Revenue from routine vaccine sales increased 19% year over year. In 2023, the company achieved revenue of 3.477 billion yuan (+10.1% YoY) and sales revenue of 3,505 billion yuan (YoY + 19.0%) for routine vaccines (excluding COVID-19 vaccines), of which 13-valent pneumococcal conjugate vaccine sales revenue increased 55.6% year over year, 23-valent pneumococcal polysaccharide vaccine sales revenue increased 36.9% year on year; achieved net profit of 861 million yuan (+749.0% year over year), net profit of 722 million yuan (YoY +495.1%). With 2024Q1, the company achieved revenue of 452 million yuan (-39.7% YoY), net profit of 54 million yuan (YoY -73.1%), and net profit of non-return to mother of 0.14 million yuan (-92.4% YoY), which is expected to be affected by the Lunar New Year holiday and delivery pace in the first quarter.
R&D cost rate improvement. In 2023, the company's gross margin was 84.5% (+0.3pp year on year) and net profit margin was 24.8% (+29.0pp year over year, mainly affected by asset impairment during the same period last year). Sales expense ratio 35.4% (YoY +1.0pp), management expense ratio 7.9% (YoY +0.6pp), financial expense ratio -0.04% (YoY +0.6pp), R&D expense ratio 14.4% (YoY -11.0pp). Mainly due to the costing of COVID-19 vaccine Ph3 clinical expenses in the same period last year, the company's R&D cost ratio gradually returned to the normal level of the industry.
The human diploid rabies vaccine has been approved for marketing, and there are plenty of reserves in the research pipeline. The company's freeze-dried human rabies vaccine (human diploid cells) was approved for marketing in September 2023, using the “5-dose” and “2-1-1” (4-dose) immunization procedures; clinical results showed that both immunization procedures had good safety, immunogenicity, and immune persistence after full vaccination.
The company currently has nearly 30 research pipelines. Among them, the live attenuated chickenpox vaccine was approved for marketing on April 16, 2024; Sabin polio inactivated vaccine (Vero cell) has applied for production registration and acceptance; quadrivalent hand, foot and mouth disease vaccine, measles vaccine, 20-valent pneumococcal polysaccharide conjugate vaccine, recombinant shingles vaccine, and recombinant respiratory syncytial virus vaccine (RSV) are the medium- to long-term pipeline layout.
Investment suggestions: The company's major human diploid rabies vaccine was approved for marketing, and commercialization began in 2024 to contribute to increased performance; medium- to long-term pipeline reserves are abundant, and several varieties are in the production and Ph3 clinical stages, and are expected to be introduced to the market one after another in the next 2 to 3 years; the internationalization strategy is beginning to bear fruit, and the 13-valent pneumococcal polysaccharide conjugate vaccine product has obtained marketing approval in Indonesia. According to the company's 2023 annual report and 2024 quarterly report, we have adjusted the profit forecast. The net profit for 2024-2025 is estimated to be $1,045/1,342 million yuan (previous value was $1,415/1,895 million yuan), and the net profit forecast value for 2026 was $1,666 billion. Currently, PE corresponding to the stock price is 22/17/14x, maintaining a “buy” rating.
Risk warning: risk of product sales falling short of expectations, risk of failure in the research pipeline, etc.