Group 1: Vaccine Development Progress - The 13-valent pneumococcal polysaccharide conjugate vaccine is the world's first dual-carrier vaccine, which received drug registration certification in September 2021 and has been approved for market entry in several provinces [2][3] - The freeze-dried rabies vaccine (human diploid cells) has received acceptance for production registration from the National Medical Products Administration, with ongoing evaluations and trials [3][4] - The inactivated COVID-19 vaccine has been granted emergency use approval in May 2021 and is currently undergoing Phase III clinical trials overseas [3][4] Group 2: Future Product Pipeline - Expected upcoming products include the freeze-dried rabies vaccine, freeze-dried varicella vaccine, and Sabin strain inactivated poliovirus vaccine, with plans for multi-valent vaccines such as the 20-valent pneumococcal polysaccharide conjugate vaccine [4][5] - The company is actively monitoring strain mutations and will disclose new developments as per regulations [4][5] Group 3: International Expansion Strategy - The company has implemented a "bring in" and "go out" strategy, enhancing R&D capabilities through international collaborations and technology imports [5] - The adenovirus COVID-19 vaccine has received emergency use authorization in Indonesia, facilitating future export opportunities [5] Group 4: Sales and Marketing Strategy - The sales team currently consists of over 1,000 members, with plans for expansion as new products are launched [5] - The company aims to enhance its marketing strategies by improving product medical manuals and strengthening academic training for the sales team [5]

[Important Notice, Table of Contents and Definitions](index=2&type=section&id=Item%201.%20Important%20Notice%2C%20Table%20of%20Contents%20and%20Definitions) This section provides essential preliminary information, the report's structure, and key definitions [Company Profile and Key Financial Indicators](index=7&type=section&id=Item%202.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section introduces the company and presents its key financial performance metrics for the reporting period [Company Profile](index=7&type=section&id=I.%20Company%20Profile) Shenzhen Kangtai Biological Products Co., Ltd. (stock code: 300601) is a Shenzhen Stock Exchange-listed company specializing in biological products - Company basic information: Stock abbreviation "Kangtai Biological", code "300601", listed on the Shenzhen Stock Exchange[8](index=8&type=chunk) [Key Accounting Data and Financial Indicators](index=8&type=section&id=IV.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) Revenue increased by 73.72% to RMB 1.83 billion, while net profit attributable to shareholders decreased by 64.19% to RMB 120.50 million, primarily due to non-recurring items 2022 Semi-Annual Key Financial Indicators | Indicator | Current Reporting Period | Prior Year Period | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (RMB)** | 1,827,843,901.50 | 1,052,204,674.04 | 73.72% | | **Net Profit Attributable to Listed Company Shareholders (RMB)** | 120,502,824.15 | 336,551,340.46 | -64.19% | | **Net Profit Attributable to Listed Company Shareholders (Excluding Non-Recurring Items) (RMB)** | 86,404,988.56 | 296,052,990.25 | -70.81% | | **Net Cash Flow from Operating Activities (RMB)** | 107,796,564.13 | 49,227,200.08 | 118.98% | | **Basic Earnings Per Share (RMB/share)** | 0.1735 | 0.4937 | -64.86% | | **Weighted Average Return on Net Assets** | 1.26% | 4.37% | -3.11% | | **Total Assets (RMB)** | 13,761,732,967.10 | 14,148,984,941.24 | -2.74% (Period-end vs. Prior Year-end) | | **Net Assets Attributable to Listed Company Shareholders (RMB)** | 9,239,677,772.86 | 9,166,735,647.64 | 0.80% (Period-end vs. Prior Year-end) | Non-Recurring Gains and Losses Items | Item | Amount (RMB) | | :--- | :--- | | Government grants included in current profit/loss | 40,646,312.86 | | Other non-operating income and expenses apart from the above | -3,825,920.93 | | **Total** | **34,097,835.59** | [Management Discussion and Analysis](index=10&type=section&id=Item%203.