\u3000\u3 Shengda Resources Co.Ltd(000603) 392 Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) )
Key investment points
Financial performance: in 2022q1, the growth rate of revenue and the improvement of net profit margin exceeded our expectations
The company released the first quarterly report of 2022, with a revenue of 3.17 billion yuan in 2022q1, a year-on-year increase of 284.9%; The net profit attributable to the parent company was 1.33 billion yuan, a year-on-year increase of 360.2%; The net profit margin was 43.7%, with a year-on-year increase of 8.5pct; The net cash flow from operating activities was 450 million yuan, a year-on-year increase of 481.8%. We believe that the company’s revenue growth and net profit margin in the first quarter of 2022 exceeded our expectations.
Growth driven: HPV vaccination rate improvement window period + net profit margin improvement under scale effect
We believe that the higher than expected growth of the company’s net profit in the first quarter of 2022 is mainly due to ① the faster than expected increase of HPV vaccination rate: according to the data of the Central Inspection Institute, 67 batches of bivalent HPV vaccine were issued in the first quarter of 2022, which significantly exceeded the level in the same period of 2021 (about 20 batches). According to the historical batch issuance volume estimation, we speculate that the batch issuance volume of 2022q1 is about 6.5-7 million. We estimate that the HPV vaccination rate in China will be about 6-7% in 2021, and 20222025 is still the window period for the rapid improvement of HPV vaccination rate. We are optimistic about the sales space of bivalent HPV vaccine promoted by the company at the grass-roots level. ② The increase in net profit margin due to the increase in the proportion of vaccine revenue is higher than expected: we estimate that the net profit margin of vaccine business exceeds that of IVD business. Under the background of rapid growth on the revenue side, the R & D expense rate and management expense rate may decline relatively, resulting in an increase in the overall net profit margin. Looking forward to 20222023, we expect that ① bivalent HPV vaccine is still in the window period of rapid growth year-on-year (from the increase of vaccination rate), ② the increment of antigen detection reagents and raw materials outside China will be reflected in the following quarters, and ③ the net profit margin will be improved under the scale effect. We expect that the company is expected to maintain a relatively high-speed growth in 20222023.
Profit forecast and valuation
We expect that the company’s EPS from 2022 to 2024 will be 6.37 yuan, 7.89 yuan and 9.59 yuan / share respectively, and the closing price on April 15, 2022 will be 42 times that of 2022. We believe that in the window period of divalent HPV production capacity release and vaccination rate improvement, the company’s traditional varicella vaccine, new varicella vaccine and nine valent HPV vaccine may be listed successively from 2023 to 2025, connecting with relatively high-speed growth. In terms of core competitiveness, the research center cooperated by the company in Xiamen University has competitive advantages in vaccine design based on structural biology and efficient gene engineering recombinant antigen expression system. We believe that we can give a valuation premium to the vaccine business. In the IVD sector, the company’s chemiluminescence business is booming and provides cash flow in traditional advantageous fields, which is expected to continue to benefit from the research advantages of the cooperative team in the antigen field. Comprehensively consider the company’s competitive advantage and industry status, and maintain the “overweight” rating.
Risk tips
The clinical promotion speed of vaccine was lower than expected; Risk of excessive price reduction of core varieties; Cooperation with Xiamen University in R & D transformation is less than expected risk; Risk of deterioration of IVD variety competition pattern.
