Event: the company released its 2022 semi-annual report on July 29, 2022. 2022H1 realized operating income of 7.195 billion yuan, an increase of 20.35% over the same period last year, and a net profit of 869 million yuan belonging to the parent company, an increase of 6.5% over the same period last year.
Comments:
Rising costs stimulate resilience and H1 performance grows steadily. 2022H1 achieved a gross profit of 2.27 billion yuan, an increase of 8% over the same period last year, and a gross profit margin of 32%, down 7pct from the same period last year. Of this total, Q2 realized operating income of 3.74 billion yuan, up 25% from the same period last year; gross profit was 1.16 billion yuan, up 5% from the previous year, down 6% from the previous year; gross profit margin of Q2 was 31.05% and net profit rate was 11.82%, respectively, down 10pct and 3pct from the same period last year, and 1pct and 0.6pct respectively compared with the previous year. 2022H1 benefits from long-term contracts with suppliers for raw materials and energy procurement, while European plants continue to improve the continuity of their production operations, while the pricing model in long-term contracts and its partial hedging mechanism partially eliminate the negative impact of significant increases in raw materials and energy costs on production costs. In addition, the company fully considers the cost differences of different raw materials and energy, optimizes and adjusts the capacity allocation of different methionine products, scientifically allocates the configuration of European and Chinese products, and constantly optimizes operational efficiency. finally, to ensure that the production and business sales of all factories are carried out normally as planned. In terms of product prices, the company continues to carry out proactive price management for all products.
Revenue from 2022H1 functional products increased by 26% compared with the same period last year, mainly due to double-digit sales growth of liquid eggs and fixed eggs. Among the income increments, the price factor contributed 130%, the sales factor contributed 0.75%, and the foreign currency conversion factor contributed-31%. The cost of functional products increased by 33% year-on-year; gross profit margin was 28%, down 4pct from the same period last year. According to the company announcement, the price trend of methionine in China is different from that of global prices, and the price increase of 2022H1 products in the global market is higher than that in China.
The revenue of 2022H1 special products did not grow compared with the same period last year, the cost increased by 2% compared with the same period last year, and the gross profit margin was 48%, down 1pct from the same period last year.
The main reason is that the market demand for special products is weak under the influence of rising raw material costs of agricultural products in the first half of the year, sluggish demand in the United States, bird flu in Europe and so on. However, Andisu's special products business Q2 is back on the growth track, with an upward trend in gross profit margin, mainly due to double-digit sales growth of single-stomach animal products and aquatic products; excellent performance of ruminant products in China and Latin America; and continuous improvement in market penetration of new products Luoyanbao Phyplus, Antailai, Xili selenium and Jianchangbao.
Revenue from other 2022H1 products increased by 48% year-on-year, cost increased by 41%, gross profit margin increased by 17%, and 4pct increased year-on-year.
The second phase of methionine will be put into production next month, and the Feikang protein project is progressing steadily. The company's current methionine production capacity is 490,000 tons / year, and its market share is the second in the world, among which it ranks first in the field of liquid methionine. At present, after the completion of 45-day overhaul of 180000 tons of methionine in the first phase of Nanjing plant, the production has achieved a high degree of stability and quickly entered the state of full production. The cost growth level of Nanjing factory is relatively low, which is good for the overall business performance. The second phase of the 180000-ton project is progressing smoothly, formal commissioning has been carried out at full speed, and trial operation is expected to start in August 2022. At that time, the company will have more room and flexibility to optimize capacity allocation, better manage the price fluctuations of raw materials and energy, and continue to strengthen cost competitive advantage.
At present, Kaidisu, a joint venture between Andy Su and Keles, has built a 20, 000-ton / year Feikang single-cell protein plant in Chongqing, which is the first Feikang factory on an industrial scale in the world. Debugging and start-up activities have been started and are expected to be put into production by the end of the year. Feikang single-cell protein uses a low-cost, non-land carbon source of natural microorganisms to ferment rich natural gas and produce non-genetically modified and nutritious proteins, so it is an ideal choice for food and feed applications. It can not only replace traditional protein sources, but also has significant health benefits, such as improving intestinal health and improving immune response. Using 100000 tons of Feikang single-cell protein instead of traditional protein sources can reduce the consumption of wild fish resources by about 42-450000 tons; instead of plant protein, 100000 tons of Feikang single-cell protein can release up to 535 square kilometers of land and save 9 billion litres of water. Feikang single cell can be used in the field of aquatic products, pet food, pig feed and human food. At present, the company is promoting the commercialization of feed protein and capacity expansion to reduce production costs.
With the gradual release of production capacity of the second phase of methionine in Nanjing, the advantage of cost scale in the world is more prominent; at the same time, the permeability of the second pillar of special products continues to improve, Feikang protein continues to promote, the company's growth space can be expected.
Profit forecast: the company's net profit from 2022 to 2024 is expected to be 1.954 billion yuan, 2.255 billion yuan and 2.648 billion yuan respectively, corresponding to 13,11.3,9.6 times of PE, giving a "buy" rating.
Risk tips: large fluctuations in raw material prices / decline in product prices, capacity construction and release are not up to expectations, and the development of special products is not as expected.
