\u3000\u3 Shengda Resources Co.Ltd(000603) 566 Pulike Biological Engineering Inc(603566) )
Matters:
According to the investor relations activity record of the company on February 20, 2022, the African swine fever subunit vaccine developed by the company in cooperation with Lanzhou Institute of veterinary medicine, Chinese Academy of Agricultural Sciences has made positive progress, and the two rounds of comments on its emergency evaluation by the Ministry of agriculture and rural areas have been completed. The project team will improve relevant experimental research in accordance with the requirements of emergency evaluation data of African swine fever subunit vaccine and the guiding principles of vaccine immune efficacy, Strive to apply for emergency evaluation as soon as possible.
Guoxin agricultural view: 1) the African swine fever subunit vaccine developed by the company in cooperation with Lanzhou Institute of veterinary medicine, Chinese Academy of Agricultural Sciences has made positive progress. Considering the company's deep participation in relevant research and development and its experience in subunit vaccine production and sales, we believe that if it is commercialized, the company may obtain production qualification and occupy a certain market share, which will promote the company's performance to achieve better growth at that time. 2) The company's core products performed well, and the pig seedling business achieved counter trend expansion by relying on new products under the background of low pig price; The avian vaccine business focuses on the multi linked and multi valent vaccine of highly pathogenic avian influenza, and is gradually establishing its market position by relying on new products. We are optimistic about the growth elasticity of the company's performance in the medium and short term. 3) The company pays attention to R & D and innovation, has rich technical reserves and obvious advantages of core single products. At this stage, the key customer strategy is advancing smoothly. In the future, the company may share the industry growth dividend brought by large-scale breeding by relying on product advantages. In addition, the layout of the company in pet animal insurance is being carried out, which may open up new performance growth points for the company in the future. 4) Risk tip: the progress of batch issuance of African classical swine fever vaccine was less than expected, and uncontrollable epidemic occurred in downstream aquaculture. 5) Investment suggestion: the company's existing new products have a strong performance, and there is a possibility of commercialization of non plague subunit vaccine. The pig cycle is superimposed or the expectation of early reversal is met. The repair of breeding profits may lead to the repair of the end demand of the animal protection industry. We are optimistic about the medium and long-term performance growth elasticity of the company. At the same time, based on the fit between the large-scale breeding trend and the company's key customer strategy, and based on the company's R & D advantages and new business development, we characterize the company as a high-quality target with growth. Based on the above judgment, we expect the company's net profit attributable to the parent company in 21-23 years to be RMB 281 / 344 / 439 million, corresponding to the current share price PE of 29.4 / 24.0 / 18.8x, which is covered for the first time and given a "buy" rating.
Comments:
There is a possibility of commercialization of non plague subunit vaccine. If it is implemented, it may promote the continuous growth of performance
In the investor relations activity record form on February 20, 2022, the company said that since the outbreak of non plague, relying on its technical accumulation and advantages in animal genetic engineering vaccine, the company has actively participated in the joint scientific research of African swine fever subunit vaccine, and the African swine fever subunit vaccine developed in cooperation with Lanzhou Veterinary Institute of Chinese Academy of Agricultural Sciences has made positive progress, The Ministry of agriculture and rural areas has completed two rounds of consultation on its emergency evaluation. The follow-up project team will improve relevant experimental research and strive to apply for emergency evaluation as soon as possible. As an inactivated vaccine, the African swine fever subunit vaccine is inferior to the live vaccine in terms of protection rate, but there is no biosafety risk. On the premise of meeting the guiding principles of national vaccine immune efficacy evaluation, it has promotion value. Therefore, we believe that the African swine fever subunit vaccine may be commercialized in the future. Considering the company's deep participation in the research and development of non plague subunit vaccine and its own experience in the production and sales of subunit vaccine, we believe that if it is commercialized, the company may obtain production qualification and occupy a certain market share, which will promote the company's performance to achieve better growth at that time
Head dynamic protection enterprise based on R & D and multi line layout
Pulike Biological Engineering Inc(603566) is mainly engaged in three types of products: vaccines for pigs, vaccines for birds, antibodies and veterinary chemicals, and is committed to the comprehensive layout of the field of pet animal protection. In the first three quarters of 2021, the revenue of vaccines for pigs, vaccines for birds and veterinary chemicals accounted for 35.6%, 34.1% and 28.36% respectively. Focusing on the core strategy of innovation driven development, the company's business scale has maintained rapid growth. Now it has 6 production bases and more than 50 production lines, which can produce more than 50 kinds of biological products and more than 200 kinds of chemical drugs for pigs and poultry. In 2020, the company's sales of live vaccines increased by 28.79% year-on-year to 5.703 billion feather parts / 100 million head parts, and the sales of inactivated vaccines increased by 24.77% year-on-year to 1.155 billion ml. in 2019, the market share in the veterinary biological products industry has reached 3.4%, Now it has become one of the leading animal protection enterprises in China.
