Core viewpoints

23H1 achieved operating income of 544 million yuan (year-on-year + 2.13%), of which enzyme preparation revenue was 191 million yuan (year-on-year + 1.03%), microecological preparation revenue was 120 million yuan (year-on-year + 5.46%), revenue from animal health products was 153 million yuan (year-on-year + 4.48%), other main business revenue was 72.1352 million yuan (year-on-year + 10.47%); net profit was 31.4696 million yuan (year-on-year-15.87%). 23Q2 achieved revenue of 311 million yuan (year-on-year + 12.56%, month-on-month + 33.90%), of which enzyme preparation revenue was 108 million yuan (year-on-year + 13.61%, month-on-month + 31.14%), microecological preparation revenue was 70.2789 million yuan (year-on-year + 10.23%, month-on-month + 45.50%), and revenue of other products was 38.7706 million yuan (year-on-year + 8.42%, month-on-month + 62.62%). The net profit of homing is 20.9069 million yuan (year-on-year + 8.20%, month-on-month + 97.93%). The company continues to increase the size of food probiotics and other new areas, tap the potential of the new track, while acquiring Runbot shares to further consolidate and improve its own product matrix, to provide customers with systematic solutions, with the recovery of the downstream breeding end, the company's performance is expected to usher in a better improvement.

Event

According to the company's semi-annual report of 2023, in the first half of 2023, the company realized operating income of 544 million yuan, an increase of 2.13% over the same period last year, and a net profit of 31.4696 million yuan, a decrease of 15.87% over the same period last year. 23Q2 realized revenue of 311 million yuan, an increase of 12.56% over the same period last year, an increase of 33.90% over the previous year, and a net profit of 20.9069 million yuan, an increase of 8.20% and 97.93% over the same period last year.

Brief comment

1. 23Q2's main plate is growing significantly compared with the same month.

23H1 achieved operating income of 544 million yuan (year-on-year + 2.13%), of which enzyme preparation revenue was 191 million yuan (year-on-year + 1.03%), microecological preparation revenue was 120 million yuan (year-on-year + 5.46%), revenue from animal health products was 153 million yuan (year-on-year + 4.48%), other business revenue was 72.1352 million yuan (year-on-year + 10.47%), and net profit was 31.4696 million yuan (year-on-year-15.87%).

23Q2 achieved revenue of 311 million yuan (year-on-year + 12.56%, month-on-month + 33.90%), of which enzyme preparation revenue was 108 million yuan (year-on-year + 13.61%, month-on-month + 31.14%), microecological preparation revenue was 70.2789 million yuan (year-on-year + 10.23%, month-on-month + 45.50%), and revenue of other products was 38.7706 million yuan (year-on-year + 8.42%, month-on-month + 62.62%). Achieve a net profit of 20.9069 million yuan (+ 8.20% compared with the same period last year, + 97.93% compared with the previous year).

In terms of sub-sales model, 23H1's direct sales model achieved revenue of 339 million yuan (year-on-year + 10.33%), accounting for 63.37% of revenue (year-on-year + 3.53pcts); distribution model achieved revenue of 196 million yuan (year-on-year-4.96%).

In terms of profit margin, 23H1's sales gross profit margin is 44.18% (year-on-year + 0.99pcts), net sales margin is 6.78% (year-on-year-1.20pcts); 23Q2 sales gross margin is 44.47% (year-on-year + 0.86pcts, month-on-month + 0.67pcts), and net sales margin is 7.81% (year-on-year-0.37pcts, month-on-month + 2.41pcts).

In terms of expenses, 2023H1's sales expenses are 91.8944 million yuan (year-on-year + 12.45%); management expenses are 59.5726 million yuan (year-on-year + 5.87%); financial expenses are 4.7146 million yuan (year-on-year + 412.63%), mainly due to the increase in current loans and interest expenses; R & D expenses are 51.4206 million yuan (year-on-year + 2.86%).

2. Continuous R & D and innovation and coordinated development of multi-business.

In May 2023, the Ministry of Agriculture and Village issued the notice on publicizing the key Laboratory of Enterprises of the Ministry of Agriculture and Village. The company, together with the Animal Husbandry and Veterinary Research Institute of Shandong Academy of Agricultural Sciences and Shandong Agricultural University, has been approved for the construction of the key Laboratory of Animal Health products of the Ministry of Agriculture and Village. After years of accumulation, the company has established a stable and professional talent team, the company's annual R & D investment accounts for more than 8% of the business income. In addition, the company has established cooperative relations with more than 300 units in the industry, exporting a number of technologies and products, promoting the upgrading of animal protection products and improving the overall technical level of animal protection enterprises. In terms of business layout, the company's technology center and plant microecological preparation project have been successfully put into operation, and the Animal Protection Industrial Park is gradually put into production and operation. The construction project of Weifang Kangdien refined enzyme production line is under smooth preparation and is expected to be put into operation in May 2024. The systematic capacity layout of the company's major business sectors has been basically completed, and its strength in products, production capacity, market share, channels and other aspects will also be further improved after the new capacity is put into operation.

