Kangtai has announced 1H25 revenue/attributable net profit(NP)/recurring NP of RMB1,392/38/18mn(+16/-77/-85%yoy),with revenue growth mainly driven by new-product contributions,while profit declined due to inventory impairment,higher depreciation,and rising R&D expenses,in our view.We believe that legacy products have entered astable stage,while new products are likely to gradually ramp up.Maintain BUY.



Core products robust,new products drive incremental growth

For 1H25,revenue grew by 16%yoy to RMB1.39bn,with core products remaining stable and growth mainly contributed by new products such as the rabies and varicella vaccines.We expect double-digit revenue growth in 2025:1)we estimate PCV13 revenue exceeded RMB500mn(a modest yoy increase),DTaP-Hib revenue of about RMB200mn(yoy decline due to immunization schedule adjustments),and hepatitis Bvaccine revenue close to RMB300mn(a modest yoy increase);2)diploid rabies vaccine(launched in April 2024)recorded RMB250mn revenue(2024 full-year revenue:RMB340mn),while live attenuated varicella vaccine(launched in July 2024)contributed less than RMB100mn.



Steady R&D,advancing Klebsiella pneumoniae vaccine

The company is advancing nearly 30 pipeline candidates.sIPV,IIV4(3+years old),and tetanus vaccine have been submitted for production approval;MenACYW has completed phase III trials;RV5 is in phase III trials;DTaP-IPV/Hib(pentavalent)is preparing for phase III trials;PCV20 is in phase I/II trials;and MMR(trivalent)and quadrivalent inactivated enterovirus vaccines are in phase Itrials.Recently,the company signed atechnology-transfer agreement with Army Medical University for Klebsiella pneumoniae vaccine,the most frequently detected pathogen according to the 2024 national hospital infection prevalence survey.In pneumonia models,the vaccine showed over 80%protection against clinical strain infections.Looking ahead,the company is to continue advancing innovative vaccine development and explore applications in hospitalized patients,diabetics,chronic respiratory disease patients,and immunocompromised populations.



Inventory and receivables impairment provisions

1)For 1H25,the sales/administrative/R&D expense ratios were 33.8/11.4/21.3%(+0.8/-3.2/+3.0pp yoy),with sales expenses stable,administrative expenses down due to lower staff compensation,and R&D expenses up as multiple products entered phase III trials;2)credit-impairment provisions were about RMB28mn,mainly on receivables,while asset-impairment provisions were about RMB94mn,mainly on inventory.



Maintain BUY

We maintain our earnings forecasts and expect attributable NP of RMB454/544/674mn in 2025/2026/2027.We assign 60x 2025E PE(a premium over its peers’median of 42x,factoring in high growth from new-product launches such as diploid rabies and live attenuated varicella vaccines),for our target price of RMB24.40(previous:RMB16.27,based on 40x 2025E PE and RMB454mn attributable NP).Maintain BUY.



Risks:declines in newborn numbers,intensified market competition;tighter compliance in disease control than we expect.