Incidents:
On October 30, 2023, Biotech Co., Ltd. released its 2023 three-quarter report: In the first three quarters of 2023, the company achieved operating income of 1,219 billion yuan, an increase of 9.98% over the previous year, and net profit of 288 million yuan, an increase of 37.24% over the previous year. In 2023Q3, the company achieved operating income of 534 million yuan, an increase of 14.52% over the previous year, and net profit of 155 million yuan, an increase of 46.38% over the previous year.
Investment highlights:
Results for the third quarter continued to grow, and profitability increased dramatically. In the third quarter of this year, the company's operating income and net profit both achieved relatively rapid year-on-year growth. Gross margin and net profit margin increased significantly by 7.12 and 6.79 percentage points, respectively. The increase in the company's operating performance and profitability in the first three quarters was mainly due to the improvement of new product promotion and solution marketing capabilities.
Adhering to the R&D drive, major products have made new progress. In the first three quarters of 2023, the company invested 109 million yuan in R&D expenses, an increase of 23.42% over the previous year. The company's active brucellosis vaccine (Rev.1 strain) obtained a new veterinary drug certificate in September. The strain used in this product comes from the “World Organization for Animal Health (OIE)” standard strain, filling the gap in this type of vaccine product in China.
The inactivated vaccine for bovine nodular dermatosis (NMG strain, suspension culture) has passed an emergency evaluation, and the company is currently applying for a temporary production number in accordance with relevant regulations. This product is a veterinary drug needed for emergency treatment of major animal diseases in China, and its application prospects are broad.
African swine fever vaccine research and development is being carried out through multiple routes. Relying on the P3 laboratory, the company also conducts research on multiple technical routes of subunit vaccines, mRNA vaccines, and gene-deficient vaccines. Among them, the African swine fever subunit vaccine jointly developed by the company and the Institute of Biophysics of the Chinese Academy of Sciences is undergoing emergency evaluation. Currently, scientific research and experimental activities are being carried out in accordance with the relevant requirements of the Ministry of Agriculture and Rural Affairs.
Profit forecast and investment rating: As the company's performance in the third quarter continued to grow rapidly, we adjusted the company's 2023-2025 revenue forecast to 1,714 billion yuan, 2,020 billion yuan, and 2,419 billion yuan, up 12.15%, 17.84%, and 19.75% year on year. Corresponding net profit was 345 million yuan, 418 million yuan, and 532 million yuan, up 63.84%, 21.12%, and 27.27% year-on-year.
Corresponding to the current stock price PE is 31 times, 25 times, and 20 times, respectively. Based on the continuous improvement of the company's business performance, the products under development have made new progress and maintained the “buy” rating.
Risk warning: the risk of a sharp drop in livestock and poultry prices, the risk of major animal diseases, the promotion of the African swine fever subunit vaccine falling short of expectations, increased competition in the industry, risks in product development and product quality, and a decline in profitability.