Key points of investment:

The company was founded in 2005 and listed on the Shenzhen GEM in 2022. It is a high-tech enterprise specializing in R&D, production and sales of human vaccines. Currently, the company has obtained the “Drug Registration Certificate” for vaccines such as influenza virus lysis vaccine, quadrivalent influenza virus lysis vaccine and quadrivalent influenza virus lysis vaccine (pediatric dosage form), H1N1 influenza virus lysis vaccine, ACYW135 group meningococcal polysaccharide vaccine, recombinant hepatitis B vaccine (Hanson yeast), group A group C meningococcal polysaccharide vaccine, freeze-dried human rabies vaccine (Vero cells), and adsorbed tetanus vaccine. A total of 8 products cover the three major fields of viral vaccines, bacterial vaccines, and genetically recombinant vaccines. Among them, the influenza vaccine is the company's main source of revenue.

In the first half of 2024, the company achieved operating income of 35.529 million yuan, a year-on-year decrease of 76.25%; realized net profit attributable to shareholders of listed companies of 25.2744 million yuan, a year-on-year decrease of 76.65%; realized net profit after deduction attributable to shareholders of listed companies - 21.3215 million yuan, a year-on-year decrease of 136.84%. Basic earnings per share were $0.04.

Prices of major products were lowered in the first half of the year. According to the company's announcement on June 5, the price of the company's quadrivalent influenza vaccine products will be adjusted starting that day. Among them, the quadrivalent influenza virus lytic vaccine (adult dosage form, prefilled 0.5 ml/tube) was adjusted to 88 yuan/tube; the quadrivalent influenza virus lysis vaccine (adult dosage, 0.5 ml/bottle of cilin bottle) was adjusted to 85 yuan/bottle; and the quadrivalent influenza virus lytic vaccine (children's dosage form, prefilled 0.25 ml/bottle) was adjusted to 128 yuan/tube.

The main reason for the sharp drop in revenue in the first half of 2024 was the outbreak of influenza A in many parts of the country in the first quarter of 2023. Vaccine sales increased significantly compared to previous years. In the first half of 2024, the influenza epidemic was relatively stable, and the price adjustment of the quadrivalent influenza vaccine affected the current sales progress. Among them, the influenza vaccine achieved sales revenue of 11.2075 million yuan, a sharp year-on-year decrease of 92.43%; the rabies vaccine achieved sales revenue of 21.3339 million yuan.

Looking at the cost rate for the period, the company's sales expense ratio in the first half of 2024 was 62.40%, up 35.13 percentage points from the same period of the previous year; the management expenses ratio was 135.14%, up 112.13 percentage points from the same period last year; and the R&D expenses rate was 131.82%, up 97.48 percentage points from the same period last year. With the arrival of the peak influenza vaccine consumption season in the second half of the year, the company's cost rate is expected to drop further.

The research pipeline is still progressing. The freeze-dried group A group C meningococcal conjugate vaccine has now completed phase III clinical trials. Production is expected to be reported in 2025. Phase III clinical trials will begin in the second half of 024 when adsorbing acell-free 100 (three components) albinism, a total of 2 vaccine doses.

Considering the reduction in the price of influenza vaccines, the company's influenza vaccine sales revenue is expected to decline in 2024. The company's earnings per share from 2024 to 2026 are expected to be 0.88 yuan, 1.09 yuan, and 1.19 yuan, respectively, corresponding to the closing price of 16.77 yuan on September 12. The dynamic price-earnings ratio is 19.06 times, 15.39 times, and 14.09 times, respectively, giving the company an investment rating of “prudent increase in holdings”.

Risk warning: single risk of product structure, uncertain risk of influenza epidemic, risk of product development under development, risk of increased market competition, product quality risk, etc.