猪用疫苗承压，盈利能力下行。由于上半年生猪养殖行业大部分时间处于亏损状态，公司产品销量下滑。2024H1，猪用疫苗业务实现销售收入3.51 亿元，同比下降28.04%，禽用疫苗业务实现销售收入851.48 万元，同比增长13.77%。在行业竞争加剧的大背景下，上半年公司毛利率同比下降10.34 个百分点。Incidents:
On August 29, 2024, Keqian Biotech released its 2024 semi-annual report: 2024H1 achieved operating income of 0.401 billion yuan, -24.69% year over year, net profit of 0.153 billion yuan, year-on-year net profit of -36.19%, after deducting non-attributable net profit of 0.133 billion yuan, or -41.57% year-on-year. With 2024Q2, the company achieved operating income of 0.196 billion yuan, a year-on-year net profit of -22.49%, a net profit of 0.065 billion yuan, or -36.91% year-on-year, after deducting non-attributable net profit of 0.057 billion yuan, or -42.87% YoY.
Investment highlights:
Vaccines for pigs are under pressure, and profitability is declining. Due to the fact that the pig breeding industry was in a state of loss for most of the first half of the year, sales of the company's products declined. With 2024H1, the pig vaccine business achieved sales revenue of 0.351 billion yuan, a year-on-year decrease of 28.04%, and the poultry vaccine business achieved sales revenue of 8.5148 million yuan, an increase of 13.77% over the previous year. Against the backdrop of increased competition in the industry, the company's gross margin fell 10.34 percentage points year-on-year in the first half of the year.
R&D investment has entered the harvest period. In the first half of the year, the company obtained 4 new veterinary drug registration certificates, including the national first-class new drug, porcine coronavirus inactivated vaccine (CHN-HN-2014 strain), porcine circovirus type 2 recombinant baculovirus, and Mycoplasma pneumoniae double inactivated vaccine (KQ strain+XJ03 strain). Two products, a live porcine pseudorabies vaccine (HB-98 strain, suspension culture) and a triple inactivated vaccine for porcine epidemic diarrhea, gastroenteritis, and coronavirus, have been reviewed and tested; swine fever, swine pseudorabies double live vaccine (strain C + HB2000 strain), and porcine seneca virus (strain HB16) are being reviewed and tested. There has also been a breakthrough in ruminant vaccines, and the live Mycoplasma bovine vaccine (HB150 strain) has been reviewed and tested.
Repurchasing shares boosts market confidence. In February 2024, the company launched a share repurchase program.
By the end of June, the company had repurchased 1.7845 million shares through centralized bidding transactions, and the total capital paid was 0.03 billion yuan (excluding transaction fees such as stamp duty and transaction commissions). The shares repurchased will in the future be used for employee stock ownership plans or equity incentives.
Profit forecast and investment rating: Due to the intensification of industry competition, the company's gross margin declined. We adjusted the company's 2024-2026 operating income to 0.975, 1.081, 1.24 billion yuan, -8.41%, +10.96%, and +14.67%; net profit to mother 0.361, 0.403, 0.459 billion yuan, -8.77%, +13.92%; corresponding to the current share price PE is 16 times, 14 times, and 13 times, respectively. Based on the company's progress in developing new products, the product matrix has been continuously improved to maintain a “buy” rating.
Risk warning: Risk of sharp drop in livestock and poultry prices, risk of major animal diseases, new product launches and sales falling short of expectations, increased industry competition, and declining profitability risk.
