Company introduction: Amino acid leader, focusing on high dividends and employee motivation
The company has developed into one of the largest enterprises with comprehensive amino acid categories and production capacity in China. Its products include animal nutritional amino acid products, food taste optimization products, and amino acid products for human medical use. The compound growth rate of the company's revenue from 2010 to 2023 was 14.1%, and the compound growth rate of net profit to mother was 11.3%. Since its listing, the company has maintained a high dividend rate all year round (except for 2011). The company's dividend rate remained above 50% in 2012-2021, and the cumulative cash dividend in the past five years (2019-2023) reached 5.31 billion yuan, with a cumulative dividend rate of 44.6%. Since 2017-2023, the company has implemented 5 employee stock ownership plans. In 2019-2023, the company launched a plan to repurchase shares for 5 consecutive years, demonstrating the company's confidence in future development and maintaining the company's long-term value.
Amino acids: The pattern of lysine and threonine has improved, and the leading advantage is obvious. The leading company is the leader in lysine and threonine, which are the main amino acids used in feed. The total global supply of amino acids for feed reached 6.153 million tons in 2023. On the demand side, according to Autech's annual feed survey report, the compound growth rate of global feed production in 2013-2022 was 3.1%. Global feed production maintained steady growth, which is expected to drive amino acid usage. According to the “Three-Year Action Plan to Reduce and Replace Feed Soybean Meal”, the proportion of soybean meal used in domestic feed will drop from 14.5% in 2022 to less than 13%. It is estimated that the amount of soybean meal used will be reduced by 6.8 million tons. It is estimated that it is expected to spur increased demand for lysine and threonine by about 90,000 tons or 30,000 tons. From the supply side, production capacity for lysine and threonine has gradually been concentrated domestically in recent years. The balance between supply and demand for lysine (98.5%) is tight, supply easing for lysine (70%) has intensified, and CR4 supply concentration in the threonine industry has remained between 88% and 91% for five consecutive years, and the leading voice has strengthened markedly. The trend trend of the large variety of amino acids industry is improving, which is expected to lead to an improvement in product prosperity.
Food flavorings: MSG has a good pattern, and the barriers to niche products are high
Representative products of the company's flavorings include monosodium glutamate and disodium flavoring nucleotide. MSG is the most widely used flavoring agent at home and abroad. The global demand for MSG exceeds 3 million tons. The apparent domestic consumption volume in 2023 is 1.88 million tons, and the export volume is 786,000 tons. The MSG industry concentration is high. CR3 in 2023 was 70.8%, and CR5 was 87.3%. The MSG boom may improve steadily. Disodium glutamate (monosodium glutamate) has an umami multiplier effect. When mixed with monosodium glutamate (monosodium glutamate), the dosage is about 2%-5% of monosodium glutamate (MSG). It is known as “strong monosodium glutamate”. China started late in flavoring nucleotides, has a long fermentation cycle, and has certain barriers.
Polysaccharide sector: the development of emerging industries brings growth
The company's representative polysaccharide products include xanthan gum, trehalose, and pullulan polysaccharide. Xanthan gum: Divided into food grade and petroleum grade. In 2022, due to the continuous increase in the use of xanthan gum in the field of oil extraction, combined with the Russian-Ukrainian conflict, oil prices soared, and xanthan gum ushered in a wave of boom. Trehalose: It can be used in the food industry, biomedicine and cosmetics industries, and the scale has continued to expand in recent years. Prulan polysaccharide:
It is widely used as a capsule forming agent, thickener, etc. in the pharmaceutical and food industries, and is in the domestic industrialization process.
Company highlights: Continuing to cultivate biological fermentation and build a synthetic biology platform The company continues to increase R&D investment and technology upgrades, promote new projects, continuously introduce high-tech talents, and build synthetic biology platforms. At the same time, the company builds high-end manufacturing through standardization, automation, and fine management and operation, and does a good job in fine management.
Investment advice: first coverage, giving a “buy” rating
The company is a global leader in monosodium glutamate and amino acids. It benefits from the gradual optimization of the industry pattern, while continuing to increase scientific and technological innovation, building a synthetic biology platform, and has strong growth momentum. The estimated net profit for 24-26 is 31.6, 35.1, and 3.90 billion yuan, giving it a “buy” rating for the first time.
Risk warning
1. Poor global aquaculture demand; 2. Risk of development and promotion of new products; 3. Risk of exchange rate fluctuations; 4. Risk of profit forecasting assumptions being unfounded or falling short of expectations.