Goldman Sachs maintains Neutral on BioKangtai and lowers 12-month target price to Rmb15

Overview

This report is Goldman Sachs' earnings review on BioKangtai (300601.SZ). The company's FY25 revenue was broadly in line with expectations, while net profit was slightly better than GSe but declined sharply YoY; 1Q26 revenue was broadly in line with expectations, while net profit was below GSe. Goldman Sachs maintains a Neutral rating and lowers the target price from Rmb17 to Rmb15.

Core views

The core view is that the company remains an important participant in China's vaccine market, and volume growth in PCV13 and human diploid cell rabies vaccine is expected to offset declining COVID-19 vaccine revenue; however, infant vaccine demand is affected by the birth rate, new products have lower gross margins and require promotional investment, and anti-corruption and other policy factors add pressure. Goldman Sachs therefore maintains a neutral view for now, awaiting evidence that the company can continue to offset the impact from COVID-19 vaccines and policy factors.

Analysis framework

The report mainly analyzes FY25 and 1Q26 actual results, variance versus GSe forecasts, product mix changes, overseas business growth, new product launch timing, and valuation methodology, and derives the 12-month target price using a two-stage DCF.

Methodology notes

• Valuation methodsTwo-stage DCF

  Two-stage DCF valuation

  The target price of Rmb15 is based on a two-stage DCF, with key assumptions including a 9.5% discount rate and 2% terminal growth rate.

• factor_profileGS Factor Profile

  Goldman Sachs factor profile

  Goldman Sachs' factor profile uses four attributes—Growth, Financial Returns, Multiple, and Integrated—to compare the stock with peers in its coverage universe and industry.

• mna_assessmentM&A Rank

  M&A probability rating

  M&A Rank is scored from 1 to 3, where 1 represents high probability, 2 medium probability, and 3 low probability; BioKangtai's M&A Rank is 3 and is not material to the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 300601.SZ

  Covered company in the report, an A-share healthcare/vaccine company

  Strengths

  A key participant in China's vaccine market, with core products including HBV vaccine, PCV13, and human diploid cell rabies vaccine; high YoY growth in overseas business; new products including quadrivalent influenza vaccine, polio vaccine, and adsorbed tetanus vaccine are being launched successively.

  Weaknesses

  FY25 net profit declined sharply YoY, and gross margins of new products are lower than those of the previous flagship product PCV13; 2026E-2028E net profit and EPS forecasts were cut significantly.

  Comparison

  Goldman Sachs believes the company's one-year forward P/E is in the lowest quartile of the past five years, but it is still not included on the buy list within the coverage universe and is rated Neutral.

  Risks

  Downside risks include weaker-than-expected sales of PCV13 and rabies vaccine, inclusion of PCV in VBP policy, and R&D risks; upside risks include development of new vaccines on the mRNA platform and stronger-than-expected overseas sales of PCV13.

Key data

• FY25 revenueRmb2,673mnUp 1% YoY, broadly in line with GSe of Rmb2,768mn.
• FY25 net profitRmb70mnDown 65% YoY, slightly above GSe of Rmb54mn.
• 1Q26 revenueRmb631mnDown 2% YoY, broadly in line with GSe of Rmb650mn.
• 1Q26 net profitRmb33mnUp 49% YoY, below GSe of Rmb57mn.
• Overseas business revenueRmb99mnScale remains small, but increased 859% YoY.
• 2026E revenue forecastRmb2,942mnLowered by 6.3% from the previous forecast of Rmb3,139mn.
• 2026E net profit forecastRmb116mnLowered by about 49.1% from the previous forecast.
• 12-month target priceRmb15Lowered from the previous Rmb17; current price is Rmb13.85, implying 8.3% upside.

Impact & implications

The earnings implications are broadly neutral: on the revenue side, new product launches are expected to restore low double-digit growth, but on the profit side, forecasts have been significantly cut due to lower gross margins of new products and promotional costs. Valuation is at the lower end of the past five years' forward P/E range, but the company still needs to deliver evidence of sustained growth to drive a rating upgrade.

Risks

• PCV13 and rabies vaccine sales are below expectations.
• PCV is included in VBP policy.
• R&D progress falls short of expectations.
• The birth rate has not improved materially, which may affect infant vaccine sales.
• Gross margins of new products are lower and promotional expenses are higher, which may pressure profit margins.
• Anti-corruption and other policies or measures may affect industry demand and channels.

What to watch

• Launches and volume ramp-up of quadrivalent influenza vaccine, polio vaccine, and adsorbed tetanus vaccine from 2H25 to 1H26.
• Launch progress of DTcP-Hib-IPV and PCV20.
• New license-in products from multinational pharmaceutical companies.
• Whether sales of PCV13 and human diploid cell rabies vaccine can continue to offset the decline in COVID-19 vaccine revenue.
• Whether overseas business revenue can expand in scale on top of high growth.
• Whether the drag from gross margin and sales promotion investment on net profit will ease.