Event: the company released the third quarter report of 2022 on October 27, 2022. 2022Q3 achieved operating income of 3.605 billion yuan, an increase of 7.15% over the same period last year, realized net profit of 274 million yuan belonging to the parent company, down 36.85% from the same period last year, and deducted 271 million yuan of non-return net profit, down 37.24% from the same period last year.
Comments:
Cost pressure Q3 performance decline. In the first three quarters of 2022, the company realized operating income of 10.8 billion yuan, + 15.6% compared with the same period last year, and net profit of 1.144 billion yuan,-8.55% of the same period last year. Of this total, Q3 realized operating income of 3.605 billion yuan, + 7.15% year-on-year, and net profit of 274 million yuan,-36.85% year-on-year. Q3 gross profit margin was 24.4% and net profit rate was 7.6%, down 13.4pct and 6.2pct respectively from the same period last year, and 6.6pct and 4.2pct respectively from the previous month. The main reason is the sharp rise in the cost of Q3 raw materials and energy.
Look at the products:
Functional products (including methionine and vitamins): 2022Q3 operating income 2.534 billion yuan, year-on-year + 4.85%, month-on-month-5.96%; operating cost 2.04 billion yuan, year-on-year + 27.72%, month-on-month + 3.43%; gross profit 19.5%, year-on-year-14.42pct, month-on-month-7.3pct. Among them, in terms of methionine, Q3 Nanjing plant continues to maintain a stable production level. with the smooth start of the second phase of the 180000 ton Nanjing liquid methionine plant (BANC2) in September, the cost competitiveness of Andy threonine has been further enhanced. The European plant also adjusted and optimized its production operations in Q3, temporarily shutting down one of the solid methionine production lines until the end of 2022, with the aim of making full use of existing natural gas contracts to optimize production costs. In terms of vitamins, the company temporarily reduced vitamin A production in Q3 to strengthen cost control.
Special products: 2022Q3 operating income 837 million yuan, year-on-year + 8.19%, month-on-month + 3.78%; operating cost 484 million yuan, year-on-year + 26.64%, month-on-month + 16.95%; gross margin 42.19%, year-on-year-8.42pct, month-on-month-6.51pct.
Of these, revenue growth was due to 2022Q3's growth in all animal products, such as + 15 per cent sales of ruminant products, Xilisen and Aetailai's nutrition and health promotion business set a single-quarter sales record. The decline in gross profit margin is due to the sharp rise in energy and raw material costs in Europe and the negative impact of the low value-added product portfolio on sales.
The Nanjing integration base has been put into production smoothly, and the Feikang protein project has progressed steadily. On September 15, 2022, the second phase of Andi Su Nanjing plant was officially put into production of 180000 tons of liquid. The total production capacity of methionine in Nanjing plant reached 350,000 tons per year, making it the single plant with the largest production capacity of liquid methionine in the world. In addition, Kaidisu, a joint venture between Andy Su and Keles, is building a 20, 000-ton / year Feikang single-cell protein plant in Chongqing, the world's first industrial-scale Feikang plant, which is expected to be put into production by the end of the year. This microbial protein is produced by natural gas fermentation, its production does not occupy arable land, does not use animal and plant raw materials, and consumes very little water resources. Feikang single cell protein has significant health benefits such as improving intestinal health and immune response. After being successfully put into production, the Chongqing plant can not only be used as a reliable protein supply for domestic direct mining, but also be promoted to the Southeast Asian market.
With the gradual release of the second phase production capacity of the Nanjing plant, the global permeability of the company's liquid methionine will continue to increase and its cost competitiveness will be further enhanced. At the same time, the permeability of the second pillar of special products continues to improve, Feikang protein continues to promote, the company's long-term space can be expected.
Profit forecast: based on the impact of the company's production line shutdown and cost rise, we adjust the profit forecast.
It is estimated that the company's net profit from 2022 to 2024 will be 1.462 billion yuan, 1.867 billion yuan and 2.23 billion yuan respectively (the original value is 1.954 billion yuan, 2.255 billion yuan and 2.648 billion yuan), corresponding to 18 times, 14 times and 12 times PE respectively, maintaining the "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.