The company's 2023H1 revenue has grown steadily, and all major business sectors have achieved steady development. The company's 2023H1 revenue from the same period last year was + 2.13% to 544 million yuan, the net profit from home was-15.87% to 31 million yuan, the revenue from 2023Q2 was + 12.56% to 311 million yuan, and the net profit from home was + 8.20% to 21 million yuan. The company adheres to the technological innovation strategy and is committed to building an industrial biological platform company driven by technological innovation and globalization. 2023H1 R & D investment reached 51 million yuan, accounting for 9.45% of revenue, which is at a high level in the industry. At present, the systematic production capacity layout of the major business plates of the company has been basically completed, the Azure Biotechnology 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. Weifang Kangdien refined enzyme series product production line construction project is expected to be put into operation in May 2024. The company's products, production capacity, market share, channels and other strength are expected to be further enhanced after the new production capacity is put into production, optimistic about the future development of the company.

The acquisition of Runbote further strengthens the animal health system, and the new production capacity of food probiotics is expected to contribute to the increase.

In August 2023, the company completed the acquisition of 51% of Runbote's equity. Runbote has a rich background in antibiotic substitution, especially in the research of tannic acid, which is properly complementary with the company's enzymes, probiotics and Chinese herbal medicine. the formation of a complete system of antibiotic substitution will effectively improve the large health system of azure animals and enrich the company's product matrix. In addition, the company is actively expanding food probiotics, plant extraction and other food industry new track. In the food probiotics section, the company has set up a nutrition and health technology center to form four R & D platforms: strain identification, functional verification, analysis and screening, and strain improvement. In 2022, we will jointly build a probiotic factory with the world's top 500 ADM, with a total investment of about 400 million yuan, and will build a new functional probiotic powder raw material production capacity of 100t and liquid product production capacity of 100t. The civil construction part is expected to start construction at the end of September 2023, and the plant will be officially put into operation at the beginning of 2025. The domestic probiotic market has broad prospects and is growing rapidly, and the forward-looking layout of the company's probiotic business is expected to open a new growth increment.

Feed replacement + raw material substitution + large-scale breeding, the company's main business is expected to benefit from market expansion. We believe that, from a top-down point of view, after the implementation of the feed replacement policy, the demand for replacement products is increasing, and at present, the mainstream replacement schemes are mainly based on the combined application of enzyme preparations, microecological preparations and medicinal plant extracts. at the same time, due to the high price of feed raw materials in recent years, the development of new alternatives to soybean protein further promotes the development of enzyme preparations, and the company is expected to benefit from market expansion in the future. From a bottom-up point of view, the company has established a leading position in the field of enzyme preparation and microecology by relying on continuous R & D investment and core technology breakthroughs, and the existing sales model is mainly direct selling. Relying on technology and product advantages, it is expected to share the scale growth dividend in the process of large-scale aquaculture.

Risk hint: the risk of outbreak of large-scale uncontrollable livestock and poultry diseases and the risk of price fluctuation of raw materials.

Investment suggestion: the company is a microbiological leader, and the growth margin is expected to open gradually. The company's 23-25 net profit is expected to reach 1.20 to 1.33 million, corresponding to an EPS of 0.72 and 0.80, respectively, and a PE of 24.8, 22.4 and 21.9 times, respectively, maintaining the "overweight" rating.