JINYU BIO-TECHNOLOGY(600201)COMMENTARY：CONFIDENCE BOOSTED IN LONG-TERM PROSPECT

　　Core views:
　　The core vaccine products of Jinyu Bio-Technology have gained stable market share. With its optimized portfolio and organizational structure, the Company enjoys improving fundamentals in its main business. The participation of its major shareholders in the proposed private placement of up to Rmb800mn will likely boost confidence in the Company’s long-term development. Its deployment of messenger ribonucleic acid (mRNA) vaccines is set to accelerate, with steady advances of R&D in potential blockbusters going forward. Given the larger-than-expected declines in hog prices and the accrual of expenses at the end of the year, we lower our 2022E/23E/24E EPS estimates to Rmb0.19/0.35/0.43 (from previous estimates of Rmb0.28/0.45/0.59) and assign 39x 2023E PE, the same as its comparable company Pulike (603566.SH), to derive a target price of Rmb14. We reiterate the “BUY” rating.
　　Abstract:
　　Event: The Company proposed a private placement of up to Rmb800mn (72.38mn-96.5mn shares) to its shareholder Inner Mongolia Jinyu Biological Holding (Jinyu Holding), the chairman Mr. Zhang Chongyu and the vice chairman Ms. Zhang Jing. Our comments are as follows:
　　The visible improvement of mRNA vaccine R&D and production capabilities.
　　The fund raised via the private placement will be mainly used for animal mRNA vaccine and nucleic acid drug R&D projects (Rmb298mn) and animal mRNA vaccine and nucleic acid drug factory construction projects (Rmb213mn). The mRNA vaccine as a cutting-edge product in the industry, boasts sound safety and protection efficacy. Through this private placement, the Company is likely to further strengthen its R&D capabilities in the third-generation mRNA vaccines. It will likely continue to develop various mRNA vaccines for pigs, ruminants, dogs, cats and other animals, and build domestic leading mRNA vaccine production lines correspondingly, which will help further consolidate the Company’s leading position in the industry.
　　ASF vaccine-related major products advancing steadily in R&D.
　　According to Jinyu Bio-Technology’s announcement, the Company has established an integrated Africa swine fever (ASF) vaccine R&D platform with multiple technical roadmaps advancing steadily. The Company has carried out joint R&D with leading universities and scientific research institutions at home and abroad, focusing on the screening of effective ASF antigens and the core technology breakthroughs of nucleic acid vaccines. It has also conducted experiments and assessment with its partners on multiple ASF vaccine technical routes by using the protection level 3 laboratories (P3 labs), and has accumulated a large amount of experimental data accordingly. In addition, the Company has also done research and experiments on ASF subunit vaccine, viral vector vaccine and epitope-based peptide vaccine, and has achieved progress in these fields.
　　Business fundamentals improved, confidence in the Company demonstrated, and the future growth to be expected.
　　Jinyu Bio-Technology has focused on the continuous cost reduction, product structure optimization and organizational reform, etc. since last year, and has now achieved certain results. We believe the current price of the its core foot-and-mouth disease (FMD) product has stabilized, and its new products such as the combined porcine Circovirus and Mycoplasma vaccines are likely to drive the increase in the proportion of non-FMD products among the Company’s product mix. In addition, after this private placement, Zhang Chongyu and Zhang Jing will become the Company’s actual controllers with a combined 18%-20% stake of the two investors and Jinyu Holding (vs. the 13.2% stake before the plan), which will likely break the status quo of no controlling shareholders or actual controllers of the Company. This fully demonstrates the support from the major shareholders and management for the Company’s development, and their confidence in its future prospect and value, meaning the Company’s robust development is likely to be secured in the long run.
　　Potential risks: Less-than-expected livestock and poultry prices; widespread ASF outbreaks; intensified industry competition; changes in vaccine industry policies; new product launch and promotion not up to expectations; disappointing private placement progress.
　　Investment recommendation: The core vaccine products of Jinyu Bio-Technology have gained stable market share. With its portfolio and organizational structure optimized, the Company enjoys improving fundamentals in its main business. The participation of its major shareholders in the proposed private placement of up to Rmb800mn will likely boost confidence in the Company’s long-term development. Its deployment of mRNA vaccines is set to accelerate, with steady advances of R&D in potential blockbusters going forward. Given the larger-than-expected declines in hog prices and the accrual of expenses at the end of the year, we lower our 2022E/23E/24E EPS estimates to Rmb0.19/0.35/0.43 (from previous estimates of Rmb0.28/0.45/0.59). With the valuation multiples of 39x 2023E PE (per Wind consensus estimates) of the comparable company Pulike (603566.SH) as a reference, we assign 39x 2023E PE to derive a target price of Rmb14 for the Company and reiterate the “BUY” rating.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。