Leading enterprises in the entire agricultural industry chain are expected to benefit from the recovery in rice prices and cost reduction and efficiency, maintaining the “purchase” rating of the company's revenue of 12.168 billion yuan, -4.39% year on year, net profit to mother of 816 million yuan, -1.20% year on year, after deducting 705 million yuan of non-net profit, +4.95% year on year. Non-economic projects are mainly government subsidies of 91 million yuan. 2023Q4 revenue was $3,548 million, -4.58% YoY, and net profit to mother was 286 million yuan, +28.41% YoY. Considering that the downturn in the grain and oil market is dragging down the company's performance, we lowered the company's 2024-2025 profit forecast and added the 2026 profit forecast. The company's net profit for 2024-2026 is 9.08/10.08/1,112 billion yuan (the original value for 2024-2025 was 9.83/1.64 billion yuan), the corresponding EPS is 0.66/0.73/0.81 yuan, and the PE corresponding to the current stock price is 16.7/15.0/13.6 times. The company's rice profit is rising and continuing to promote cost reduction and efficiency. “Buy” rating.
The company's rice yield and profitability have risen sharply. It is optimistic that rice prices will rise in 2024 to expand profit margin (1) Planting business: 2023 revenue of 3.803 billion yuan, +8.88% year over year, gross profit margin of 23.64%, +1.05 pct year on year. In 2023, the total output of the company's grain and oil crops was 2,737 billion kg. The annual yield of rice and wheat at the headquarters was 2,481 kg, and the annual yield of the expanded base was 2,159 kg, a record high. (2) Rice: Affected by declining domestic demand, reduction in planting area, and restrictions on rice exports by major international exporters, etc., China's rice price fell first and then rose in 2023. The price rose from about 2,900 yuan/ton to about 3,100 yuan/ton during the year, driving the company's rice business revenue of 1,744 billion yuan, +16.67% year-on-year, with a gross profit margin of 15.28% compared to the previous year. (3) Wheat: Revenue of 1,580 billion yuan in 2023, +2.11% year-on-year, gross profit margin of 28.44%, year-on-year -4.81 pct, self-produced wheat sales volume of 299,200 tons, +3.49% year over year, sales volume of exported wheat was 316,200 tons, -19.80% year over year.
High-end results of rice and malt processing products are showing, and product structure optimization drives profit increase (1) Rice processing and sales: 2023 revenue of 3.815 billion yuan, -16.25% year-on-year, with rice sales volume of 333,000 tons, -0.89% year over year. In the context of fierce competition in the rice processing industry, the company continues to optimize the product structure and develop high-end products with high added value and high profitability, driving gross margin +0.94 pct to 5.19% year over year. In 2023, Suken Rice processed a total of 4381,000 tons of rice, with a net profit of 95.9389 million yuan, +32.73% over the same period last year. (2) Cooking oil: The grain and oil market was sluggish in 2023. The company's edible oil revenue was 2,435 billion yuan, -23.35% year on year, gross profit margin 2.22%, -3.66 pct year on year, sales volume 298,800 tons, -1.37% year on year, and the subsidiary Golden Sun Grain and Oil's net profit was 5.4042 million yuan, -92.79% year over year. (3) Malt processing: The company is developing high-end product direction. The total malt output in 2023 was 203,300 tons, including 65,000 tons of high-end wheat, and the net profit of the subsidiary Suken Malt was 55.3956 million yuan, +144.48% over the same period last year.
Risk warning: The increase in planting costs exceeded expectations, the price increase of wheat and wheat fell short of expectations, and demand fell short of expectations.