Matters:
(1) The company released its 2023 annual report, achieving full year revenue of 52,918 billion yuan (+38.30%), net profit to mother of 8.070 billion yuan (+7.04%), and net profit of 7.915 billion yuan (+5.40%) after deduction. Dividend plan: 8.00 yuan (tax included) for every 10 shares.
(2) The company released its 2024 quarterly report. Q1 achieved revenue of 11.396 billion yuan (+2.00%), realized net profit to mother of 1,458 billion yuan (-28.26%), and net profit after deducting non-return to mother was 1,455 billion yuan (-28.36%).
Ping An's point of view:
HPV vaccine release drives 23-year growth
In '23, the company's independent products achieved revenue of 1,028 billion yuan (-68.70%), and the gross margin of the sector was 89.38% (+2.90pct). The change was mainly due to the fact that COVID-19 vaccines were still sold a lot during the same period last year. The company's agent products achieved revenue of 51,885 billion yuan (+48.35%), and the gross margin of the sector was 25.68% (-2.98pct). Further distribution of HPV vaccines is the core driving force for the rapid growth of surrogate vaccines.
Judging from the batch issuance situation, in 23, 10.34 million doses of the 4-valent HPV vaccine were issued in batches (-26.27%), and 36.55 million doses of the 9-valent HPV vaccine were issued in batches (+136.16%). The increase in sales share of 9-valent products also confirmed the decline in the gross margin of agent products. 7.17 million doses of the RV vaccine were issued in batches throughout the year (-18.72%), and it is estimated that sales in 23 were basically the same as the previous year.
Sales remained flat in 24Q1, and the amount of shingles vaccine gradually increased after Q2
24Q1 achieved revenue of 11.396 billion yuan (+2.00%) and gross margin of 26.05% (YOY-4.25pct, QoQ +3.03pct). It is estimated that the 9-valent HPV vaccine remains at a high level of sales. In terms of cost rates, Q1 sales, management, and R&D expenses were 4.34% (+0.35pct), 0.97% (+0.26pct), and 2.05% (+0.14pct), respectively, all with a slight increase. In addition, the 24Q1 company lost 341 million yuan in credit impairment due to inventory deductions, up from 150 million yuan in the same period last year, which also had an obvious negative impact on profit growth. After 24Q2, the GSK shingles vaccine represented by the company will be sold in more batches. Zhifei's minimum annual purchase amount for the next 3 years is 34.40/68.80/10.320 billion yuan, respectively. It is another very heavy product that the company will sell after the HPV vaccine, and is expected to continue to contribute to increased performance over the next few years.
Maintain a “Recommended” rating. According to the company's vaccine promotion schedule and agent shingles vaccine sales forecast, the 2024-2025 profit forecast was adjusted and the 2026 profit forecast was increased to 96.16 billion yuan, 116.50, and 13.357 billion yuan (originally 2024-2025, 10.6.63 billion yuan and 12.865 billion yuan). According to the current forecast, the company's valuation was 8.7xPE in '24, and the valuation converged with pure channel companies. The potential value of self-produced products such as microcards was not fully reflected, and the “recommended” rating was maintained.
Risk warning: 1) New product launch approval is uncertain. If progress falls short of expectations, release may be delayed; 2) The company's product promotion or production does not meet expectations, which may affect business growth; 3) Vaccine products have a wide audience. If negative events occur in the industry, it may cause the public to distrust the vaccine, which in turn affects demand in the vaccine market.