Profit attributable to shareholders in 2022 was $3,861 billion, up 201.5% year-on-year. The company achieved revenue of 27.475 billion yuan in 2022, an increase of 27.6%; profit attributable to shareholders of the company was 3,861 billion yuan, an increase of 201.5% year on year; and basic profit per share attributable to shareholders was 1.5234 yuan, an increase of 201.36% year on year. The high growth in the company's performance is mainly due to a sharp increase in revenue from the Food Additives, Animal Nutrition and Colloid segment. The company focuses on continuous transformation, profit growth, active pricing, cost management and strict capital control. The company achieved operating income of 14.544 billion yuan in 2022H2, an increase of 12.47% over the previous year, and profit attributable to shareholders of 1,835 billion yuan, a decrease of 9.42% over the previous year and an increase of 166.10% over the previous year.
By product: 1) Food additives division: In 2022, we achieved operating revenue of 13.301 billion yuan, a year-on-year increase of 28%, a gross profit margin of 19.5%, and a year-on-year increase of 5.8pct. Among them, MSG revenue was 10.78 billion yuan, up 26.6% year on year, and sales volume was 1.2531 million tons, up 12.92% year on year. 2) Animal Nutrition Division:
In 2022, we achieved operating revenue of 9.581 billion yuan, a year-on-year increase of 25.7%, gross profit margin of 27.9%, and a year-on-year increase of 9.9pct. Among them, the company achieved revenue of 2,470 billion yuan, up 3.1% year on year, sales volume 258,800 tons, up 1.78% year on year, and lysine achieved revenue of 2,008 billion yuan, up 21.9% year on year. 3) Colloid Division: Achieved revenue of 2,239 billion yuan in 2022, an increase of 114.7% year on year, of which xanthan gum revenue was 2,169 billion yuan, an increase of 123.9% year on year.
Benefiting from rising prices for main products. According to Zhuochuang information, the average price of monosodium glutamate in 2022 was 9,776 yuan/ton, up 6.87% year on year; the price difference of monosodium glutamate corn was 2,215 yuan/ton, up 18.27% year on year; the average price of xanthan gum was 40,452 yuan/ton, up 61.76% year on year; the price difference of xanthan gum was 3,3021 yuan/ton, up 85.03% year on year.
Implement an internationalization strategy and continue to reduce production costs. In 2023, the company will implement an international strategy with high quality, accelerate the implementation of a more complete international production and sales network, and establish three major regional marketing centers in America, Europe and Southeast Asia to directly serve overseas customers. At the same time, the company will continue to improve production technology to reduce unit production costs, improve logistics systems, further optimize logistics processes and reduce logistics costs.
Profit forecast and valuation: We expect the company's 2023-2025 net profit to be 35.63 billion yuan, 41.98 billion yuan, and 4.590 billion yuan, respectively, corresponding EPS of 1.41, 1.66 and 1.81 yuan/share, respectively. Referring to comparable company valuations and considering AH share valuation differences, the company was given 4-5 times PE in 2023 (corresponding PB is 0.75-0.94 times), and the corresponding reasonable value range was $5.64-7.05. Based on the exchange rate of 1 HKD = 0.87 RMB, the corresponding reasonable value range was HK$6.48-8.10, which gave a “superior to the market” rating for the first time.
Risk warning: risk of a sharp rise in raw material prices, risk of falling product prices, risk of a slowdown in economic growth