It is optimistic that the shareholding subsidiary Sinovac Biotech EV71 vaccine has great potential: in the past year, China's vaccine field has ushered in the birth of many heavyweight varieties, driving the expansion of the vaccine industry, and China's vaccine industry is expected to usher in a golden period of development. The heavyweight EV71 vaccine of Sinovac Biotech, a subsidiary, is approved for the prevention of hand, foot and mouth disease in children, which is approved for half a year, and is expected to enjoy a huge market of 10 billion yuan in the future, bringing huge profits for the company. One of the core logic of our recommendation of unknown Medicine is to be optimistic about the great potential of Sinovac Biotech's blockbuster variety-EV71 vaccine.
There is a big expectation gap in the rat nerve growth factor business: at the beginning of the restructuring, the company made a three-year performance commitment, as 2017 is the last year of the commitment period, the market fears that the performance of Peking University Road will decline from 2018. However, according to our understanding, expectation and judgment, although mouse nerve growth factor is used as an auxiliary drug, it has a certain property of rigid demand. unlike other similar companies, Peking University Road has a very strong sales ability, and it is expected that in the next three years, rat nerve growth factor can still maintain a rapid growth of 15% to 20%, and will not become a drag on the company.
The company has a high margin of safety, and the privatization of SVA implies a huge option value:
First of all, regardless of the huge performance thickening expectations brought about by Sinovac Biotech's privatization and injection, we expect the company's net profit from 2017 to 2019 to be 560 million yuan / 690 million yuan respectively, and the current share price corresponds to the 2018 valuation of 30 picks at 24 times, which is significantly undervalued compared to the average valuation of more than 60 times for other vaccine companies.
Secondly, we estimate that the net profit of Sinovac Biotech in 2017 and 2018 will be 390 million yuan and 540 million yuan respectively. If the remaining 73.09% of the equity is successfully injected into the listed company, the corresponding net profit will be 285 million yuan and 395 million yuan respectively. We estimate that the equity injected into the listed company will be priced at less than 4 billion yuan (the privatization cost is estimated to be about 2.8 billion yuan), then the valuation in 2018 is only 1410 times. It greatly increases the company's profits and helps to significantly increase the company's valuation (the PE of mergers and acquisitions in the primary market of vaccine companies is usually no less than 50 times).
Considering the test preparation profit after privatization, assuming that the privatization cost is 4 billion yuan, the net profit from 2017 to 2018 is 845 million yuan, and the current market value is 16.9 billion yuan. After increasing the market value by 4 billion, the corresponding valuation is 25 shock 19 times from 2017 to 2018, and in 2018, Sinovac Biotech contributed 50% of the net profit, and the follow-up vaccine business will maintain rapid growth. The company will be completely transformed into a vaccine-based company and should enjoy the high valuation of the vaccine industry.
The privatization of SVA is well under way and substantial progress is expected by the end of 2017. Taking into account the profit of the reserve test for privatization, the net profit contribution of the vaccine business is expected to reach 50% in 2018, and the subsequent vaccine business will maintain rapid growth, and the company will be completely transformed into a company dominated by the vaccine business. should enjoy the high valuation of the vaccine industry.
Investment advice: we expect the company's revenue growth from 2016 to 18 to be 47.80%, 27.32% and 17.43% respectively. The EPS of the company is 0.64 yuan, 0.85 yuan and 1.05 yuan respectively, and the current stock price is valued at 40x, 30x and 25x, respectively. Maintain the buy-An investment rating, with a target price of 34.00 yuan for the next 12 months.
Risk tips: Enjingfu income growth is not up to expectations; EV71 vaccine sales are not as expected; Beijing Science and Technology traditional vaccine performance is uncertain; Sinovac Biotech privatization process is slower than expected.