Incidents:

On July 8, Hualan Biotech issued an announcement regarding plans for the chairman, actual controller, and some directors to increase their holdings of the company and subsequent plans for the chairman, actual controllers, some directors, and senior management to increase their holdings.

The company increased its shareholding by 1.22-2.42 million in six months from July 8:

Based on confidence in the company's future development prospects and recognition of long-term value, the company's actual controller and some directors and executives plan to increase their holdings of the company by 1.22-2.42 million shares within 6 months from July 8. Of these, the chairman and actual controller Ankang plan to repurchase 1-2 million shares. On July 8, Chairman and Actual Controller An Wenqi and Director An Wenqi increased their holdings of the company by 0.45 million shares and 10,000 shares respectively. The average transaction price was about 15.03 yuan/share. At the same time, the company made it clear that the directors, supervisors, and executives who have increased their holdings will not reduce their holdings of the company's shares during the increase period and within six months after the completion of the increase plan.

Pulp collection is expected to continue to grow at a high rate, and batch issuance resumed good growth in the second quarter:

In May of this year, the Xiangcheng Single Plasma Collection Station was officially certified for mining. Up to now, the company has completed mining at all 7 pulp stations approved in Henan in the 14th Five-Year Phase, laying a solid foundation for the continuous good growth of the pulping side in recent years. The company's slurry production reached 1,342 tons in 2023. Henan Province has a large population base and large pulp harvesting potential. With the joint efforts of new and old pulping stations, the company is expected to achieve double-digit growth in 2024. Judging from the statistics of batches issued by the Central Inspection Institute in the second quarter, Hualan Bioalbumin Q2 was issued in batches of 50, and Jing Jing was issued in batches of 31. The number of batches issued increased by 9 and 5, respectively, over the same period last year. Among the exempted varieties, Crazy Exemption, and Exemption B Q2 were approved and issued 16 batches, 10 batches, and 1 batch respectively. Among factor products, Eight Factor, PCC, and Fibrinogen Q2 were approved and issued in 26 batches, 11 batches, and 6 batches, respectively.

Prices of influenza vaccines have been lowered, and penetration is expected to increase

In the first half of 2024, the vaccine company's quadrivalent influenza vaccine was issued in 54 batches, and the trivalent influenza vaccine was issued in 4 batches. On June 5, the company issued an announcement on price adjustments for major products: quadrivalent influenza virus lytic vaccine (adult dosage, prefilled 0.5ml/tube) to 88 yuan/tube; quadrivalent influenza virus lysis vaccine (adult dosage, 0.5 ml/bottle) adjusted to 85 yuan/bottle; quadrivalent influenza virus lytic vaccine (children's dosage, prefilled 0.25ml/bottle) adjusted to 128 yuan/tube. Compared to the previous tender price, the price of the quadrivalent influenza vaccine dropped by about 30%. The penetration rate of influenza vaccines in China is low, and there is plenty of room for improvement.

Investment advice:

We expect the company's net profit to be returned to mother in 2024-2026, respectively

1.688/1.923/2.152 billion yuan, corresponding EPS is 0.92/1.05/1.18 yuan, respectively. The current stock price is 16.41/14.41/12.87 times PE, respectively. It continues to be recommended and given a “buy” rating.

Risk warning:

The amount of pulp collected falls short of the expected risk; the risk of product sales falling short of the expected risk; the launch of a new product falls short of the expected risk.