Net profit to mother in '23/24Q1 was 4.5/87 billion yuan, maintaining the “purchase” rating Huaheng Biotech released its annual report for the year 23 and the quarterly report for the year 24 on April 21. The company achieved revenue of 1.94 billion yuan, +37% year over year, net profit of 450 million yuan (not 400 million yuan), +41% year over year (after deducting +45% year over year); of which 23Q4 revenue was 570 million yuan, +32% /month-on-month, +12% month-on-month. Month-on-month basic Mochihira. The company plans to distribute 9 yuan for every 10 shares and increase 4.5 shares. 24Q1 achieved revenue of 500 million yuan, +25% year over year, and net profit of 87 million yuan to mother, +7% YoY/-33% YoY. We expect the company's net profit to be 6.6/8.6/1.07 billion yuan for 24-26 years, corresponding EPS of 4.20/5.48/6.79 yuan. Referring to a comparable company's 24-year Wind consensus average of 25xPE, considering the growth of the company's new projects and leading edge in the field of small amino acids, we will give the company 33xPE for 24 years, with a target price of 138.6 yuan to maintain the “buy” rating.
New production capacity was compounded by continuous cost reduction and efficiency. The company's fund-raising project continued to expand since it was put into operation in 2022. The valine product market and customers continued to expand, and the scale of amino acid production and sales continued to grow. The annual sales volume of amino acid products yoy +30% to 77,000 tons, revenue yoy +26% to 1.47 billion yuan, gross margin yoy+0.95pct to 43.3%. Also, according to Boya Hexun, the average price of valine market in '23 was 22,700 yuan/ton, compared to -2%. 18.5 million tons, YoY -24%/-11% month-on-month. Although the price side of valine has weakened, the company continued to reduce costs and increase efficiency, and the company's gross margin increased year-on-year in 23Q4/23. At the same time, the release of new products such as inositol also contributed in '23. The company's vitamin product revenue yoy +575% to 220 million yuan, and gross margin yoy+18.5pct to 55.1%. The 23-year consolidated gross margin yoy+1.9pct to 40.5%.
24Q1 amino acid production and sales continued to grow year on year. The decline in valine prices dragged down gross margin and other factors, and 24Q1's sales of alanine and other products continued to grow year on year. In terms of valine, according to Boya Hexun, the average market price of 24Q1 was 15.53 yuan/kg, -41% /month-on-month. Due to factors such as increased production expansion in the industry, the price center of valine fell a lot from year to month. We expect it to drag down the company's profit in the single quarter. 24Q1 The company's comprehensive gross profit margin was 33.6%, -5.2pct/month-on-month -5.0pct.
R&D drives growth, and new technologies and new projects reinforce future growth. According to Boya Hexun, the valine market price was 15.35 yuan/kg on April 9, +3% compared to early March. Along with factors such as pattern optimization at low prices, the valine boom rebounded. Considering that the demand side continues to benefit from increased demand for soybean meal alternatives, and the supply pattern is expected to continue to be optimized at low prices, and the future economy is expected to continue to improve.
According to the company's annual report for the year 23, the Chifeng 50,000 tons/year bio-butyric acid and bio-based product raw material project, the Qinhuangdao project with an annual output of 50,000 tons of bio-based malic acid, and the Chifeng 50,000 tons/year biomedical PDO project are progressing steadily. At the same time, the layout of products such as high-silk amino acids is also being carried out in an orderly manner. The R&D cost ratio of the 23/24Q1 company was 5.6%/5.7%, maintaining a high level. The project under construction at the end of 24Q1 was 1.68 billion yuan. Relying on high R&D investment and continuous category expansion, it is expected to continue to grow in the future.
Risk warning: The progress of new construction projects falls short of expected risks; risk of loss of core technology.