Discharge as scheduled

Incidents:

On August 17, 2024, Kanghua Biotech disclosed its 2024 semi-annual report. In 2024, H1 achieved operating income of 0.741 billion yuan, +16.81% year over year; realized net profit of 0.307 billion yuan, +23.51% year over year; realized net profit without return to mother of 0.309 billion yuan, +32.26% year over year.

Sales of non-immunized vaccines are growing steadily

In 2024 H1, the company's revenue came from sales of the core product freeze-dried human rabies vaccine (human diploid cells) and overseas licensing revenue for recombinant hexavalent norovirus vaccines. By product, H1's non-immunization vaccine sales revenue in 2024 was 0.635 billion yuan, +0.17% year over year, with a steady increase.

Make progress in advancing technology overseas

The company signed an “Exclusive License Agreement” with HillEvax on January 6, 2024. The company authorized HillEvax to develop, manufacture 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 15 million US dollars, development and sales milestone payments of up to 0.2555 billion US dollars, and 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 Forecasts and Investment Ratings

H1's performance grew rapidly in 2024, and we believe that the performance is expected to continue to grow steadily as human diploidy continues to grow. The company may increase its investment in sales expenses due to factors such as the approval and marketing of new human diploid products, so we maintain our previous revenue forecast of 1.922/2.329/2.619 billion yuan for 2024-2026 and net profit forecast of 0.678/0.809/0.912 billion yuan for 2024-2026. Maintain a “buy” rating.

Risk warning: Risk of product development falling short of expectations, risk of product sales falling short of expectations, risk of changes in industry policies, risk of relatively poor product structure.