Event: the company released its 2016 results of KuaiBao, with operating income of 1.269 billion yuan (+ 47.80%) and net profit of 423 million yuan (+ 69.09%).
The performance significantly exceeded expectations, and the estimated increment mainly came from EV71 vaccine. The company's third quarterly report predicts a full-year net profit of 328-383 million yuan, an increase of 31-53% over the same period last year. The actual net profit is about 40 million yuan higher than the forecast limit, which is estimated to be mainly due to the higher-than-expected dose of EV71 vaccine. Sub-business point of view: 1) the chemical business is basically stable, the net profit from 2014 to 2015 is about 8000-90 million, combined with three quarterly reports it is estimated that the whole year is about 90 million. 2) the net profit of the pharmaceutical business is estimated to be about 330 million, exceeding the 300 million net profit promised by backdoor listing. Combined with the company's semi-annual report data and PDB data, it is estimated that the growth rate of mouse nerve growth factor is about 20%, and interferon is basically the same. The biggest increase comes from the EV71 vaccine, which is estimated to sell no less than 1 million doses and usher in a period of rapid growth in the next three years.
The market space of the blockbuster variety EV71 vaccine is big, and the privatization of Sinovac Biotech is a high probability event. Hand, foot and mouth disease (HFMD) is listed as a statutory class C infectious disease in China. A total of 1380 cases were reported from 2008 to 2015, with an average annual incidence of 147 / 100000 and more than 3300 deaths, posing a serious threat to children's health. EV71 virus (enterovirus 71) is one of the main causes of hand-foot-mouth disease. Among patients with hand, foot and mouth disease, the positive rate of EV71 virus ranks first in 44%, and accounts for 74% and 93% of severe cases and deaths respectively. Therefore, vaccination with EV71 vaccine helps to control the spread of HFMD. The EV71 vaccine of Sinovac Biotech, the company's shareholding subsidiary (26.91%), went on sale in May 2016. CDC recommends that vaccination be completed within 6-12 months, with 2 doses per person at an interval of 1 month. For standard varicella, hand, foot and mouth disease is more serious, the death toll is more, and the threat to children is greater. It is estimated that the market demand for EV71 vaccine is not lower than that of varicella vaccine. Varicella vaccine has been on the market for more than 10 years, with annual batches of 1500-20 million people. It is estimated that the peak sales of EV71 vaccine is not less than 20 million people. If Sinovac Biotech's market share reaches 40% and the peak sales volume is not less than 8 million people, with reference to the winning bid price of 188 yuan, terminal sales are expected to reach a peak of 1.4 billion and factory sales revenue is expected to exceed 1 billion. And the company has submitted Sinovac Biotech's privatization plan, if the smooth privatization return, or will significantly thicken the company's performance.
Profit forecast and investment advice. It is estimated that the EPS from 2016 to 2018 will be 0.64,0.79,0.92 yuan respectively, and the corresponding PE will be 36 times, 29 times and 25 times respectively. Taking into account the high performance growth brought about by the release of EV71 vaccine and the catalyst for Sinovac Biotech's privatization, we cover it for the first time and give it a "buy" rating.
Risk tips: the risk of EV71 vaccine sales or lower than expected; the risk of Sinovac Biotech privatization or lower than expected; the risk of rat nerve growth factor sales or lower than expected risk.