%20Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operations, financial performance, and strategic initiatives [Main Business Activities and Operating Performance](index=10&type=section&id=I.%20Main%20Business%20Activities%20During%20the%20Reporting%20Period) The company's revenue grew significantly due to new product launches and core vaccine sales, despite a net profit decline from COVID-19 vaccine asset impairment - The company's main business is the R&D, production, and sales of human vaccines, with a rich product line including 13-valent pneumococcal vaccine, quadrivalent vaccine, and hepatitis B vaccine, and over 30 R&D projects underway[19](index=19&type=chunk) - In the first half of 2022, operating revenue increased by **73.72%**, primarily driven by the ramp-up of the new 13-valent pneumococcal vaccine and sales growth of quadrivalent vaccine (**60.13% increase**) and hepatitis B vaccine (**20.76% increase**)[24](index=24&type=chunk) - Net profit attributable to parent company shareholders decreased by **64.19%**, mainly due to the impairment provision for COVID-19 vaccine-related assets[27](index=27&type=chunk) - The company is steadily advancing its internationalization strategy, with its recombinant COVID-19 vaccine (Y25 adenovirus vector) approved and exported in Indonesia, and production bases receiving EU and Philippine GMP compliance statements, laying the foundation for overseas market expansion[20](index=20&type=chunk)[31](index=31&type=chunk) [Analysis of Core Competencies](index=16&type=section&id=II.%20Analysis%20of%20Core%20Competencies) The company's core strengths include robust R&D capabilities, comprehensive technology platforms, a rich product pipeline, stringent quality control, and a strong market position - The company possesses a leading edge in multi-valent and multi-component vaccine R&D, with its independently developed "dual-carrier 13-valent pneumococcal polysaccharide conjugate vaccine" being a global first, and a domestic pentavalent vaccine approved for clinical trials[36](index=36&type=chunk) - The company has comprehensive vaccine R&D technology platforms, including viral vector and mRNA technologies, and has technology import collaborations with international giants such as Merck, Sanofi, and AstraZeneca[37](index=37&type=chunk)[38](index=38&type=chunk) - The R&D pipeline is extensive, with over **30 projects**, including significant products like pentavalent vaccine, quadrivalent hand-foot-and-mouth disease vaccine, and 20-valent pneumococcal vaccine[39](index=39&type=chunk) - The internationalization strategy is steadily progressing, with the recombinant COVID-19 vaccine (Y25 adenovirus vector) approved and exported in Indonesia, and production bases receiving EU and Philippine GMP compliance statements[43](index=43&type=chunk) [Analysis of Main Business](index=18&type=section&id=III.%20Analysis%20of%20Main%20Business) Main business revenue increased by 73.72% driven by vaccine sales, with significant increases in operating costs, sales expenses, and R&D investment Key Financial Data Year-on-Year Changes | Item | Current Reporting Period (RMB) | Prior Year Period (RMB) | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 1,827,843,901.50 | 1,052,204,674.04 | 73.72% | Ramp-up of new 13-valent pneumococcal vaccine and sales growth of main products | | **Operating Cost** | 243,378,526.66 | 163,723,070.66 | 48.65% | Increase in sales volume | | **Selling Expenses** | 607,038,824.44 | 345,506,885.72 | 75.70% | Increase in sales volume of non-EPI vaccines, increased market investment | | **R&D Investment** | 491,004,186.09 | 144,864,849.27 | 238.94% | Increase in R&D investment | | **Net Cash Flow from Operating Activities** | 107,796,564.13 | 49,227,200.08 | 118.98% | Increase in sales collection | Breakdown by Product or Service | Product or Service | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Profit Margin | Year-on-Year Change in Operating Revenue | | :--- | :--- | :--- | :--- | :--- | | **Proprietary Products - EPI Vaccines** | 189,527,125.52 | 56,189,513.64 | 70.35% | 5.30% | | **Proprietary Products - Non-EPI Vaccines** | 1,631,847,700.63 | 182,069,156.72 | 88.84% | 87.18% | [Analysis of Non-Core Business](index=19&type=section&id=IV.