The company released its 2023 annual report, and the results were in line with expectations: during the reporting period, the company achieved revenue of 2,783 million yuan (YoY +26%), net profit after net income of 371 million yuan (YoY +16%), net profit margin 24.18% (YoY+1.24pct), net profit margin 13.38% (YOY-1.13pct), sales, management, and finance expenses rate 4.92% (YoY 1.30pct), and R&D expenses increased 24% to 1.24 100 million yuan. Among them, 23Q4 achieved revenue of 741 million yuan (YoY +21%, QoQ +10%), realized net profit of 96 million yuan (YoY +48%, QoQ +7%), and realized net profit of 84 million yuan (YoY -6%, QoQ +4%) in a single quarter. The results were in line with expectations. 23Q4 The company's gross sales margin was 24.16%, and the net profit margin was 13.12%. The company announced the 2023 profit distribution and capital transfer plan from the Provident Fund. It plans to distribute a cash dividend of 7 yuan (tax included) for every 10 shares to all shareholders, and 3 additional shares for every 10 shares.

Sales of sugar alcohol products have maintained rapid growth, profitability continues to increase, and domestic and foreign markets are developing simultaneously. According to the operating data disclosed by the company, the company's crystalline sugar alcohol products completed sales volume of 148,700 tons (YoY +28%) in 2023, achieving revenue of 19.14 billion yuan (YoY +15%), and a gross profit margin of 28.90% (YoY+2.18pct). The main reason for the lower revenue growth rate was changes in product structure. Xylitol sales remained stable in 2023, and sales of sorbitol and maltitol increased significantly. In particular, sorbitol sales increased by about 60%, but their prices were lower than xylitol; their prices were lower than xylitol; 209,800 tons (YoY +34%), achieved revenue of 680 million yuan (YoY +33%) and gross profit margin of 8.82% (YoY+1.14pct). By region, the company's domestic revenue in 2023 was 1,463 billion yuan (YoY +39%), gross profit margin 15.60% (YoY+0.61 pct); overseas revenue of 1,268 billion yuan (YoY +12%), gross profit margin of 33.04% (YoY+1.44pct).

The xylose project strengthens the supporting advantages of xylitol raw materials and increases the Zhoushan project to open up room for future growth. The company's “Green Intelligent Upgrading and Transformation Project with an Annual Output of 30,000 Tons of D-Xylose” began construction in May 2022 and has now entered the trial production stage. At the same time, considering the industrial relocation plan for Silya Group's Yibin Yanpingba factory area, the company plans to sign an “Investment Agreement for an Industrialization Project for the Comprehensive Utilization of Hemicellulose Resources” with the Yibin Gaoxian County People's Government to continue using the hemicellulose alkali solution produced by Celia Group in the production of viscose fiber to produce xylose. At the Zhoushan base, the company's “1 Million Tons of Corn Deep Processing Health Food Ingredients Project” was launched in August 2022 and is currently under construction. The first phase of the project is divided into two stages. The first phase of construction will take 2 years, mainly liquid syrups and some crystalline sugar alcohol products; the second phase of construction will take 3 years, and new product lines such as dietary fiber and modified starch will be put into construction one after another. During the reporting period, the company announced that it plans to invest no more than 99.6 million yuan in the “annual processing of 100,000 tons of corn germ oil extraction project” and that it plans to invest 148 million yuan to add the “100,000 tons of maltodextrin project”. Both projects are an extension of the Zhoushan Phase I plan. The construction period is expected to be 13 months. After production is put into operation, the annual revenue (excluding tax) will be increased by 1.43 and 444 million yuan, respectively.

Investment analysis opinion: Considering subsequent equity incentive fees and the climbing pace of the Zhoushan project, the 2024-2025 net profit forecast was lowered to 4.07 billion yuan and 510 million yuan (original values were 5.08 billion yuan and 632 million yuan), and the net profit forecast for 2026 was 635 million yuan. The current market capitalization corresponding PE is 12, 10, and 8X, respectively. According to Wind's unanimous expectations, comparable companies Jinhe Industrial, Bailong Chuangyuan, and Chenguang Biotech have an average PE of 15X in 2024, maintaining an “increase” rating.

Risk warning: 1) Prices of raw materials have risen sharply; 2) Product prices have fluctuated greatly; 3) New projects have fallen short of expectations.