In terms of business, thanks to strong R & D capability, the company's core business is maintaining rapid growth by relying on the latest single products:
(1) swine vaccine: benefiting from the repair of pig production capacity and the large volume of core single products, the company's swine vaccine business has grown rapidly in recent two years. In the future, the company may continue to improve its overall profitability by relying on a high gross profit level. As the first enterprise to launch porcine circovirus vaccine in China, the company has established a relatively stable competitive position in the field of porcine circovirus vaccine. It has a number of innovative products such as porcine circovirus type 2 inactivated vaccine, porcine round branch two-way inactivated vaccine and porcine round Deputy two-way inactivated vaccine. In recent years, the company's newly launched porcine round branch two-way inactivated vaccine and porcine ring genetic engineering subunit vaccine are driving the company's porcine ring vaccine business to enter the rapid growth channel again. In the first three quarters of 2021, the sales revenue of porcine round branch two-way inactivated vaccine, porcine ring genetic engineering subunit vaccine and other products doubled year-on-year. Judging from the batch issuance data in China, relying on the above two single products, the company's share in the total batch issuance of domestic porcine circovirus vaccine is rapidly increasing against the trend, and is expected to further establish a leading position under the trend of localization in the future. In addition, the company also performed well in the sales of other single products of swine vaccines. Among them, the sales revenue of porcine pseudorabies gE gene deletion inactivated vaccine (epidemic strain) quadrupled year-on-year in the first three quarters of 2021, and the batch issuance of foot-and-mouth disease vaccine nearly doubled year-on-year in 2021.
(2) avian vaccine: the company focuses on highly pathogenic avian influenza vaccine, and relevant single products have entered the rapid and large-scale stage. In 2019, the company wholly acquired Nanjing Meria animal health Co., Ltd. and renamed Pulike Biological Engineering Inc(603566) (Nanjing) Biotechnology Co., Ltd. (hereinafter referred to as " Pulike Biological Engineering Inc(603566) Nanjing"), marking the company's official entry into the field of highly pathogenic avian influenza vaccine. From the batch issuance data, the company's highly pathogenic avian influenza vaccine business began to rapidly increase in volume in the first quarter of 2021, and the batch issuance volume in 2021 was 84, In the fourth quarter of 2021, the share in the batch issuance of domestic similar products has risen to 13.9%, and the advantage of single product has been preliminarily established. On January 28, 2022, the company's latest fixed increase plan was accepted by the CSRC. The company plans to invest 400 million yuan in Pulike Biological Engineering Inc(603566) Nanjing to establish three highly pathogenic avian influenza vaccine production lines with high automation and intelligence. It is expected to form a production capacity of 2 billion ml / year, which may promote the company's avian vaccine business to enter the rapid growth channel again in the future.
Rich technical reserves + large-scale breeding, optimistic about the future growth space of the company
We believe that the growth of the company is mainly reflected in the following three points:
(1) the company has leading R & D capacity and rich technical reserves. In the future, it may rely on the output of new products to realize the continuous expansion of its business.
The company has always regarded independent innovation and joint R & D as the core driving force of business development. According to the 2020 annual report, the proportion of the company's R & D investment in operating revenue has been higher than 10% for three consecutive years, and the solid R & D investment is accelerating to be transformed into achievements in recent years.