%20Analysis%20of%20Non-Core%20Business) Non-core business significantly impacted profit negatively, primarily due to a substantial asset impairment loss related to COVID-19 vaccines Non-Core Business Profit and Loss Items | Item | Amount (RMB) | Proportion of Total Profit | Explanation of Formation | | :--- | :--- | :--- | :--- | | **Asset Impairment** | -448,714,726.35 | -530.45% | Primarily due to impairment provision for COVID-19 inactivated vaccine-related assets in the current reporting period | | **Other Income** | 42,403,612.27 | 50.13% | Primarily due to government grants related to daily operating activities received in the current reporting period | | **Non-Operating Income** | 4,937,453.88 | 5.84% | Primarily due to litigation compensation received in the current reporting period | | **Non-Operating Expenses** | -8,587,574.86 | -10.15% | Primarily due to external donation expenses in the current reporting period | [Analysis of Assets and Liabilities](index=20&type=section&id=V.%20Analysis%20of%20Assets%20and%20Liabilities) Total assets slightly decreased, with notable shifts in cash, accounts receivable, and construction in progress, while short-term borrowings significantly reduced - Accounts receivable increased by **5.79 percentage points** from the end of the previous year to **16.11%** of total assets, mainly due to increased sales revenue[51](index=51&type=chunk) - Construction in progress increased by **3.89 percentage points** from the end of the previous year to **20.29%** of total assets, primarily due to increased investment in projects such as Minhai Bio's New Vaccine Internationalization Industrial Base and Kangtai Bio's Industrial R&D Headquarters Base[51](index=51&type=chunk) - Monetary funds as a percentage of total assets decreased from **25.09%** to **19.11%**, mainly used for distributing 2021 annual cash dividends and repaying short-term borrowings[51](index=51&type=chunk) - Development expenditures decreased due to the impairment provision for COVID-19 inactivated vaccine assets[51](index=51&type=chunk) [Analysis of Investment Status](index=21&type=section&id=VI.%20Analysis%20of%20Investment%20Status) Investment activities focused on fundraising projects, with a significant decline in total investment and proposed changes to COVID-19 vaccine-related projects due to market shifts - Investment amounted to **RMB 491 million** in the reporting period, a year-on-year decrease of **36.30%**[54](index=54&type=chunk) - The feasibility of the Baiwangxin Emergency Project and the Adenovirus Vector COVID-19 Vaccine Workshop project has significantly changed due to the rapid decline in COVID-19 vaccine market demand and uncertainties such as delayed unblinding of overseas clinical data[59](index=59&type=chunk) - The company's board of directors has approved the "Proposal on Changing the Use of Partial Raised Funds and Permanently Replenishing Working Capital," proposing to use the raised funds from the two aforementioned COVID-19 related projects to permanently replenish working capital, which is subject to shareholder approval[60](index=60&type=chunk) [Risks Faced by the Company and Countermeasures](index=26&type=section&id=X.%20Risks%20Faced%20by%20the%20Company%20and%20Countermeasures) The company faces risks from policy changes, R&D uncertainties, adverse event publicity, and underperforming investment projects, addressed by strategic adjustments - Industry policy change risk: The vaccine industry is highly regulated by administrative bodies, and updates to laws and regulations impose higher requirements on the company's R&D, production, and quality control[65](index=65&type=chunk) - New product R&D risk: Vaccine R&D cycles are long (**7-15 years**), involve significant investment, and carry uncertainties regarding successful industrialization[66](index=66&type=chunk) - Risk of raised fund investment projects not meeting expected benefits: Particularly for COVID-19 vaccine-related projects, due to the rapid decline in domestic and international market demand, delayed unblinding of overseas clinical data, and other factors, there are significant uncertainties regarding future sales and orders[69](index=69&type=chunk) [Corporate Governance](index=29&type=section&id=Item%204.