Revenue continued to grow in 2023, and operating cash flow improved markedly. The company's revenue in 2023 was 1.58 billion yuan, up 9% year on year, net profit to mother was 510 million yuan, down 15% year on year, net profit after deducting non-return to mother was 540 million yuan, down 0% year on year, and operating cash flow was 570 million yuan, up 194% year on year.

24Q1 received an initial payment of $13.5 million. The company received a down payment of $15 million from HillEvax on March 26, with a net payment of $13.5 million. The company's 2024Q1 revenue was 310 million yuan, up 12% year on year, net profit to mother was 150 million yuan, up 42% year on year, after deducting non-net profit of 150 million yuan, up 58% year on year, and operating cash flow was 98.59 million yuan, up 484% year on year.

Hexavalent norovaccine collaborates with HillEvax to innovate globally. The company signed an “Exclusive License Agreement” with HillEvax on January 6, 2024. The company authorized HillEvax to develop, produce and commercialize the recombinant hexavalent norovirus vaccine and its derivatives in regions other than China (including Hong Kong, Macao and Taiwan). The transaction amount includes a down payment of US$15 million, development and sales milestone payments of up to US$255.5 million, and royalties as a single-digit percentage of actual annual net sales. This overseas authorization helps advance the process of R&D, production and commercialization of recombinant hexavalent norovirus vaccines at home and abroad, rapidly promote the products globally, build domestic and international markets for recombinant hexavalent norovirus vaccines, and provide high-quality vaccine products to patients around the world. It also highlights the company's leading R&D and innovation capabilities and the proper layout of the R&D pipeline.

Profit forecasting and valuation. We expect the company's net profit to be returned to mother in 2024-26 to be 750 million yuan, 800 million yuan, and 90 million yuan respectively (the original 2024-25 forecast was 710,000 yuan and 8.3 million yuan), with year-on-year increases of 48%, 9%, and 11%, respectively. Referring to comparable companies Kangtai Biotech and Zhifei Biotech, PE in 2024 was 19.1 times and 7.9 times, respectively.

The company's rabies vaccine continues to be released. The Noro vaccine has entered the global clinical phase. We gave the company 14 times P/E in 2024 (originally 18x in 2023), with a target price of 78.35 yuan, maintaining a “superior to market” rating.

Risk warning. Accounts receivable, risk of inventory impairment, risk of slowing diploid rabies vaccine release, risk of Norovirus vaccine development.