Andisu released the semi-annual report of 2023: from January to June 2023, the operating income was 6.328 billion yuan, and the net profit of YoY-12.06%, was 33 million yuan, YoY-96.16%.

From the revenue side, the decline in the price of the main products led to a decline in revenue from functional products, but growth in specialty products. ① functional products: revenue in the first half of 2023 fell 20% year-on-year to 4.163 billion yuan. Although product sales increased, the prices of major products such as methionine and vitamin A fell sharply in the first half of the year compared with the same period last year, resulting in a decline in overall revenue. ② special products: revenue in the first half of 2023 increased 14% to 1.749 billion yuan compared with the same period last year, and some product lines maintained good growth, so although product prices declined slightly, product sales increased significantly, driving overall revenue growth.

From the profit side, due to the adverse impact of high costs, gross profit margin fell sharply by 11 percentage points, dragging down profit performance. In the first half of 2023, although the price of the company's main raw materials fell compared with the same period last year, it was still relatively high, resulting in a significant decline in the company's gross profit margin, including 17% year-on-year gross profit margin for functional products and 8% year-on-year price decline for special products. the company's comprehensive gross profit margin fell 11 percentage points, dragging down the company's net profit performance. At present, the company has taken a series of action plans to protect profit margins, including price optimization, production distribution, proactive cash management and special cost reduction plans, and we expect the company's profit margins to gradually pick up in the future.

Invest in the construction of new methionine production capacity in Quanzhou, which continues to increase and consolidate its leading position. The company also announced that it will invest 4.9 billion yuan to build a new solid methionine plant in Quanzhou, Fujian, with an annual production capacity of 150000 tons, in order to make full use of the integrated synergy with Sinochem. The project is expected to be put into production in 2027. The company's methionine production capacity has continued to increase over the past few years, and the global market share of methionine has increased from 24% to 27% between 2012 and 2017, and has continued to consolidate its existing market share in recent years. We expect the company to further expand its production capacity through continuous industrial investment and continue to maintain its leading position in the global first echelon in the future.

We will actively promote the "two pillars" strategy and open up room for long-term growth. In recent years, the company has been actively implementing the "two-pillar" strategy, that is, to speed up the development of special business while continuously consolidating the leading position in the methionine industry.

At present, the special product business has become one of the company's main sources of profit. As the company's second business pillar, the company is actively developing special product business, special product capacity expansion and optimization projects continue to advance as planned, opening up long-term growth space.

Company profit forecast and investment rating: the company is a global leader in the animal nutrition industry and the second largest methionine producer in the world, which can produce both solid and liquid methionine, while the company actively implements the "two-pillar" strategy. continue to consolidate the leading position of methionine industry, and accelerate the development of special business. Based on the company's semi-annual report of 2023, we adjust the company's profit forecast for 2023 to 2025 accordingly. We predict that the net profit of the company in 2023 to 2025 is 4.08,7.80 and 983 million yuan respectively, and the corresponding EPS is 0.15,0.29 and 0.37 yuan respectively. Maintain the "highly recommended" rating.

Risk tips: product prices decline; new production capacity in the industry is put in too fast; demand in the feed industry is declining.