Performance was under pressure for a short time, and there was a clear month-on-month recovery in the second quarter. The company achieved revenue of 1.202 billion yuan in the first half of 2024, a year-on-year decrease of 30.54%. Of these, 24Q2 achieved revenue of 0.75 billion yuan, an increase of 66.14% over the previous year. In the first half of 2024, the company achieved net profit of 0.165 billion yuan, a year-on-year decrease of 67.61%; of these, 24Q2 achieved net profit of 0.111 billion yuan, an increase of 105.81% over the previous year.

The human diploid rabies vaccine achieved sales of 0.117 billion yuan, which is expected to drive new growth. The company's freeze-dried human rabies vaccine (human diploid cells) was officially marketed in April 2024. As of 2024 H1, the company's products have been approved by 26 provinces, autonomous regions and municipalities directly under the Central Government, and 0.9049 million doses have been issued in batches, achieving sales revenue of 0.117 billion yuan. We believe that with the development of product market entry and further promotion of sales, the human diploid rabies vaccine is expected to drive further growth in the company's performance.

A number of R&D pipelines have made phased progress. The live attenuated varicella vaccine obtained a drug registration certificate in April 2024 and completed the admission process in 10 provinces and cities. In addition, 1) the Sabin strain polio inactivated vaccine (Vero cells) application was accepted; 2) adsorbed tetanus vaccine and quadrivalent influenza virus lysis vaccine (people aged 3 years and above) are in phase I and III clinical trials; 3) the adsorbed acellular polycythemia (component) combination vaccine has completed phase I clinical trials and is being prepared for phase III clinical trials; 4) The oral pentavalent recombinant rotavirus vaccine (Vero cells) is in phase I and phase II clinical trials; 5) 20-valent pneumococcal pneumococcal Obtaining medicines in combination with vaccines Clinical trial approval notice; 6) The quadrivalent influenza virus lysis vaccine was added to people aged 6-35 months and the clinical trial application for quadrivalent influenza virus lysis vaccine (MDCK cells) was accepted.

The internationalization strategy is being implemented steadily. In April 2024, Minhai Biotech, a wholly-owned subsidiary of the company, and AstraZeneca signed a “Memorandum of Strategic Cooperation” to jointly explore all-round cooperation in the vaccine field and help China cooperate and develop innovative vaccine products at home and abroad. In addition, the company's PCV13 overseas has also made progress. In January 2024, the company signed a “sales contract” for the 13-valent pneumococcal polysaccharide conjugate vaccine with an Indonesian partner, and exported the original solution in July to vigorously promote the localization process of this product in Indonesia; the first batch of finished products was exported in August.

Profit forecasting and valuation. We expect the company's net profit to be 0.675 billion yuan, 0.893 billion yuan, and 1.036 billion yuan respectively in 2024-26, up -22%, 32%, and 16% year-on-year respectively. Referring to comparable companies, Wantai Biotech, Baike Biotech, and Zhifei Biotech's 2024 PE was 152 times, 14 times, and 6 times, respectively. The company is a vaccine leader with excellent R&D, production and sales in China. We gave the company a 2024 P/E of 30 to 32 times, a reasonable value range of 15.60 to 16.64 yuan, and a market value of 17.4-18.6 billion yuan, giving it a “superior to the market” rating.

Risk warning. Risk of product release falling short of expectations, risk of R&D failure.