Event: in the first three quarters of 2023, the company achieved 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 previous year, and a net profit of 23.8534 million yuan, an increase of 41.93% and 14.09% over the same period last year.
Comments: the company's revenue has increased steadily, while the level of gross profit margin has increased. 2023Q3 sales gross profit margin of 44.59%, year-on-year + 3.95pp, month-on-month + 0.13pp. The increase of the company's gross profit margin is mainly due to the fact that the company adheres to the technological innovation strategy and continues to increase investment in research and development. The R & D expenditure of 2023Q3 company is 29.776 million yuan, which is + 33.71% compared with the same period last year.
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.
The probiotics industry has been highly valued, and the company has a bright future for cooperation in the development of multi-field layout. Probiotics help to regulate the physiological function of the human body and improve immunity, which belongs to the industry encouraged by the national industrial policy. China's "healthy China 2030 Plan outline" has been issued and implemented, which has become a powerful driving force to stimulate the development of health care industry. At the national strategic level, it is required to actively expand prevention and health care services and promote the transformation of traditional disease treatment to health promotion. According to the research firm ZIONMarketResearch, the global output value of probiotics is expected to exceed US $77 billion in 2025. The company takes advantage of the increased demand for probiotics for human use in the consumer market. In cooperation with international leading companies, ADM Group has extensive experience in the development and production of food, beverage and supplement ingredients, additives and flavors. In the future, both sides will make joint efforts to provide R & D and technical support to Weifang Azure (Aidi League Azure). The new plant will have a production capacity of 100 tons of functional probiotic powder and 100 tons of probiotic liquid products. The plant is expected to be put into operation at the beginning of 2025. Aidi League Azure Biology, as a Sino-foreign joint venture, has unique resource advantages, serves as a bridge to connect ADM global probiotic resources and probiotic technology and strain reserve of Azure organisms, and uses patented strains of all parties to provide customers with quality products and services, and with the cost advantage of local production, its performance-to-price ratio is improved.
Improve the product matrix, capacity climbing step by step. In August 2023, the company acquired a 51% stake in Runbote Biotechnology Co., Ltd. Runbote has a rich background in antibiotic substitution, especially in the research of tannic acid, which is properly complementary with the company's enzyme preparation, probiotics and Chinese herbal medicine to form a complete system of antibiotic substitution. 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. With the improvement of product matrix and capacity climbing, the company will further improve its probiotic brand, production capacity, market share and so on.
Profit forecast and investment advice. It is estimated that the EPS from 2023 to 2025 will be 0.42,0.55 and 0.67 yuan respectively, and the corresponding dynamic PE will be times higher than that in 33-25-21, maintaining the "hold" rating.
Risk tips: the progress of research and development is not as expected, product sales are not as expected, and other risks.