\u3000\u3 Guocheng Mining Co.Ltd(000688) 526 Wuhan Keqian Biology Co.Ltd(688526) )
Event:
Wuhan Keqian Biology Co.Ltd(688526) released the annual report of 2021 & the first quarterly report of 2022: in 2021, the total operating revenue of the company was 1.103 billion yuan, an increase of 30.81% year-on-year, and the net profit attributable to the parent company was 571 million yuan, 27.45% year-on-year. In 2022, the total operating revenue of Q1 was 203 million yuan, a year-on-year decrease of 36.46%, and the net profit attributable to the parent company was 90.766 million yuan, a year-on-year decrease of 46.28%
Key investment points:
Downstream pig breeding losses squeezed the profit of animal insurance, and the interest rate fell slightly.
① in 2021, the company achieved a revenue of 1.103 billion yuan (year-on-year + 30.81%) and a net profit attributable to the parent company of 571 million yuan (year-on-year + 27.45%); In terms of segments, the company’s revenue of pig vaccine was 1.06 billion yuan (year-on-year + 29.9%), and the gross profit margin was 81.8%, which was mainly due to the recovery of downstream pig breeding, the company actively explored the market and achieved performance growth throughout the country; Affected by the market situation, the revenue of poultry seedlings was 110 million yuan (year-on-year – 11.3%), and the gross profit margin was 3.3%. Affected by the downturn of downstream aquaculture market, the company’s comprehensive gross profit margin was 79.8% in 2021, down 3pcts from the same period last year.
② in 2022q1, the company achieved a revenue of 203 million yuan (year-on-year – 36.46%), and a net profit attributable to the parent company of 90.766 million yuan (year-on-year – 46.28%). After the Spring Festival in 2022, the pig price continued to decline, the deep loss at the downstream breeding end reduced the investment in drug vaccines, and the company’s revenue performance of pig vaccines decreased. This round of pig cycle is expected to usher in an inflection point in the second half of 2022. With the expected recovery of pig prices, the corresponding demand for animal insurance will increase, and the company’s performance is expected to improve in the second half of the year. From the long-term impact of African classical swine fever, disease prevention and control has permanently raised the breeding threshold of the industry. Scientific disease prevention and control has become an important indicator of efficient breeding enterprises, and the profitability of the company will usher in growth.
Overweight R & D and innovation, and continue to build the company’s core competitiveness. In 2021, the company continued to increase R & D investment, with R & D funds of RMB 80.028 million (year-on-year + 35.42%), and continued to scale up R & D innovation. During the reporting period, the company obtained five new veterinary drug registration certificates, including Inactivated Porcine Pseudorabies gE gene deletion vaccine (hnx-12 strain), live porcine encephalitis B vaccine (passage cell source, SA14-14-2 strain), inactivated duck tambusu virus vaccine (df2 strain), avian leukemia virus p27 antigen sandwich ELISA test kit and canine parvovirus colloidal gold test strip, and obtained the product registration announcement of African classical swine fever virus fluorescent PCR test kit; Obtain porcine infectious gastroenteritis, porcine epidemic diarrhea and porcine δ Three clinical trial approvals, including coronavirus triple inactivated vaccine (WH-1 strain + aj1102 strain + chn-hn-2014 strain), porcine circovirus 2D baculovirus inactivated vaccine (ch17 strain) and porcine pseudorabies live vaccine (HB-98 strain, suspension culture); 19 invention patents were applied for and 7 invention patents were authorized.
The vaccine product matrix has been continuously improved, and the results of diversified layout have emerged. In 2019 and 2020, the company ranked second in the market sales revenue of non-state compulsory immunization veterinary biological products in China, and first in the market sales revenue of non-state compulsory immunization pig biological products. From 2016 to 2020, the market share of Porcine Pseudorabies Vaccine ranked first for five consecutive years, and the market share of Porcine mycoplasma pneumonia vaccine and porcine gastroenteritis and diarrhea vaccine ranked first in China for two consecutive years. In 2021, the company invested heavily in the fields of vaccines for poultry, pets and ruminants, and a variety of single and combined vaccines for economic animals entered the new drug registration or completed the clinical trial stage. In terms of companion animal (PET) vaccine, the company’s rabies inactivated vaccine (sad strain) and canine quadruple live vaccine products have entered the market; Cat triple inactivated vaccine is in the stage of intensive research in the laboratory. This will further enrich the company’s product structure and improve its ability to resist market risks.
Profit forecast and investment rating we believe that the operating revenue of the company from 2022 to 2024 is RMB 1.321/17.87/2.107 billion, and the corresponding PE is 15.76/10.53/9.30 times respectively. Considering that the company’s performance is dragged down by the pig market in the short term, with the arrival of the turning point of the cycle, the profitability of the company is expected to regain the upward trend and maintain the “overweight” rating.
The risk indicates the risk of low pig price; The risk of repeated outbreaks in the downstream aquaculture industry; The risk of intensified market competition; Risk of failure in research and development of new products; Risks of cooperative research and development with central China Agricultural University; The risk that the company’s performance does not meet expectations, etc.