%20Corporate%20Governance) This section details the company's governance structure and the implementation of its equity incentive plans [Implementation of Equity Incentive Plans](index=29&type=section&id=IV.%20Implementation%20of%20Equity%20Incentive%20Plans%2C%20Employee%20Stock%20Ownership%20Plans%20or%20Other%20Employee%20Incentive%20Measures) The 2017 restricted stock incentive plan concluded, while the 2019 stock option incentive plan continued with option exercises and adjustments - The 2017 restricted stock incentive plan has been fully implemented, with the repurchase and cancellation of **59,899 shares** from the last batch of ineligible incentive recipients completed on February 14, 2022[82](index=82&type=chunk) - The 2019 stock option incentive plan is still in progress; during the reporting period, the exercise of the second exercise period for the initial grant of stock options was completed, adding **13.27 million shares**[88](index=88&type=chunk) - Due to the implementation of the 2021 annual equity distribution, the company adjusted the exercise price of the reserved grant portion of the 2019 stock option incentive plan from **RMB 111.80/share** to **RMB 69.34/share**, and the number of options from **1.22 million units** to **1.95 million units**[89](index=89&type=chunk) [Environmental and Social Responsibility](index=38&type=section&id=Item%205.%20Environmental%20and%20Social%20Responsibility) This section outlines the company's commitment to environmental protection and its contributions to social welfare [Environmental Protection](index=38&type=section&id=I.%20Significant%20Environmental%20Issues) The company, a key pollutant emitter, adheres to environmental regulations, ensuring all emissions meet standards without penalties - The company and its wholly-owned subsidiary, Minhai Bio, are both listed as key pollutant-discharging units by local environmental protection authorities[92](index=92&type=chunk) Main Pollutant Emission Status (Excerpt) | Company or Subsidiary | Main Pollutant | Emission Method | Emission Concentration | Standard Implemented | Total Emission Volume | Approved Total Volume | Exceedance Status | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Kangtai Biological (Guangming) | Chemical Oxygen Demand | Standard Emission | 11.052 mg/L | 280 mg/L | 0.194 tons | 51.19 tons | None | | Minhai Biological | Chemical Oxygen Demand | Standard Emission | 96.96 mg/L | 500 mg/L | 22.738 tons | 173.72 tons | None | [Social Responsibility](index=41&type=section&id=II.%20Social%20Responsibility) The company actively fulfills social responsibilities through shareholder returns, employee welfare, and significant charitable contributions - Implemented the 2021 annual equity distribution plan, distributing a cash dividend of **RMB 8.5** per 10 shares (including tax) and converting capital reserves to increase shares by **6 shares** per 10 shares; since its listing in 2017, cumulative cash dividends total **RMB 1.24 billion**[103](index=103&type=chunk) - Actively participated in social welfare initiatives, donating **RMB 50 million** worth of 23-valent pneumococcal polysaccharide vaccine to the Jiangxi Provincial Red Cross Society in June 2022, and contributing epidemic prevention supplies or funds to Shenzhen, Anhui, and other regions[105](index=105&type=chunk) [Significant Matters](index=44&type=section&id=Item%206.%20Significant%20Matters) This section covers important events and developments, including litigation and major project updates [Litigation Matters](index=46&type=section&id=VIII.%20Litigation%20Matters) The company has no major litigation, but several ongoing contract disputes with varying monetary amounts - The company has a contract dispute arbitration case with Guangdong Lidao Health Management Co., Ltd., involving an amount of **RMB 30.37 million**, which has not yet been heard[111](index=111&type=chunk) [Urban Renewal Project Progress](index=49&type=section&id=XIII.