Incidents:
On April 26, 2024, Kangtai Biotech disclosed its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 3.477 billion yuan, +10.14% year over year; realized net profit of 881 million yuan, +749.02% year over year; realized net profit of 722 million yuan without return to mother, +495.11% year over year. 2024Q1 achieved operating income of 452 million yuan, or -39.65% year on year; net profit to mother of 54 million yuan, -73.69% year on year; net profit after deducting non-return to mother of 0.14 million yuan, -92.42% year on year.
Varieties under development have been approved one after another, and the release volume of human diploid seedlings is worth looking forward to by product structure. In 2023, independent type I seedlings achieved revenue of 0.25 million yuan, -89.00%; self-produced class II seedlings achieved revenue of 3.441 billion yuan, +18.59% over the same period last year, accounting for 98.96% of the second class seedlings. Since 2023, the freeze-dried human rabies vaccine (human diploid cells) and live attenuated chickenpox vaccine independently developed by the company have obtained drug registration certificates, and the sales volume of human diploid vaccine is worth looking forward to.
The internationalization strategy is progressing steadily, and progress continues to be made
The company's internationalization strategy is progressing steadily and continues to make progress. In October 2023, the company obtained a “marketing license” for the 13-valent pneumococcal polysaccharide conjugate vaccine from Indonesia, indicating that the vaccine has met the basic conditions for sale in the Indonesian market. Currently, the company has signed a “sales contract” for the 13-valent pneumococcal polysaccharide conjugate vaccine with an Indonesian partner. In April 2024, Minhai Biotech, a wholly-owned subsidiary of the company, signed a “Memorandum of Strategic Cooperation” with the Daxing District Government and AstraZeneca to jointly explore all-round cooperation in the vaccine field to help China cooperate and develop innovative vaccine products at home and abroad.
Changes in product structure are expected to drive increased profitability
In 2023, the company's gross margin was 84.54%, +0.37pct year on year. Among them, the gross margin of Class II seedlings was 86.59%, -0.56pct year on year, the gross margin of Class I seedlings was -191.96%, and -243.90pct year on year. We believe that with the further release of Class II seedlings, the gross margin is expected to increase further. The company's net sales margin was 24.77%, +28.90pct year on year; R&D expenses ratio was 14.40%, -11.00pct year on year.
Profit Forecasts and Investment Ratings
The 2024Q1 company's performance is under pressure. We believe that with the release of the 13-valent pneumonia vaccine and the marketing of diploid vaccine, the performance is expected to continue to grow steadily. Taking into account factors such as changes in the number of newborns each year in the future, we adjusted the revenue for 2024-2025 from 4.788/5.440 billion yuan to 45.01/5.368 billion yuan, and the 2026 revenue forecast to 6.206 billion yuan; the net profit forecast for 2024-2025 was adjusted from 1,44/1,499 billion yuan to 1,04/1,231 billion yuan, and the net profit forecast for 2026 was 1,452 billion yuan. Maintain a “buy” rating.
Risk warning: risk of changes in industry policies, risk of new product development falling short of expectations, risk of adverse vaccination events.