Shinwa Seong released its 2023 annual report. In 2023, the company achieved operating income of 15.117 billion yuan, a year-on-year decrease of 5.13%; realized net profit to mother of 2.704 billion yuan, a year-on-year decrease of 25.30%.
The company's performance in 2023 was mainly affected by downward pressure on the prices of key vitamin products. 1) By product, revenue from nutritional products, flavors, new materials, and other products changed year-on-year by -9.91%, 10.34%, 3.04%, and -8.80% to 98.67, 32.74, 12.02, and 774 million yuan, respectively. 2) In 2023, the company's gross sales margin and net sales margin were 32.98%/18.03%, respectively, with year-on-year changes of -3.96pct/-4.80pct. 3) The cost rate for the three items increased by 1.39pct year-on-year to 11.00%. Among them, sales, management, and financial expense ratios changed 0.28, 0.96, and 0.15 pct to 1.05%, 9.52%, and 0.43% year on year. In 2023, the company's R&D expenses accounted for 5.87% of revenue, up 0.48 pcts year on year. 4) The total amount of cash dividends (including other methods) was 1,383 billion yuan, accounting for 100% of the total profit distribution.
The development and construction of the company's new projects and products is carried out in an orderly manner. 1) Of the 250,000 ton/year methionine phase II project in the nutrition sector, the 100,000 ton plant was running smoothly, and the 150,000 ton plant process route was opened at once, and the comprehensive competitive advantage continued to improve; 2) The company and China Petroleum & Chemical Corporation jointly built a 180,000 tons/year liquid methionine (pure) project to be put into construction; 3) Construction of the 4,000 tons/year cysteine began; 4) The adiponitrile project was successfully tested, and project approval progressed in an orderly manner; 5) The HA project was put into operation, and the project progressed smoothly; 6) Pharmaceutical-grade Q10 was put into the market Market demand upgrades product structure It gradually developed into a manufacturer of antipyretic analgesics, nutritional drugs, and specialty APIs.
The company focuses on the effective combination of technology and equipment to comprehensively improve the level of process equipment. The company is committed to large-scale, airtight, continuous and automated transformation of equipment in process equipment research and development, with the aim of saving energy and reducing emissions, improving labor production efficiency, improving product quality, increasing the intrinsic safety of production processes, reducing production costs, and improving the level of automation. At present, for specific processes, the company has developed various high-efficiency reaction and separation platforms such as continuous reaction, high vacuum distillation, continuous crystallization, high-efficiency filtration, simulation of mobile bed separation, microchannel and microinterface reactions. Through continuous improvement and upgrading of large-scale production equipment, continuous reaction transformation, gas-liquid solid multiphase reaction, and separation of air-sensitive and heat-sensitive materials have achieved remarkable results.
Profit forecasts and reference ratings. We expect the company's EPS in 2024-2026 to be 1.17, 1.36, and 1.59 yuan respectively. Referring to the valuation of comparable companies in the same industry, we believe that a reasonable valuation range is 18-20 times PE in 2024, and the corresponding reasonable value range is 21.06 to 23.40 yuan, maintaining the “superior to the market” rating.
Risk warning. The progress of projects under construction fell short of expectations, and raw material market prices fluctuated