Performance summary: For the full year of 2023, the company achieved operating income of $52,918 billion (+38.30%), net profit of 8.070 billion yuan (+7.04%), net profit of 7.915 billion yuan (+5.40%); realized gross profit margin of 26.92% (-6.71pct), net profit ratio 15.25% (-4.45pct), sales expense ratio 5.24% (-0.60pct), management expense ratio of 0.74% (-0.24pct), R&D expense ratio 1.83% (-0.40pct) , financial expense ratio 0.09% (+0.05pct). The company's rapid revenue growth mainly benefited from agent product sales. In 2023, the company's agent product revenue was 51,885 billion yuan (+48.35%), of which 36.55 million nine-price HPV were issued in batches (+136.16%). Fluctuations in gross margin were mainly affected by changes in product revenue structure.

Partnering with GSK to proxy the shingles vaccine opens up room for growth. In October 2023, the company and GSK reached a cooperation. The company will be the exclusive agent in mainland China to promote and sell the recombinant shingles vaccine. The agreement stipulates a minimum annual purchase amount for the next three years, and the two sides reached preliminary intentions for the RSV vaccine. Currently, only 2 shingles vaccines have been approved for marketing in China. Global sales of the GSK shingles vaccine in 2023 are about 4.3 billion US dollars. Based on the company's channel advantages and strong sales capacity, the shingles vaccine is expected to open up room for the company's performance growth.

Acquired Chenan Biotech to expand its commercial footprint. According to the company's announcement, in November 2023, the company signed the “Chenan Biotech Intentional Acquisition Agreement”. Chenan Biotech is a biopharmaceutical company based on a recombinant protein technology platform, focusing on metabolic diseases such as diabetes and obesity, forming a clear pipeline layout of GLP-1 similar drugs and insulin analogs, and has 6 drug candidates that have entered clinical trials. The company laid out biopharmaceuticals through investment and mergers and acquisitions, and the business layout was further expanded.

Profit forecast and rating: In 2024-2026, the company is expected to achieve revenue of 601.19/663.59/72,567 billion yuan, up 13.6%/10.4%/9.4% year on year; net profit to mother of 90.30/104.96/12.315 billion yuan, up 11.9%/16.2%/17.3% year on year. Based on the company's continued release of nine-valent HPV, the shingles vaccine market has huge potential and maintains a “buy” rating.

Risk warning: risk of product price changes, increased risk of market competition, risk of changes in industry policies