\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 41 Chengdu Kanghua Biological Products Co.Ltd(300841) )
Under the influence of the epidemic, the revenue of 2022q1 still achieved positive growth, and the cost rate during the period was effectively controlled. The company’s 2022q1 revenue was 270 million yuan, a year-on-year increase of 12%, the net profit attributable to the parent was 140 million yuan, a year-on-year increase of 35%, and the non net profit deducted was 120 million yuan, a year-on-year increase of 25%. The company’s 2021 annual report shows that the revenue in East China accounts for 34.53% of the overall revenue, and the Q1 revenue of the company still achieves positive growth under the control of the epidemic in some regions.
The growth rate of the company’s net profit is higher than that of its revenue. We believe that it is due to the further decline of the company’s sales and management expense ratio. In 2022q1, the company’s sales expense ratio is 25.75% (27.27% in the same period last year) and the management expense ratio is 7.18% (10.12% in the same period last year). At the same time, the company’s R & D expenses further increased, with a R & D expense rate of 7.88% in 2022q1 (7.06% in the same period last year).
With the expansion of production capacity, the diploid rabies vaccine is in the high-speed and high-volume period. In 2021, the company issued 4.795 million rabies vaccines in batches, with a year-on-year increase of 29%. The sales revenue was 1.26 billion yuan, with a year-on-year increase of 26%. The growth rate of sales was similar to that of batch issuance. We think it reflects the strong demand for terminal sales of diploid rabies vaccine.
From 2016 to 2020, the average number of rabies vaccine batches issued in China was 68.69 million. In 2021, the number of diploid rabies vaccine batches issued by the company accounted for only 7.0% of the industry. We believe that the current penetration rate is still low. The second workshop of the company’s viral vaccine was put into operation in June 2021. We believe that the diploid rabies vaccine is in a large-scale period under the release of production capacity.
The second growth curve is the smooth progress of pet rabies vaccine. In 2021, Kang Hua mobile obtained the distribution rights of the Hangzhou pet’s rabies inactivated vaccine in the Chinese mainland and Macao, Hongkong and Taiwan area government procurement and pet hospital Wuxi Online Offline Communication Information Technology Co.Ltd(300959) . Kanghua dynamic insurance will vigorously introduce high-quality marketing personnel, expand pet vaccine sales and marketing team, accelerate the expansion of dealer channels, carry out market brand construction and product promotion, and build industry brand influence. On December 5, 2021, Kanghua dynamic Insurance launched the Hillis guarding plan. By the end of 2021, the plan had recruited more than 2000 pet hospitals.
The layout of R & D was accelerated. In the research projects of the company, the pre clinical research is expected to be completed in 2022, including the hexavalent norovirus vaccine and the immobilized bioreactor culture process of human rabies vaccine (human diploid cells). The number of R & D personnel of the company reached 107 at the end of 2021, an increase of 101.89% over 53 at the end of 2020. In 2021, the company’s R & D expenses were 78.88 million yuan, a year-on-year increase of 35%.
Profit forecast and valuation. The fair value of the company was RMB 202.7 billion, which was a non recurring profit and loss. We estimate that the net profit attributable to the parent company in 202224 will be 860 million, 1.31 billion and 1.66 billion yuan, with a compound annual growth rate of 39% in 202224. Referring to comparable companies, we give the company 25 times PE in 2022, corresponding to the target price of 238.17 yuan per share, and give the rating of “better than the market”.
Risk warning: the risk of product batch issuance falling short of expectations, the risk of intensified market competition, the risk of valuation fluctuation of vaccine sector, and the risk of shareholder reduction.
