Key points of investment:
The company released a performance forecast for the first quarter of 2023: the company expects to achieve revenue of 640-658 million yuan in the first quarter of 2023, an increase of 58%-62% over the previous year, an increase of 5%-8% over the previous year; it is expected to achieve net profit of 0.87 to 95 billion yuan, an increase of 73%-89% over the previous year, an increase of 35%-47% over the previous month. The performance slightly exceeded expectations, mainly due to continued strong demand in overseas markets.
Product export demand continued to be strong, domestic demand also increased, and Q1 performance slightly exceeded expectations. Since 2022, the Russian-Ukrainian conflict and other factors have led to high energy costs in Europe, and the production and costs of related functional sugar alcohol companies have been affected. The company has seized historical opportunities, kept up with customer demand in a timely manner on the premise of maintaining steady growth in sales from its original customers, and seizing a larger market share.
23Q1 The company's overseas sales continued to improve. Although the domestic market was affected by the Spring Festival holiday, it continued to grow. Furthermore, the 23Q1 exchange rate, sea freight, etc. are all relatively stable, and the company's performance is impressive. Looking at sales throughout the year, it is expected that the company's xylitol will maintain an increase of about 10%, and sorbitol and maltitol will maintain an increase of nearly 30%; in terms of price, the price of the raw material xylose is expected to decline, and the price of xylitol will be slightly adjusted accordingly. Prices of sorbitol and maltitol are expected to stabilize, and there is room for growth when supply is in short supply.
The xylose technical improvement project improved the raw materials for xylitol. Sorbitol and maltitol continued to grow rapidly. The Zhoushan project focused on big health products to open up room for future growth. The combination of the raw material xylose largely determines the profitability of xylitol. The company's “annual output of 30,000 tons of D-xylose green intelligent upgrading project” will be put into operation in the third quarter of this year. At that time, the competitive advantage of the company's xylitol products will be further strengthened. Sales of the company's crystalline sorbitol and crystalline maltitol products have continued to grow rapidly in recent years. The company put into production 30,000 tons of sorbitol and 20,000 tons of maltitol in 2021 and 2022, respectively, to support business development. Considering the company's long-term development, the company selected the Zhoushan International Grain and Oil Industrial Park in Zhejiang to plan and build a second production base, and set up a 1 million tons of corn deep-processing health food ingredient project to produce health food ingredient products such as sorbitol, fructose syrup, maltose syrup, glucose syrup, maltitol, mannitol, polydextrose, antadextrin, modified starch for food, aloxone sugar, etc. Improve the upstream supply chain layout vertically, guarantee the supply of starch as the main raw material, and continue to enrich the product structure with horizontal development to meet the diverse needs of customers. It is expected that the project will be gradually put into operation in the second half of 2024, opening up the company's future growth space.
Investment analysis opinion: For the time being, maintain the company's net profit forecast for 2023-2025 at 392, 508, and 632 million yuan. The corresponding PE was 15, 12, and 9X respectively, maintaining the “increase in holdings” rating.
Risk warning: 1) raw material prices have risen sharply; 2) product prices have fluctuated greatly; 3) new projects have fallen short of expectations.