Incident: The company released its annual report on March 18, achieving revenue of 27.761 billion yuan, -0.63% YoY; net profit to mother of 3.181 billion yuan, -27.81% YoY. Single Q4 revenue was 7.234 billion yuan, +1.66% YoY, +2.57% month-on-month; net profit to mother was 1.02 billion yuan, +5.99% YoY, +21.93%.
The price drop increased slightly, and the performance was in line with expectations. On the revenue side, there was a high increase in xanthan gum, and other products remained stable. In 2023, flavors/feed amino acids/pharmaceutical amino acids/large raw material by-products/ others (xanthan gum, trehalose) achieved operating income of 87.50/103.23/5.63/48.72/3.52 billion yuan, respectively, -5.99%/-0.77%/2.25%/-7.11%/33.78%. Sales bucked the trend. According to the company's announcement, sales of the company's main products lysine hydrochloride (98% lysine), lysine sulfate (70% lysine), and threonine scored +6.91%/+3.93%/+24.33% year on year, while sales of xanthan gum increased 26.86% year on year. Sales prices, lysine hydrochloride (98% lysine), lysine sulfate (70% lysine), and threonine were -16.75%/-10.41%/-5.25%, respectively. In terms of gross margin, the company's gross margin was 19.68% in 2023, down 5.45 pcts year-on-year, mainly due to the decline in products.
Repurchases are compounded by a high percentage of dividends, which highlights the long-term value of the company. According to the company's announcement, the company plans to distribute a discovery dividend of about 1.2 billion yuan (tax included) in 2023, and the amount of shares to be repurchased in cash in 2023 is 890 million yuan. The total dividend amount for 2023 (including the share repurchase amount already implemented in 2023) accounts for 65.71% of net profit returned to the mother in 2023. The high proportion of dividends shows the company's long-term value.
The company's net profit for 24/25/26 is estimated to be 32.29/38.34/4.253 billion yuan, maintaining a “buy” rating.
Risk warning:
Project construction falls short of expectations; market competition enhances risk; demand falls short of expected risk