1H24 net profit is in line with our expectations

The company announced its results for the first half of 2024: revenue of 1.653 billion yuan, a year-on-year increase of 4.3%; net profit to mother of 0.44 billion yuan, a year-on-year decrease of 16.4%, corresponding to earnings per share of 0.24 yuan, after deducting non-return net profit of 0.363 billion yuan, a year-on-year decrease of 8.7%, in line with our expectations.

Development trends

The blood products business achieved revenue of 1.617 billion yuan in the first half of 2024, or 12.65% year-on-year. The blood products sector achieved net profit of 0.423 billion yuan in the first half of the year, down 6.71% from the same period last year, and realized net profit without return to mother of 0.377 billion yuan, an increase of 5.22% over the same period last year. Among them, human blood albumin revenue was 0.644 billion yuan, up 24.97% year on year, intravenous human immunoglobulin income was 0.459 billion yuan, down 2.41% year on year, specific immunoglobulin revenue was 0.314 billion yuan, up 1.45% year on year, and revenue from coagulation factor products was 0.197 billion yuan, up 45.64% year on year. Among them, fibrinogen revenue was 62.42 million yuan, up 206% year on year.

Pulp harvesting increased 22.47% year over year in the first half of 2024. According to the company's announcement, in the first half of 2024, the company's Dengzhou, Xiangcheng and Qixian single plasma collection stations passed the inspection, obtained a pulp collection license, and successfully mined, and realized the mining of all 32 of the company's 32 single plasma collection stations (including sub-stations). Furthermore, the company announced that in August 2024, the company was approved to establish 2 new pulp stations in Fengdu County and Wushan County in Chongqing. We believe that the expansion of the new pulp station and the continued healthy development of the original pulp station are expected to lay a solid foundation for the company's blood products business to maintain steady growth.

The company's vaccine business achieved revenue of 35.53 million yuan in the first half of 2024, a year-on-year decrease of 76.25%. The vaccine subsidiary achieved net profit of 25.27 million yuan, down 76.65% from the same period of the previous year, and realized net profit without deduction of 21.32 million yuan, a decrease of 136.84% from the same period last year. The main reason for the decline in the company's announcement is that domestic vaccine sales increased significantly in the first quarter of 2023 compared to previous years. The influenza epidemic was relatively stable during the reporting period. At the same time, price adjustments for the quadrivalent influenza vaccine affected the current sales progress, so vaccine sales revenue declined sharply year on year. According to the company's announcement, as of the end of August 2024, a total of 76 batches of the company's influenza vaccine had been issued, and the number of batches issued continued to maintain the leading position in the country. Since August, the country has entered the main vaccination season for influenza vaccines. The company will adjust production plans according to market supply and demand conditions to actively guarantee supply.

Profit forecasting and valuation

Due to adjustments in the price of the company's vaccine subsidiary's core products, we lowered net profit of 16.9% and 15.5% to 2024 and 2025 to 1.401 billion yuan and 1,660 billion yuan. The current stock price corresponds to 19.6 times the 2024 price-earnings ratio and 16.6 times the 2025 price-earnings ratio. We maintain our outperforming industry rating. Due to adjustments in profit forecasts, we lowered our target price by 14.9% to 20.60 yuan, which corresponds to 26.9 times the price-earnings ratio of 2024 and 22.7 times the price-earnings ratio of 2025, with 36.9% upside compared to the current stock price.

risks

Changes in industry policies, negative public opinion on the quality and safety of clinical products, national priority monitoring and rational drug use may lead to a decline in demand, seasonal fluctuations in influenza vaccine sales, and the extent of collection and price reductions exceeding expectations.