.46 yuan, respectively. Referring to the company's 2024 Wind, the average PE value is 17 times. Considering the company's obvious pig breeding moat and strong R&D strength, single products such as porcine infectious gastroenteritis, swine epidemic diarrhea, porcine delta coronavirus triple vaccine and round branch dual vaccine are expected to be launched in 2024 and contribute an additional increase to the company's profit in 2024. 25 times PE, target price 24.25 yuan, maintaining the “buy” rating.
23Q4 sales declined & depreciated, profit declined year-on-year
In 2023, the company achieved revenue of 1.1 billion yuan, +6% year-on-year. Among them, pig vaccines achieved revenue of 973 million yuan, +3.89% year over year, mainly driven by a 23% increase in sales of live vaccines for pigs (sales of inactivated vaccines for pigs fell 9%). Revenue from poultry vaccines, pet vaccines, diagnostic reagents, and microecological preparations all grew by more than 30% year on year. However, against the backdrop of both the price and cost of pig vaccine products being pressured, the company's gross margin fell 1.52 pct to 72% year on year in 2023, leading to a slight decline in net profit to the mother. In 23Q4, the company's profit declined significantly, or was mainly due to factors such as a significant decline in sales of pig vaccine products and compounding the company's impairment losses. On the one hand, the 22Q4 base was relatively high, while the peak season for pig prices in 23Q4 was not strong, and the breeding side was less motivated to use medication, which in turn led to a significant decline in sales of the company's pig vaccine products, causing the company's 23Q4 revenue and gross profit to drop 25% and 34% year-on-year respectively; on the other hand, the company accrued 10.92 million yuan in asset impairment losses and 55.63 million yuan in credit impairment losses in 23Q4, a total increase of 60.77 million yuan over the same period last year.
Strong R&D strength, many new products under development
The company continues to promote the development of new products. In terms of vaccines for pigs, 3 new products, including the round branch double vaccine and the mycoplasma parporcine double vaccine, are about to obtain new veterinary drug certificates. Pseudorabies (HB-98 strain) and swine infectious gastroenteritis, porcine epidemic diarrhea, and porcine delta coronavirus triplets have entered the review and testing stage, and products such as swine fever and pseudoclonal double vaccines are also being developed; various products such as poultry vaccines, pet vaccines (cat triplets, etc.), and ruminant vaccines are also being developed. The launch of new products is expected to continue to contribute to the company's performance growth.
Target price of 24.25 yuan, maintaining “buy” rating
The anti-plague vaccine from various domestic units is undergoing emergency review, and the production and sale of the anti-plague vaccine is expected to drive the expansion of the pig seedlings market. We expect the company's net profit for 2024/25/26 to be 4.52/563 million yuan, with a target price of 24.25 yuan, maintaining a “buy” rating.
Risk warning: The recovery of pig stocks fell short of expectations, market-based sales fell short of expectations, and competition in the animal vaccine market intensified.