Event: In January-September, the company's revenue was 1.22 billion yuan, +10.0% year-on-year, net profit of 290 million yuan, +37.2% year-on-year, and net profit of 270 million yuan after deducting non-return net profit of 270 million yuan, +25.7% year-on-year. In the third quarter alone, revenue was 530 million yuan, +14.5%, +66.6% month-on-month, and net profit was 150 million yuan, +46.4% year-on-year, and +455.2% month-on-month.
Expense rate: From January to September, the company's sales/management/R&D/financial expenses were 18.9%/7.9%/9.0%/-3.4%, respectively, +1.5pct/+0.6pct/ +1.0pct/ -0.1pct.
Profit level: 2023Q3 The company's gross profit level for a single quarter was 63.2%, +7.1 pct over the previous year and +8.0 pct over the previous quarter. There was a significant increase in gross profit levels in a single quarter over the same period, mainly due to an increase in the share of non-five products with high gross profit levels and a decrease in production costs for major foot-and-mouth disease vaccines.
Future pipeline expectations: On the economic animal vaccine side, the company will release new products one after another in the future, such as live bovine mycoplasma vaccine, bovine nodular skin disease inactivated vaccine, etc., to complete the company's non-five product matrix. Furthermore, the African swine fever vaccine in cooperation with the Chinese Academy of Sciences has submitted an emergency evaluation application, and is currently progressing smoothly. If approved for listing, it is expected to provide the company with a new growth curve. On the pet vaccine side, the triple vaccine for cats has been submitted for emergency evaluation, and the quadruple vaccine for dogs has entered the new veterinary drug registration stage.
Equity incentive plan: At present, the company has achieved net profit of 270 million yuan from January to September. If the annual equity incentive expenses are added back, this year's equity incentive target has been completed ahead of schedule (the target value for 2023 reached 300 million yuan after deducting non-return net profit plus equity incentive expenses).
Investment suggestions: We believe that in the future, the company will go public one after another as new major products are listed, and measures such as cost reduction and efficiency will be further implemented. Revenue and profitability are expected to increase further. The estimated net profit of the company from 2023-2025 will be 3.01, 3.96, and 516 million yuan respectively. Based on the closing price of November 7, 2023, the corresponding PE was 35.1, 26.7, and 20.5 times, maintaining the “increased holdings” rating.
Risk warning: risk of recurrence of animal outbreaks, risk of increased market competition, product development risk, biosafety risk, product quality risk, policy change risk