Huachuang Securities: Over the past 25 years, most types of vaccines have seen year-on-year increases in batch approvals. It is important to focus on targets with low valuations and improving logic.

Huachuang Securities released a research report stating that although the industry has been impacted by the spread of internal competition since Q2 of the 24th year, from the supply perspective, the continuous deterioration of internal competition has objectively led to some companies on the path of exit. Since the 25th year, the firm has seen a stabilization and rebound in the prices of animal medicine raw materials, with macrolide products even experiencing a significant price and profit recovery. They have also observed an improvement in the year-on-year issuance of most vaccine varieties. In this process, company performance has shown significant differentiation, but the well-performing companies all share a common characteristic, which is innovation, whether it be product innovation, marketing innovation, or capital operation innovation. Ultimately, these innovations are manifested on the profit statement, deserving of continued attention. Huachuang Securities' main points are as follows: Vaccine issuance: Most vaccine varieties have seen year-on-year growth in the 25th year, with new vaccines outperforming According to the Chinese Animal Medicine Basic Database, looking at the cumulative year-round issuance data from January to December, most vaccine varieties have shown year-on-year growth. Specifically, in terms of pig vaccines, foot-and-mouth disease vaccine, round ring vaccine, pseudorabies vaccine, swine fever vaccine, gastric duodenum vaccine, and swine encephalitis vaccine have seen year-on-year growth of +6.4%, +13.0%, +5.1%, +11.7%, +21.3%, and +7.9% respectively. Only blue ear vaccine and piglet parvovirus vaccine saw year-on-year declines of -3.7% and -4.5%, respectively. In terms of poultry vaccines, avian influenza trivalent vaccine, Newcastle disease vaccine, and duck contagious serositis vaccine have seen year-on-year growth of +22.8%, +8.8%, and +17.3%, respectively, while the Marek's disease vaccine saw a year-on-year decrease of -3.6%. In terms of ruminant vaccines, brucellosis vaccine saw a year-on-year growth of +61.6%, while small ruminant plague vaccine saw a year-on-year decline of -16.2%. With regards to pet vaccines, domestic rabies vaccine and domestic cat triple vaccine saw year-on-year growth of +22.1% and +32.3%, respectively. Segment analysis: Profitability, increased slaughter, diseases, new products, and other factors support growth Looking at the varieties, in the 25th year, pig vaccines with relatively fast growth rates include the economic products round ring vaccine and the necessary immunogen swine fever vaccine. It is speculated that the increased profitability of pig farming, increased pig slaughter, and new products like gastric duodenum vaccine have collectively contributed to this growth. Vaccines with a relatively stable growth rate include the mandatory immunogen foot-and-mouth disease vaccine and the necessary immunogen pseudorabies vaccine. Among products specially for sows or mainly used by sows, the fastest growing remains the gastric duodenum vaccine, followed by the swine encephalitis vaccine achieving a certain growth. The increase in piglet diarrhea issues or the rapid growth of the gastric duodenum vaccine is a key factor. In terms of poultry vaccines, the avian influenza trivalent vaccine and duck contagious serositis vaccine have experienced relatively fast growth. Since the 24th year, the issue of avian diseases caused farmers to pay more attention to the breeding side, driving the high growth of duck disease vaccines as a major factor. Additionally, the Newcastle disease vaccine continued to grow steadily, while the Marek's disease vaccine saw a slight decline. In terms of ruminant vaccines, with the continuous introduction of new products, the brucellosis vaccine has maintained a high growth rate, while the small ruminant plague vaccine saw a slight decline based on a high base in the same period last year. As for pet vaccines, since the introduction of the domestic cat triple vaccine in the 24th year, with continued market promotion and consumer education, the 25th year continued to maintain a high growth rate. Furthermore, looking at different vaccine types for the same disease, in the entire 25th year, the unit price of foot-and-mouth disease single vaccine saw a year-on-year decline of -0.7%, while the multi-valent vaccine saw a year-on-year increase of +8.9%, with the pig foot-and-mouth disease OA bivalent vaccine (including the 3B-deficient vaccine) seeing a high growth rate of +12.3% year-on-year. The round ring vaccine saw a year-on-year increase of +19.7%, and the round ring single vaccine saw a year-on-year increase of +11.1%, with the genetically engineered single foot-and-mouth disease vaccine seeing a year-on-year increase of +14.2%, and the inactivated complete foot-and-mouth disease vaccine seeing a year-on-year increase of +8.7%. Overall, new vaccines continue to outperform. Animal medicine raw materials: The animal medicine VPI index increased by 7.2% year-on-year in the 25th year, but there is significant differentiation between varieties Looking at the annual average prices, the animal medicine VPI index increased by 7.2% year-on-year in 2025, but there is significant differentiation between varieties. Macrolide products saw across-the-board increases, with tilmicosin, tiamulin, and tilmicosin prices increasing by 29.5%, 11.4%, and 22.9% respectively. Additionally, tilmicosin price increased by 29.8%, but florfenicol and amoxicillin showed weaker performances, with prices decreasing by 5.9% and 21.0% respectively, while doxycycline hydrochloride saw a slight increase of 3.2%. Looking ahead, the firm predicts that the breeding side will continue to face pressure for some time, combined with the fact that the pre-holiday period is traditionally a slow season for animal medicine, the short-term market may continue to maintain a weak trend. Risk warning: downstream demand recovery is lower than expected, intensified industry competition, product quality issues, slower-than-expected progress in new product research and development, and adjustments in industry regulatory policies.