Chengdu Kanghua Biological Products Co.Ltd(300841) (300841)
Rabies vaccine is just needed, and human diploid cell rabies vaccine is the gold standard vaccine for the prevention of rabies
The death rate of rabies is close to 100%. Injection of rabies vaccine is the key to prevention. From 2015 to 2020, the average annual batch issuance of rabies vaccine in China was maintained at 60-80 million, of which Vero cell rabies vaccine is the mainstream rabies vaccine used in China, accounting for more than 85% of the overall batch issuance. Human diploid cell rabies vaccine can produce reliable immune response, produce high titer neutralizing antibody and have no serious adverse reactions. Therefore, it is called the gold standard vaccine for rabies prevention by the World Health Organization. Under the background that the National Drug Administration has continuously strengthened the supervision of vaccine quality and safety, human diploid cell rabies vaccine is expected to gradually replace Vero cell rabies vaccine because of its differential advantages of culturing rabies virus with human diploid cells as cell matrix.
At present, the proportion of human diploid cell rabies vaccine is only 5%, which is the exclusive variety of the company. With the release of the company’s production capacity, the proportion is expected to increase rapidly
Human diploid cell rabies vaccine is an exclusive product of Chengdu Kanghua Biological Products Co.Ltd(300841) , and the production technology of the vaccine has strong technical barriers. Previously, due to the company’s capacity constraints, the number of batches of Chinese diploid cell rabies vaccine was relatively low, only 5% in 2020. With the continuous improvement of the company’s capacity utilization in recent years, from 33% in 2017 to nearly 80% in 2019, the company issued 3.7 million batches of human diploid cell crazy seedlings in 2020. In order to improve the production capacity and production efficiency and meet the market demand for the company’s rabies vaccine, the production capacity of the second workshop of the company’s technical transformation project has also been officially put into operation in June 2021. The design production capacity of the second workshop is 2 million. The formal operation has opened the bottleneck that previously limited the company’s production capacity. At the same time, the company also has the construction of new production line of listed fund-raising projects, which is designed to be 6 million pieces / year and is expected to be completed in 2023. At that time, the company’s annual production capacity of human diploid cell rabies vaccine will reach 11 million pieces, which is expected to achieve a significant increase in the company’s sales.
Pet vaccine is different from traditional veterinary vaccine. The company’s entry into the animal vaccine industry has brought new growth in performance
Unlike traditional veterinary vaccines, large-scale breeding is highly sensitive to vaccine price. With the improvement of China’s social and economic level, for pet owners, the status of domestic pets in people’s hearts is gradually “anthropomorphic”, and pet owners pay very high attention to pet health. Therefore, high-quality pet vaccine will be favored by pet owners, which is also the future development direction of pet health care consumption. In 2020, the total batch issuance data of animal rabies vaccine in China was only 25 million copies, and there was a gap of 55 million copies in the urban animal rabies vaccine market. Through equity participation and signing strategic cooperation agreements, the company has entered the animal rabies vaccine industry, and pet vaccine sales are expected to bring new increment to the company’s performance.
Stock repurchase and equity incentive show the company’s confidence in future development, and the CAGR is expected to reach 47% in three years
In May 2021, the company launched a restricted stock incentive plan to grant 100000 shares to 73 incentive objects who met the grant conditions (the grant price was RMB 202.80, corresponding to the market value of RMB 20.28 million). The incentive plan is evaluated at the company level in three fiscal years from 2021 to 2023, one for each fiscal year. The evaluation goal is to take the net profit in 2020 as the base, and the net profit growth rate in 2021-2023 is 48% / 108% / 218% respectively, corresponding to the net profit of RMB 570 / 85 / 1.3 billion respectively in 2021-2023. The net profit CAGR in 2020-2023 is expected to reach 47%. At the same time, the company has also recently carried out stock repurchase. Equity incentive and stock repurchase show the company’s confidence in future development.
Profit forecast
Considering the accelerated release of the company’s production capacity of human diploid cell rabies vaccine and the new increment brought by the company’s agent rabies vaccine for pets, without considering the non recurring profits and losses, we raised the company’s operating revenue and net profit attributable to the parent from 2021 to 2022, the operating revenue from 2021 to 2022 from 1.258/1562 billion yuan to 1.345/1989 billion yuan, and the net profit attributable to the parent from 578/763 million yuan, It is raised to RMB 579 / 856 million, and the profit forecast for 2023 is added. It is estimated that the operating revenue of the company in 2023 will be RMB 2.992 billion and the net profit attributable to the parent company will be RMB 1.318 billion. From 2021 to 2023, EPS was 6.43/9.51/14.64 yuan, corresponding to the share price of 212.72 yuan / share on December 31, 2021, and PE was 33 / 22 / 15 times, maintaining the “buy” rating.
Risk statement
The sales of human diploid cell rabies vaccine is less than the expected risk; The company’s capacity construction plan is less than the expected risk; Risk that the progress of the company’s pipeline under research is less than expected; Pet vaccine sales are less than expected risk.
