Core viewpoints

In the first three quarters of 2023, the company achieved operating income of 880 million yuan, an increase of 6.06 percent over the same period last year, and a net profit of 55.3231 million yuan, an increase of 2.05 percent over the same period last year. 2023Q3 realized revenue of 336 million yuan, an increase of 13.10 percent, an increase of 7.81 percent over the previous year, and a net profit of 23.8534 million yuan, an increase of 41.93 percent and 14.09 percent, respectively. From a product point of view, the revenue of 2023Q3's enzyme preparation products was 126 million yuan, an increase of 21.39% over the same period last year, and that of microecological preparations was 58.6833 million yuan, down 10.75% from the same period last year. The company's gross profit margin has increased significantly, mainly due to the company's adherence to the technological innovation strategy, continued increase in R & D investment, significant cost reduction and efficiency gains in the application of new technologies, and optimization of product sales structure. The company actively cooperates with overseas advantageous enterprises, and is expected to continuously enhance its market competitiveness. at the same time, the production capacity layout of all major business sectors of the company has been basically completed, and a new track has been actively developed on the basis of strengthening the original business. it is expected to promote the sustained growth of the company's performance.

Event

The company disclosed that in the first three quarters of 2023, the company realized operating income of 880 million yuan, an increase of 6.06% over the same period last year, and a net profit of 55.3231 million yuan, an increase of 2.05% over the same period last year. 2023Q3 realized revenue of 336 million yuan, an increase of 13.10% over the same period last year, an increase of 7.81% over the same period last year, and a net profit of 23.8534 million yuan, an increase of 41.93% and 14.09% over the same period last year.

Brief comment

The main results are as follows: 1. the product of enzyme preparation has increased significantly, and R & D can reduce cost and increase efficiency.

2023Q3 achieved revenue of 336 million yuan, an increase of 13.10% over the same period last year, of which the revenue of enzyme products was 126 million yuan, up 21.39% over the same period last year, and that of microecological preparations was 58.6833 million yuan, down 10.75% from the same period last year.

In terms of profit margin, the company's gross sales margin was 44.34% (year-on-year + 2.06pcts) and net sales margin was 7.64% (year-on-year + 0.12pcts) in the first three quarters of 2023. 2023Q3's gross sales margin is 44.59% (year-on-year + 3.95pcts, month-on-month + 0.13pcts), and net sales margin is 9.02% (year-on-year + 2.34pcts, month-on-month + 1.21pcts). The improvement of the company's gross profit margin is mainly due to the fact that the company adheres to the strategy of technological innovation and continues to increase investment in research and development. Through the effective application of new gene screening technology, high efficient enzyme products were developed; through protein engineering transformation, some products increased the specific enzyme activity and temperature resistance, increased the application effect of enzyme, and reduced the cost; through the expression system (chassis cells) to further improve and optimize the regulatory factors, the fermentation level is improved and the cost is reduced. At the same time, the product sales structure is optimized. In terms of expenses, 2023Q3's sales expenses are 52.9006 million yuan (year-on-year + 14.34%), management expenses are 29.9882 million yuan (year-on-year-3.25%), financial expenses are 3.5713 million yuan (year-on-year + 94.81%), and R & D expenses are 29.776 million yuan (year-on-year + 33.71%).

2. Deepen cooperation with overseas advantageous enterprises and continuously improve the layout of the industrial chain in October 2023, Shandong Ulan, a wholly-owned subsidiary of the company, signed a "shareholder agreement" with China to set up a Sino-foreign joint venture company. Shandong Ulan will accept the entrustment of the joint venture company to produce GHS products exclusively for the joint venture company by OEM processing. In the future, the joint venture company will continue to invest in research and development, product variety development and applied technology research, and make full use of the scientific breeding technology of the two companies to improve the competitiveness of the joint venture company. Prior to this, the company's subsidiary and the world's top 500 ADM established Aidi League Azure Biotechnology (Shandong) Co., Ltd., mainly engaged in the production and sales of food probiotics products for global market promotion. In July, the company acquired a 51% stake in Qingdao Runbote Biotechnology Co., Ltd. Runbote has a rich background in the substitution of antibiotics, especially in the research of tannic acid. it can complement the enzyme preparation, probiotics and Chinese herbal medicine of azure organisms and form a complete system of antibiotic substitution. In terms of capacity layout, the Azure Biotechnology Center and the 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. Active cooperation between the company and overseas advantageous enterprises will help to fully combine the advantages of both sides to enhance R & D capabilities, expand channels at home and abroad, and enhance market competitiveness.

3. Profit forecast and rating: the company actively cooperates with overseas advantageous enterprises and is expected to continuously enhance its market competitiveness. at the same time, the production capacity layout of all major business sectors of the company has been basically completed, and actively expand new tracks on the basis of strengthening the original business. it is expected to promote the sustained growth of the company's performance. 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 33.47x/24.76x/19.22x, respectively, maintaining the "overweight" rating.