3. Continuous incremental expansion, acquisition of Runbo special reinforcement preparation business

On July 20, 2023, the company acquired a 51% stake in Qingdao Runbote Biotechnology Co., Ltd with its own capital of 91.8 million yuan. Runbote is an early manufacturer of green non-resistant feed additives in China. With coated preparation technology as the core technology, Runbote has developed coated tannic acid preparation, coated butyric acid preparation and coated plant essential oil preparation. As well as ruminant used rumen choline, rumen methionine and other products, the market covers more than 30 provinces and cities in China. And successfully opened up the European Union, Southeast Asia, South Asia, the Middle East, North Africa, South America, Russia and other overseas markets. Runbote has a rich background in the substitution of antibiotics, especially in the research of tannic acid, and can complement the enzyme preparation, probiotics and Chinese herbal medicine of azure organisms to form a complete system of antibiotic substitution. effectively improve the large health system of azure animals, provide customers with system solutions, a richer product matrix will greatly enhance the company's market competitiveness. In addition, Azure Bio and a number of international leading enterprises to carry out R & D cooperation, Runbote can share the company's platform resources, the coordinated development of both sides is expected to produce greater market value.

4, carry out international cooperation in various fields, actively layout probiotic track company and the world's top 500 ADM to carry out multi-field cooperation, subsidiary and ADM set up Aidi League Azure Biotechnology (Shandong) Co., Ltd., mainly engaged in the production and sales of food probiotic products, the products are promoted to the global market, including functional probiotic powder raw material production capacity of 100t, probiotic liquid product production capacity of 100t It is expected to be officially put into production and operation in early 2025. Through cooperation with industry leader ADM, it is expected that the company's probiotic brand and market share will continue to improve, and fully tap the development potential of the probiotic market. In addition, the company has further deepened its cooperation with Germany's Yingchuang Industrial Group (EVONIK). After about two years of joint research and development, the company has successfully launched an innovative probiotic additive product that can improve the water quality of aquaculture, which is currently mainly aimed at shrimp culture. The products are promoted in the mode of blue production and exclusive sales, and have been sold in the global market one after another. Through international cooperation with a number of enterprises, it is helpful to promote companies to link global resources and speed up the global layout.

5, profit forecast and recommendations: 23Q2's main business revenue has a good performance compared with the previous month, the company continues to promote R & D and innovation, the capacity layout of each major business plate is basically completed, on the one hand, through equity acquisition to strengthen the preparation business, on the other hand, actively enter the new track such as food probiotics, under the background of the gradual recovery of downstream breeding demand, the company is expected to usher in better growth. It is estimated that from 2023 to 2025, the company will achieve operating income of 1.284 million yuan, net profit of 1.055 and 1.42 million, EPS of 0.42, 0.56 and 0.72 respectively, and PE of 32.75x/24.23x/18.84x, respectively, maintaining the "overweight" rating.

Risk analysis.

① market competition risk: the company's enzyme preparation, microecology and animal protection industry are facing increasingly fierce market competition. If the company cannot keep up with the development trend of the industry, meet the changes of customer demand, and further strengthen its strength in new product research and development, technological innovation and customer service, it will face the risk of declining performance caused by intensified market competition in the future. ② breeding blight and natural disaster risk: after the occurrence of aquaculture blight, it will cause greater economic losses to the aquaculture industry in the short term, resulting in a decline in feed production and demand, thus affecting the upstream demand for feed enzymes, animal microecology and animal protection products. ③ raw material price fluctuation risk: raw material price fluctuation will increase the difficulty of purchasing management and production operation of the company, and the rise of raw material price will increase the production cost of the company's products and reduce the company's profitability. ④ exchange rate fluctuation risk: the company's export products are mainly settled in US dollars. If the RMB exchange rate fluctuates, the enterprise will face the risk of exchange loss. If the RMB continues to appreciate against the US dollar, it will lead to a rise in the price of products denominated in US dollars, reducing the price competitiveness of the company's export products, thus affecting the export sales of the company's products.