Event: The company announced its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 868 million yuan, +20.28% year over year; realized net profit of 193 million yuan, +27.97% year over year; realized net profit without deduction of 176 million yuan, +24.51% year over year. Among them, 23Q4 achieved revenue of 214 million yuan, +25.03% year over year; realized net profit of 51.65 million yuan, +57.42% year over year; realized net profit of 42.2 million yuan without return to mother, +27.57% year over year. With 204Q1, the company achieved revenue of 252 million yuan, +29.63% year over year; realized net profit of 53.54 million yuan, +20.47% year over year; realized net profit without deduction to mother of 51.25 million yuan, +25.80% year over year.
Comment:
2023 came to a successful conclusion with rapid revenue growth. In 2023, driven by increased external demand, the company's internal product restructuring, and the commissioning of a 20,000 ton functional sugar drying project, the company achieved rapid growth in revenue and performance. In terms of product structure, the prebiotic series, dietary fiber series, and healthy sweeteners achieved revenue of 257 million yuan, 444 million yuan, and 137 million yuan respectively, +4.51%, +31.08%, and +44.91% compared with the same period last year. On the gross margin side, the overall gross margin reached 32.73% in 23 years, +1.07pct year on year. This is mainly due to the high increase in dietary fiber gross margin (+4.60pct year over year), which accounts for a relatively large revenue share (51.99%). On the cost side, the company's overall expense ratio remained relatively stable. The sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 3.04%, 2.46%, 3.75%, and -0.65%, respectively, -0.35pct, -0.39pct, +0.01pct, and +1.28pct, respectively. As a result, the net profit margin to mother increased by 1.34 pct year on year in '23, achieving a faster profit growth rate than revenue growth.
Production capacity is nearing saturation, and 24Q1 achieved a bright start. With the 30,000 ton dietary fiber project delayed, the company achieved a brilliant start in 24 years through product restructuring. In the product structure, the prebiotic series, dietary fiber series, and healthy sweeteners achieved revenue of 73.13 million yuan, 135 million yuan and 24.25 million yuan respectively, +55.40%, +32.89%, and -34.86% year-on-year respectively. The decline in revenue from healthy sweeteners is mainly due to the fact that the gross margin of allodonose is lower than that of prebiotics and dietary fiber, so the company adjusted its product structure. We expect the gross margin of the 15,000 tons of crystallized sugar project to be increased by self-produced crystallized fructose, and revenue is expected to recover rapidly. On the gross margin side, 24Q1 achieved a gross profit margin of 33.76%, a year-on-year ratio of -3.56pct, mainly due to product restructuring. With the expense ratio shrinking relatively, the company's 24Q1 net profit margin declined slightly, achieving a rapid year-on-year increase in net profit for 24Q1.
Dividends have been further increased, and new production capacity has begun to be put in. In 2023, the company plans to pay a cash dividend of 2.40 yuan (tax included) for every 10 shares, accounting for 30.91% of net profit returned to mother for the year, further increasing the dividend payment rate over the previous two years. In addition, the company also plans to pay semi-annual dividends to give back to shareholders. On the business side, according to company information, the 30,000 tons of dietary fiber and 15,000 tons of crystalline sugar projects have recently begun, and the company expects May to contribute to revenue and profits. As for the base in Thailand, the company is expected to start construction in the second half of the year.
Profit forecasting and investment ratings: New production capacity is about to be put into operation, and seize opportunities for high performance growth. In the current context of weak domestic macroeconomic demand, the company continued to generate new profits year on month through domestic and foreign two-wheel drive. The company's new production capacity has recently begun, and we expect a further increase in revenue and profit from Q2. Furthermore, the increasingly recent approval expectations for alloone sugar, the planning and construction of the Thai project, and the company's reserves of new products are expected to boost the company's performance further in the next few years. We expect the company's 2024-2026 EPS to be 1.10/1.57/2.08 yuan, maintaining the company's “buy” rating.
Risk factors: Production progress falls short of expectations, Thailand's investment in the construction of a functional sugar production base project falls short of expectations, and industry competition intensifies