In the field of swine vaccine, the company focuses on foot-and-mouth disease, swine fever, pseudomania and other key diseases, and strives to promote the R & D and achievement transformation of multi linked and multivalent vaccines that meet the market demand. In the future, relevant products may contribute to the performance increment of the company. In the field of avian vaccine, the company focuses on the research and development of genetic engineering vaccine for highly pathogenic avian influenza. The trivalent inactivated vaccine of avian influenza (H5 + H7) recombinant baculovirus vector has obtained the approval of clinical trial. The new tributary faglandular pentavalent inactivated vaccine has entered the stage of new veterinary drug registration in 2020. The relevant products are consistent with the market demand for multi linked and multivalent vaccine, and may contribute to the business scale of the company in the future.
(2) the company adheres to the key customer strategy, which is a high-quality target benefiting from the large-scale breeding process
From the perspective of the industry, although the disturbance of non plague to the whole breeding chain has been weakened, affected by the downturn of pig prices, the national pig production capacity began to be de converted month on month in July 2021. Many large-scale enterprises rely on capital and cost advantages, the market share at the bottom of the cycle has increased instead of decreasing, and the market share has been increasing. In 2021, the CR10 of the pig industry has reached 17.2% (calculated by the market volume). Compared with free range farmers, large-scale breeding enterprises pay more attention to animal epidemic prevention. With the continuous improvement of the scale of the breeding industry, the market capacity of pig vaccine may be further expanded, and head animal protection enterprises are more likely to reach in-depth cooperation with large-scale enterprises by relying on their advantages in technology, products and scale. Therefore, the concentration of animal protection industry may continue to increase in the process of large-scale breeding in the future. From the perspective of the company, Pulike Biological Engineering Inc(603566) has established a strategic customer department in 2021, which is committed to the development of top 30 large-scale livestock and poultry breeding groups, and continuously strengthen the cooperative relationship between the company and large-scale breeding enterprises by quickly responding to the needs of large-scale breeding customers. From the perspective of the company's sales model structure, the proportion of the company's direct sales model in the total revenue is continuously and rapidly increasing, reaching 48.94% in 2020, an increase of 25 PCT compared with 2015. We believe that relying on high-quality products and supporting services, the company is expected to reach in-depth cooperation with large-scale breeding enterprises. The sales volume of relevant products may usher in rapid growth, and the company may become a high-quality target benefiting from the large-scale breeding process.
(3) the company's pet related business layout has been launched one after another, and it is expected to open up a new growth curve in the future
The company established Luoyang Huizhong animal health care Co., Ltd. in 2021 to carry out the whole chain development of research, production and marketing of pet business. Through the online and offline business development of Shanghai mengbang, a joint-stock company, the company is committed to building a pet health management ecosystem. By the end of June 2021, the company has basically completed the clinical trial of canine distemper and canine parvovirus live vaccine (DP), and the application for the production approval number of the first domestic and efficient in vitro anthelmintic compound non pronone drops is progressing in an orderly manner. Considering the broad market space of pet products, pet related business may become a new performance growth point of the company in the future.
Investment suggestion: key recommendation
The company's new vaccine products have a strong performance, and there is a possibility of commercialization of non plague subunit vaccine. Superimposing the pig cycle or meeting the expectation of early reversal, the repair of breeding profits may lead to the repair of terminal demand in the animal protection industry. Therefore, we are optimistic about the growth elasticity of the company's medium and long-term performance. In the long run, the company focuses on the innovation driven development strategy, with strong R & D strength, sufficient technical reserves and support for long-term growth. At the same time, the company steadily promotes the key customer strategy under the background of large-scale breeding, and shares the growth dividends brought by large-scale breeding in the future or relying on product advantages. In addition, the layout of the company in the field of pet animal protection is being carried out one after another, and the R & D of related products has made positive progress, It may open up new performance growth points for the company in the future. Based on the above judgment, we expect the company's net profit attributable to the parent company in 21-23 years to be RMB 281 / 344 / 439 million, corresponding to the current share price PE of 29.4 / 24.0 / 18.8x, which is covered for the first time and given a "buy" rating.
Risk tips
The progress of vaccine batch issuance was less than expected, and an uncontrollable epidemic occurred in downstream aquaculture.