%20Explanation%20of%20Other%20Significant%20Matters) The Kangtai Biological Industrial R&D Headquarters Base urban renewal project is progressing well, with the main structure topped out - The Kangtai Urban Renewal Project has obtained construction land, engineering planning, and construction permits, and the main structure has now been topped out[118](index=118&type=chunk) [Share Changes and Shareholder Information](index=51&type=section&id=Item%207.%20Share%20Changes%20and%20Shareholder%20Information) This section details changes in the company's share capital and the ownership structure, including major shareholders [Share Changes](index=51&type=section&id=I.%20Share%20Changes) The company's total share capital increased significantly due to a capital reserve transfer, stock option exercises, and minor convertible bond conversions - Implemented the 2021 annual equity distribution, converting capital reserves to increase shares by **6 shares** per 10 shares for all shareholders, totaling **420 million shares**[121](index=121&type=chunk) - The second exercise period for the initial grant of the 2019 stock option incentive plan was exercised, increasing the company's shares by **13.27 million shares**[121](index=121&type=chunk) [Number of Shareholders and Shareholding Information](index=54&type=section&id=III.%20Number%20of%20Shareholders%20and%20Shareholding%20Information) The company has 71,818 common shareholders, with the actual controller and his concerted parties holding 47.41% of voting rights Top Ten Shareholders' Shareholding (as of June 30, 2022) | Shareholder Name | Shareholding Percentage | Number of Shares Held (shares) | Restricted Shares Held (shares) | | :--- | :--- | :--- | :--- | | Du Weimin | 25.37% | 284,219,243 | 235,453,751 | | Yuan Liping | 19.61% | 219,730,680 | 0 | | Hong Kong Securities Clearing Company Limited | 3.16% | 35,384,139 | 0 | | Zheng Haifa | 2.20% | 24,667,603 | 18,500,702 | | GF Tech Pioneer Mixed Securities Investment Fund | 1.56% | 17,535,147 | 0 | | Hangzhou Hekun Enterprise Management Co., Ltd. | 1.43% | 16,000,000 | 0 | - Du Weimin, Yuan Liping, and Hangzhou Hekun Enterprise Management Co., Ltd. are parties acting in concert; Yuan Liping and Hangzhou Hekun have entrusted their voting rights to Du Weimin[128](index=128&type=chunk) [Information on Preferred Shares](index=57&type=section&id=Item%208.%20Information%20on%20Preferred%20Shares) This section confirms the absence of preferred shares during the reporting period [Preferred Share Information](index=57&type=section&id=Item%208.%20Information%20on%20Preferred%20Shares) The company did not have any preferred shares during the reporting period - The company had no preferred shares during the reporting period[132](index=132&type=chunk) [Information on Bonds](index=58&type=section&id=Item%209.%20Information%20on%20Bonds) This section provides details on the company's outstanding convertible corporate bonds [Convertible Corporate Bonds](index=58&type=section&id=IV.%20Convertible%20Corporate%20Bonds) The "Kangtai Convertible Bond 2" remains outstanding, with its conversion price adjusted due to equity distribution, and minimal conversion activity to date - Due to the implementation of the 2021 annual equity distribution, the conversion price of "Kangtai Convertible Bond 2" was adjusted from **RMB 107.28/share** to **RMB 66.51/share**, effective June 2, 2022[136](index=136&type=chunk) - As of the end of the reporting period, the cumulative number of shares converted was **3,088 shares**, with an unconverted amount of **RMB 2.00 billion**, accounting for **99.99%** of the total issuance amount[137](index=137&type=chunk) - The company's corporate credit rating and the credit rating of "Kangtai Convertible Bond 2" are both **AA**, with a stable outlook[139](index=139&type=chunk) [Financial Report](index=62&type=section&id=Item%2010.%20Financial%20Report) This section contains the company's unaudited interim financial statements and detailed notes for the reporting period [Financial Statements](index=62&type=section&id=II.%20Financial%20Statements) This section presents the company's unaudited consolidated and parent company financial statements for the first half of 2022, including notes