Incidents:

The company disclosed the 2024 semi-annual report. 2024H1 achieved revenue of 18.258 billion yuan, a year-on-year decrease of 25.31%; net profit to mother of 2.234 billion yuan, a year-on-year decrease of 47.04%; net profit after deducting 2.23 billion yuan, a year-on-year decrease of 47.04%; single Q2 achieved revenue of 6.863 billion yuan, a year-on-year decrease of 48.29%; net profit to mother of 0.777 billion yuan, a year-on-year decrease of 65.14%; net profit after deducting non-return to mother $0.775 billion, a year-on-year decrease of 64.44%.

Sales of the HPV vaccine are under pressure, and the shingles vaccine is expected to be gradually released

2024H1's agent products achieved revenue of 17.592 billion yuan, a year-on-year decrease of 25.40%, mainly due to the company's marketing efforts in some regions and products not meeting expectations, and sales of the HPV vaccine declined year on year, but the market share maintained a high share, and the competitive advantage of product differentiation was obvious; the company's new agent GSK recombinant shingles vaccine achieved the first batch issuance in March 2024, and the 2024H1 batch issued 1.6069 million units. As of 2024H1, the company's recombinant shingles vaccine achieved coverage of more than 0.02 million terminal user units nationwide. At the same time, the company's sales staff increased to 4,749, an increase of 39.51% over the previous year. The sales team is expected to expand the number of new varieties through channels.

Self-developed product echelons are becoming more mature

2024H1 invested 0.57 billion yuan in R&D, accounting for 103% of the revenue from independent products, and the number of R&D personnel increased further to 979. The company's independent research and development projects include 32 independent research and development projects, including quadrivalent influenza virus lysis vaccine and freeze-dried human rabies vaccine (MRC-5 cells), have completed clinical trials; 15-valent pneumococcal conjugate vaccine, freeze-dried human rabies vaccine (Vero cells), Fuchs and Sonne's dysentery bivalent conjugate vaccine, ACYW135 cluster influenza conjugate vaccine, and quadrivalent recombinant norovirus vaccine (Pichi yeast) are undergoing phase III clinical trials. The company has made positive progress in research and development of many self-developed products, and the advantages of the platform-based layout are initially evident.

Profit Forecasts, Valuations, and Ratings

Considering that the company's marketing efforts in the first half of the year did not meet expectations, we expect the company's revenue for 2024-2026 to be 40.73/40.833/41.691 billion yuan, with year-on-year growth rates of -23.03%/0.25%/2.10%, respectively, and net profit to mother of 5.457/6.091/7.171 billion yuan, respectively, year-on-year growth rates of -32.38%/11.62%/17.73%, and E PS 2.28/2.54/3.00 yuan per share, respectively. Since the company is a leader in domestically produced vaccines, it is recommended to continue to pay attention.

Risk warning: policy risk, risk of sales falling short of expectations, risk of R&D falling short of expectations, risk of bad debts