1H24 results are in line with our expectations

The company announced 1H24 results: revenue of 0.303 billion yuan, a year-on-year increase of 1,071.2%; net loss to mother of 0.225 billion yuan, which is in line with our expectations.

Development trends

MCV4 is growing steadily. According to the company's announcement, by product, 1H24 achieved revenue of 0.263 billion yuan for its products, an increase of 18% over the previous year, while confirming CDMO revenue of 22.61 million yuan. On a quarterly basis, 1Q/2Q Neo products contributed 0.104 billion/0.159 billion yuan in revenue respectively, an increase of 37%/8% year-on-year. MCV4 is the company's key promotion product for the next 2 years. Considering that the market monopoly period for this product is still 2 years, we are optimistic about the future sales prospects of this product. In addition, the company has begun overseas work for MCV4. The main target regions include Southeast Asia, the Middle East, North Africa, South America, etc.

Expense management is continuously optimized. 1H24's R&D expenses were 0.186 billion yuan, down 45.1% year on year. The main company's R&D focus was skewed towards non-COVID-19 pipelines; sales expenses were 0.112 billion yuan, down 12.7% year on year. The main company's commercialization system gradually matured and overall marketing efficiency improved; management expenses were 83.51 million yuan, a decrease of 38.4% year on year, and the main company strengthened management expenses control. We expect the company to maintain a cost control strategy throughout the year.

The R&D pipeline is being actively promoted. According to the company's announcement, the marketing application for the company's 13-valent pneumococcal conjugate vaccine PCV13i was accepted by the CDE in February 2024, and we expect it to be approved for marketing from the end of 2024 to the beginning of 2025; the company's infant component 100 white dTCP is in phase III clinical phase and has now completed the first three basic immunization doses of the subjects; Tdcp for adolescents and adults is in phase I clinical trials, and clinical site work has been completed; adsorbed tetanus vaccine has completed enrollment and vaccination of phase III clinical trials; recombinant pneumococcal pneumococcus The protein vaccine PBPV obtained positive initial phase I clinical results, and the company is considering the next development plan.

Profit forecasting and valuation

We keep our profit forecasts unchanged for 2024 and 2025. We maintained an outperforming industry rating. Based on the DCF model, we lowered TP for A shares by 25.1% to $54.00 (32.9% space) and TP for H shares by 15.8% to HK$24.72 (35.4% space) based on the DCF model.

risks

Commercialization falls short of expectations; R&D progress falls short of expectations.