Event: the company realized operating income of 1.815 billion yuan in 2020, an increase of 1.81 percent over the same period last year; the net profit of shareholders belonging to listed companies was 117 million yuan, down 36.56 percent from the same period last year; and the net profit of shareholders of listed companies after deduction was 101 million yuan, down 31.39 percent from the same period last year. In the fourth quarter alone, the company achieved revenue of 608 million yuan, an increase of 13.84% over the same period last year, and the net profit attributed to shareholders of listed companies was 15 million yuan, down 63.08% from the same period last year.

Overseas epidemics are raging, and short-term performance is under pressure. The company's 20-year income was 1.815 billion yuan, an increase of 1.81% over the same period last year, slightly lower than expected. From a regional point of view, Chinese mainland revenue was 1.167 billion yuan, up 9.95 yuan over the same period last year, while overseas revenue was 647 million yuan, down 10.18% from the same period last year. Affected by the global spread of COVID-19 's epidemic, the company's export sales in the United States have been greatly affected in the past 20 years. In terms of products, veterinary drug revenue was 935 million yuan, down 11.8% from the same period last year, mainly because the sales market of chlortetracycline changed from feed line to breeding line, and sales in the transition phase were suppressed for a short time. The income of veterinary vaccine was 268 million yuan, an increase of 210.2% over the same period last year, mainly due to the company's continuous improvement of product quality by virtue of mature technology and rich experience. Pig blue ear, pig ring and other vaccines have successfully expanded a large number of customers in China, and their market share has increased.

With the continuous increase in R & D investment, the new park is expected to increase production capacity. The company spent 10,000 on R & D in 2020, accounting for 3.66% of revenue, an increase of 0.25 percentage points over the same period last year. Research and development and registration continued to increase, 20 years obtained rabies inactivated vaccine approval number, foot-and-mouth disease synthetic peptide vaccine new veterinary drug certificate, while the distribution of disease vaccine, porcine encephalitis inactivated vaccine, pig small inactivated vaccine is in the stage of preparation for registration. In addition, the construction of the company's new Jiantuo County Industrial Park in September 20 is under way, and it is expected that dynamic GMP acceptance will be completed in 21 years, and the production capacity of 52000 tons of high-efficiency chlortetracycline and 1000 tons of chlortetracycline hydrochloride will be added after reaching production.

Profit forecast: we predict that the net profit attributed to the parent company from 2020 to 2022 is 218 million yuan, 244 million yuan and 269 million yuan respectively, and the corresponding EPS is 0.34,0.38,0.42 yuan respectively. The current stock price corresponds to 16.6 pounds 14.8 pounds 13.5 times. The impact of the overseas epidemic is expected to gradually fade, customer expansion to help the continuous release of animal insurance income, to maintain the "recommended" rating.

Risk tips: the risk of the epidemic affecting product sales; the risk of decline in the prosperity of the industry; the systemic risk of the capital market, and so on.