Description of the event
On April 21, Lanxiao Technology released its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved operating income of 2,489 billion yuan, an increase of 29.62% year on year; realized net profit attributable to owners of the parent company of 717 million yuan, an increase of 33.35% year on year; basic income per share was 1.43 yuan, an increase of 32.41% year on year.
In the fourth quarter of 2023, revenue of 912 million yuan was achieved, up 22.82% year on year, up 60.26% month on month; net profit attributable to parent company owners was 199 million yuan, down 11.18% year on year, up 15.48% month on month. The first quarter of 2024 achieved operating income of 631 million yuan, a year-on-year increase of 25.99% and a year-on-month decrease of 30.84%; realized net profit attributable to owners of the parent company of 169 million yuan, an increase of 26.35% year-on-year and a decrease of 14.94% month-on-month; and basic earnings per share of 0.34 yuan, an increase of 25.93% year-on-year.
Incident reviews
Basic warehouses and major salt lake lithium extraction projects drive growth, and the growth of high-margin life science varieties enhances profitability. In 2023, the company's Salt Lake lithium extraction project achieved revenue of 520 million yuan, accounting for 20.9%, an increase of 85.16% over the previous year; the basic warehouse business achieved revenue of 1,969 billion yuan, an increase of 20.12% over the previous year. The company's total output of adsorption materials was 49,300 tons, up 1.63% year on year; sales volume was 47,700 tons, up 10.47% year on year.
In 2023, the company's comprehensive gross margin was 48.9%, up 4.88% year on year, mainly due to the increase in the share of high-margin products such as life sciences, and the strengthening of refined production management and cost control. By sector, in 2023, the company's revenue in the three major sectors of life sciences, energy saving and environmental protection, water treatment and ultra-purification increased by 40%, 37%, and 22% year-on-year; revenue from metal resources, chemicals and catalysis, and other adsorption materials decreased by 9%, 6%, and 64% year-on-year. The revenue of the food processing sector remained largely unchanged.
Life sciences: Driven by the boom in the GLP-1 market, demand for solid phase carriers has increased significantly, driving the share of revenue to continue to rise. For the full year of 2023, Eli Lilly Mounjaro's sales were US$5.163 billion, up 970% year over year, of which fourth-quarter sales were US$2.06 billion; Zepbound, an indication for weight loss, which went on sale on December 5, recorded sales of US$176 million. Strong sales of tiverpotide are expected to drive future demand for solid phase carriers. At present, the company has a solid phase carrier production capacity of 120 tons, and the solid phase synthesis carrier SepLife2-CTC and sieber resin have become the main suppliers of leading varieties for peptide companies.
Salt Lake Lithium Extraction: In 2023, the company received 4 large-scale industrialization project orders, adding a contract amount of nearly 500 million yuan. As of the 23rd annual report, the company has completed and implemented a total of 12 industrial salt lake lithium extraction projects, with a total production capacity of 86,000 tons of lithium carbonate/lithium hydroxide, 5 of which have been successfully put into operation. The total number of pilot projects is about 120, providing potential for continuous order formation.
Water treatment and ultra-purification: Benchmarking top international brands, the penetration rate of the high-end drinking water market continues to increase, and the coverage of the ultrapure water market continues to increase. In 2023, the promotion rate of the company's homogenized grain series products was close to 70% for major customers in the fields of electronics and nuclear power.
Investment advice
We predict that from 2024 to 2026, the company will achieve revenue of 30.32/36.9/4.344 billion yuan, an increase of 21.8%/21.7%/17.7% year on year; net profit to mother of 9.86/12.43/1,488 billion yuan, up 37.6%/26.0%/19.7% year on year, corresponding EPS of 1.95/2.46/2.95 yuan, PE 22.7/18.0/15.1 times, maintaining the “buy-B” rating.
Risk warning
Regulatory risk due to expansion of business scale; market competition risk; recovery risk of accounts receivable; risk of loss of core technical personnel and technology leakage; risk of international business expansion.