Keqian Biology(688526) 国信证券·2024-09-06 09:30Investment Rating - The investment rating for the company is "Outperform the Market" [3][7] Core Views - The company's main business profitability has declined, with a significant drop in revenue and net profit in the first half of 2024 due to a sluggish breeding market and intensified industry competition [4][6] - The revenue from pig vaccines has decreased, while the company continues to invest in R&D, leading to the launch of new products like the cat trivalent vaccine [5][6] - The report anticipates a recovery in the breeding market, which could benefit the demand for animal health products, particularly pig vaccines [6][7] Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 401 million yuan, down 24.69% year-on-year, with Q2 revenue at 196 million yuan, a decrease of 4.56% quarter-on-quarter and 22.49% year-on-year [4][6] - The net profit attributable to the parent company for H1 2024 was 153 million yuan, a decline of 36.19% year-on-year, with Q2 net profit at 65 million yuan, down 25.05% quarter-on-quarter and 36.91% year-on-year [4][6] Business Segments - Revenue from pig vaccines in H1 2024 was 351 million yuan, down 28.04% year-on-year, with a gross margin of 66.69%, a decrease of 7.59 percentage points compared to the full year of 2023 [5][6] - Revenue from poultry vaccines increased by 13.86% year-on-year to 8.5148 million yuan, but the gross margin was negative at -31.46% [5][6] - Other business revenue grew by 33.48% year-on-year to 22.7963 million yuan, with a gross margin of 55.80% [5][6] R&D and Product Development - The company increased R&D investment to 40.3594 million yuan in H1 2024, leading to the registration of new veterinary drugs and the launch of the cat trivalent vaccine [5][6] - The report highlights the potential for continued product development and market expansion due to solid R&D foundations [6][7] Market Outlook - The report suggests that the pig cycle is entering a recovery phase, which could lead to increased demand for high-quality pig vaccines as breeding profits improve [6][7] - The company is positioned to benefit from the recovery in pig prices, which is expected to drive revenue growth [6][7] Profitability and Valuation - The forecast for net profit for 2024-2026 has been revised down to 420 million, 490 million, and 500 million yuan respectively, with corresponding EPS of 0.90, 1.05, and 1.08 [7][9] - The current price-to-earnings ratio is projected to be 14, 12, and 12 times for the years 2024, 2025, and 2026 respectively [7][9]