Incident: On January 16, the company announced the 2024 employee shareholding plan, including no more than 245 directors, supervisors, senior management, and various business line executives, with a total purchase of no more than 250 million yuan through the secondary market. On January 9, the company announced that 35 core executives would increase the company's shares by no less than 80 million yuan within half a year using self-financing as a benchmark of January 8.
The core backbone of the company is firmly optimistic about the company, and real money continues to buy back and increase its holdings. The company's executives and core employees have confidence in the company's operations. The company has implemented an employee stock ownership plan for 4 consecutive years since 2021. In 2024, the company will continue to raise no more than 250 million yuan in capital from executives and core executives, publicly repurchase company shares in the secondary market for employee stock ownership plans. The employee stock ownership plan lasts 36 months, and 50% of the ban is lifted in the 12th and 24th months, respectively. On this basis, the company's 35 core executives will also use self-raised funds to increase their holdings by no less than 80 million yuan in their personal accounts within half a year, and promise not to reduce their holdings within 5 years. Through the repurchase and increase of holdings with real money, the company's executives and core employees have fully demonstrated their confidence in the future development of Meihua Biotech.
The pattern of monosodium glutamate, alcohol, and lysine has been optimized, and the profit center of the industry has increased significantly. According to our statistics, in terms of production volume, the global MSG CR3 is currently about 76%, threonine CR3 is about 84%, and lysine CR3 is about 74%. The industry's disorderly competition has basically come to an end. Leading companies are expanding production in an orderly manner, and benefiting from soybean meal reduction and substitution, demand for su and lysine is growing rapidly, and the industry profit center has risen significantly. Combined with the increase in corn processing volume, we predict that the net profit of the company will all be higher than 30 billion yuan in 2023-2025.
Continued high dividends, and the cost-effectiveness of dividends has been highlighted: the company attaches great importance to shareholder returns. Starting in 2017, the overall dividend rate remained above 80%. According to the 2023 dividend plan, the overall dividend rate remained above 80%. According to the 2023 dividend plan, the cash dividend dividend was 1,177 billion yuan, and the corresponding dividend rate of 800 to 1 billion yuan was cancelled. According to the current market value, considering buyback and cancellation, the corresponding dividend rate is about 7.3%.
Profit forecast, valuation and investment rating: We expect the company's net profit to be 32.1, 35.8 billion yuan, and 3.79 billion yuan, respectively. The corresponding PE is 9/8/8 times, respectively. Compared with comparable companies Xinhecheng/Zhejiang Pharmaceutical/Andy Suwind, we are careful to give Meihua Biotech 10 times PE in 2024, with a target price of 12.20 yuan, maintaining a “buy” rating.
Risk warning: Risk of large fluctuations in soybean meal prices, risk of amino acid export demand falling short of expectations.