UBS: Shenzhen Kangtai Biological Products – Q1 Revenue Miss, Profit Beat
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UBS notes that Shenzhen Kangtai Biological Products reported full-year 2025 revenue of RMB 2.673 billion, up 0.81% year-over-year, missing both Visible Alpha consensus and UBS estimates. Net profit fell 65.1% to RMB 70.3 million. In Q1 2026, revenue declined 2.2% to RMB 631 million, while net profit reached RMB 21.2 million, a 48.6% increase but still below consensus.
Gross margins contracted by 7.3 and 2.4 percentage points in 2025 and Q1 2026, respectively. However, operating margins gradually recovered, reaching 8.7% by Q1 2026. Core products accounted for over 80% of 2025 revenue, led by PCV13 and rabies vaccines. Batch release data revealed a significant decline in PCV13 and rabies vaccine volumes, partially offset by a 25.6% growth in hepatitis B vaccines.
Management expects 2026 revenue and net profit to remain flat, as new product growth is offset by legacy product declines, VAT policy changes, and rising selling expenses. UBS lowered its PCV13 sales forecasts for 2026-2027 and reduced total revenue projections.
The firm cut its target price to RMB 15.5 from RMB 18.0, based on a DCF model with a 7.5% WACC and 2.5% terminal growth rate. UBS maintains a Neutral rating, citing reasonable valuations offset by slow growth and macroeconomic headwinds. Downside risks include VAT policy shifts and legacy vaccine clearance.