Events:
On August 27, the company released a semi-annual performance report. In the first half of 2023, the company realized operating income of 287 million yuan, down 23% from the same period last year; realized net profit of 46 million yuan, down 32% from the same period last year; deducted 38 million yuan, down 43% from the same period last year; and realized basic earnings per share of 0.57 yuan per share.
Downstream going to the treasury is under pressure on the performance, and is optimistic about the performance repair in the second half of the year.
23H1's performance is temporarily under pressure, or due to the destocking of downstream manufacturers. In a single quarter, the operating income of Q2 company in 2023 was 163 million yuan, down 11% from the same period last year, an increase of 30% from the same period last year; the net profit from the parent was 26 million yuan, down 31% from the same period last year, with an increase of 24% from the previous year. With the end of downstream depots and increased procurement at Christmas in the fourth quarter, the company's performance in the second half of the year is expected to continue to repair.
The growth of coolant is full of toughness, and the profitability of spices is improved.
In terms of segment, in the first half of 2023, the company's operating income of natural spices / coolers / synthetic spices reached RMB 0.95 trillion, compared with the same period last year. The gross profit was 43%, 31%, 25%, and + 2pct/-7pct/+7pct, respectively. The company focuses on natural spices, whose added value far exceeds that of synthetic spices, and is optimistic about the resilience of the overall performance brought about by the restoration of natural spices.
Layout of Thailand base, vanillin is expected to return.
Natural vanillin is the company's core product, because it is included in the "double high list", the company's production and sales of vanillin have been greatly affected. By laying out its base in Thailand, the company is expected to regain its vanillin advantage. In addition, the Thai base also contains leaf alcohol and coolants and other products, which is expected to meet higher-than-expected demand in the field of e-cigarettes.
Synthetic biology is expected to open up the space of natural spices.
The company uses synthetic biology to empower the manufacture of natural spices, has achieved certain results in individual products, and has the possibility of technology spillover. The cost of related products is expected to be greatly reduced and the market is expected to expand rapidly.
Earnings forecast, valuation and rating
We estimate that the company's revenue in 2023-25 will be 7.3 million yuan, 9.9 billion yuan, 1.15 billion yuan, corresponding growth rate of 4%, 35 percent, 16 percent, net profit of 1.3 million yuan, 270 million yuan,-1 percent, 53 percent, 37 percent, 37 percent, 1.61 percent, 2473.39 yuan and 28%, respectively. In view of the company's obvious advantages in the field of natural fragrances, synthetic biology empowered spices are expected to make a breakthrough. with reference to the comparable company valuation, we give the company 20 times PE in 2024, corresponding to a target price of 49.3 yuan in 2024, maintaining a "buy" rating.
Risk hint: Thailand base construction progress is not as expected risk, market development is not as expected risk, e-cigarette regulatory risk, the main income comes from overseas risk, synthetic biology technology development is not as expected risk