Report guide
The company released its 2024 quarterly report, with revenue of 4.499 billion yuan, up 24.54% year on year; net profit to mother was 870 million yuan, up 35.2% year on year, net profit not returned to mother of 857 million yuan, up 46.2% year on year. The performance was in line with expectations.
Key points of investment
The sharp rise in the quantity and price of methionine drove a sharp year-on-year increase in Q1
According to Boya Hexun, the average price of VA/VE/methionine in the first quarter was 81.67/64.97/21.77 yuan/kg, with year-on-year changes of -9.27%/-13.15%/+21.12%, and +11.71%/+5.79%/+2.91%, respectively.
Q1 Revenue increased month-on-month, which is expected to be mainly due to a sharp rise in the quantity and price of methionine. The company has a strong methionine cost advantage and high profitability. As the share of methionine increased, the company's Q1 sales gross profit margin was 35.04%, +3.34PCT year-on-year, and +3.59 PCT month-on-month. Changes in fair value, asset impairment, and credit impairment losses combined reduced net profit by about 100 million yuan, which dragged down the company's performance growth rate. Q1 Net profit margin of 19.40%, +1.49 PCT year over year, +4.63 PCT month over month. The company's accounts receivable and inventory turnover increased slightly, and the net operating cash flow was 481 million, an increase of 23% over the previous year. The company's 24Q1 projects under construction amounted to 1,477 billion yuan, a year-on-year decrease of 3.148 billion yuan, a year-on-month decrease of 145 million yuan, and an investment cash flow of 580 million yuan, a year-on-year decrease of 667 million yuan, a year-on-year decrease of 500 million yuan; the balance ratio was 34.87%, and the overall operation continued to be steady.
Demand is expected to recover, and the price trend of vitamin methionine is improving
Due to the influence of the farming cycle, vitamins and methionine have been out of stock for 2 consecutive years, and stocks are at a historically low level. Q1 Farming profits have rebounded steadily, and vitamin supplements have driven prices of many varieties to varying degrees. Pig stocks continue to decline, and we are optimistic that the recovery of breeding profits will drive a recovery in vitamin demand. Due to factors such as overseas installation maintenance and installation accidents, major VA and VE companies have stopped reporting prices, and it is expected that Q2 prices will continue to rise. Furthermore, the company's methionine production capacity continues to increase in Q2, and performance is expected to continue to grow month-on-month.
Methionine expands at low cost, new materials are worth looking forward to
With its cost advantage, the company's methionine has expanded from 50,000 tons to 300,000 tons at present, and its market share has increased rapidly. 180,000 tons/year liquid eggs, a venture with Sinopec, have already been put into construction. The adiponitrile pilot test went smoothly. The HA project has been put into trial, and the project is progressing smoothly. The new materials are expected to accelerate the company's growth and become an important growth point in the future.
Profit forecasting and valuation
The price of vitamins increased and the amount of methionine released. The company's net profit for 24-26 was 46.2, 58.8, and 7.04 billion yuan, EPS was 1.50/1.90/2.28, respectively, and PE was 12.63/9.92/8.29 times the current price. The company is a global leader in nutrition products, flavors and fragrances. The product line continues to expand, new production capacity has entered the production period one after another, has strong endogenous growth momentum, and maintains a “buy” rating.
Risk warning
Large fluctuations in raw material and product prices; production safety risks; exchange rate and trade risks; environmental policy risks; production time falls short of expectations, etc.;