CanSino Biologics Inc. (6185.HK), also known as CanSinoBIO, is a vaccine maker in China. The company name reflects the Canadian and Chinese backgrounds of the four founding scientists who started the company eleven years ago with their personal savings.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”]
CanSino Biologics is currently developing 16 vaccine candidates for 13 human infectious diseases such as meningitis, pneumonia, tuberculosis, pertussis, diphtheria, tetanus, shingles, EBOLA, and COVID-19. Seven vaccine candidates are in a clinical trial or clinical trial application stage, six candidates in a preclinical stage. CanSino Biologics has facilities to produce about 70 to 80 million vaccine doses a year.
In the race for a COVID-19 vaccine, CanSino Biologics collaborates with the Chinese Academy of Military Medical Science’s Bioengineering Institute and with The National Research Council of Canada. A potential vaccine is already in an advanced clinical trial stage but does not show satisfying results yet.
CanSino Biologics is currently focusing mainly on the Chinese market but has signed agreements with Italian and Indian pharmaceutical companies to promote its products in Europe and South Asia. The company is also looking at other emerging markets. A possible COVID-19 vaccine could push CanSino Biologics’ expansion effort.
CanSino Biologics was founded in 2009 and is headquartered in Tianjin, China. The company is listed on the main board of Hong Kong’s stock exchange since March 2019. Its shares can also be traded in Germany and the US. Major shareholder is Lilly Asia Ventures, the investment arm of US pharmaceutical giant Eli Lilly, with ownership of around 16 percent. The founders hold together about 26 percent in the company. Forty-four percent of the shares are in public hands.
CanSino Biologics has not generated any revenue yet. Only some small revenues of about 1m RMB from providing R&D services to a third party was generated in 2018 so far. CanSino Biologics has a workforce of over 429 employees and reported a loss before tax of 157m RMB (22m USD) in its fiscal year 2019. The loss increased by 13 percent compared to the same period a year ago.
CanSino Biologics’ cash reserves increased by over 250 percent to 203m RMB (28m USD), while debts and lease obligations increased by 11 percent to 167m RMB (23m USD) in 2019. The company’s cash level is sufficient for a runway of another 12 months without revenues. The equity ratio is at 82 percent and the gearing, defined here as total liabilities to total equity, at 21 percent. The next earning results will be announced at the end of August.
CanSino Biologics’ shares gained momentum since November last year and more than quintupled in value since, over 200 percent increase alone this year. The company is currently priced at 27 times book value, the only valuation ratio available at the moment. CanSino Biologics does not pay dividends. All four covering analysts have a ‘buy’ or ‘outperform’ recommendations on the stock.
Our conclusion: CanSino Biologics is a risky but interesting play. The valuation is high. If the company succeeds with a COVID-19 vaccine, stock prices will jump. More than any other country, China wants to win the vaccine race, and CanSino Biologics could be a ray of hope. If not, the company will take a slower path to grow by commercializing current vaccine candidates and by expanding its activities in Asia.
AIS Rating: ★★★☆☆
| 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|
| EPS (RMB) | (0.41) | (0.45) | (0.9) | (0.8) |
| Change (%) | (10) | (100) | 14 | |
| DPS (RMB) | n/a | n/a | n/a | n/a |
| P/E | P/E INDUSTRY in Asia |
P/B | P/CF | Equity Ratio* (%) |
ROE (%) |
LIAB./ Equity** (%) |
Div YLD (%) |
|---|---|---|---|---|---|---|---|
| n/a | 107 | 29 | n/a | 82 | (13) | 21 | n/a |
* Equity / Total Assets, ** Total Liabilities / Equity
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