Key points of investment
The company's performance continued to grow steadily in 2023. The 24Q1 performance was excellent; the company achieved revenue of 868 million yuan, +20.28% year over year; realized net profit of 193 million yuan, +28.02% year on year; 23Q4 achieved revenue of 214 million yuan, +25.03% year over year; realized net profit of 52 million yuan, +57.68% year on year; 24Q1 achieved revenue of 255 million yuan, +29.63% year over year; achieved net profit of 54 million yuan, +20.47% year over year.
By product, in 2023, the company's prebiotic series products reached 257 million yuan, +4.49%; dietary fiber products reached 444 million yuan, +31.08%; mainly due to the increase in the penetration rate of terminal dietary products, the company's sales of resistant dextrin and polydextrose in food and beverage customers continued to grow; healthy sweetener series products reached 137 million yuan, +44.91% year over year; mainly due to the rapid growth in demand for this product in overseas markets, this product accounts for 16.07% of the company's main business revenue. It has become an important business segment of the company and a source of revenue and profit. The other starch sugar business reached 16 million yuan.
Gross margin increased in 2023, with 24Q1 gross margin slightly decreasing. The company's gross margin in 2023 was 32.73%, +1.07pct year on year; 24Q1 was 33.75%, -3.56pct year on year; the company's product prices remained stable, and changes in gross margin were mainly affected by product restructuring.
In 2023, the company achieved sales/management/R&D/finance expense ratios of 3.04%/2.46%/3.75%/-0.65%, respectively, -0.35/ -0.39/+0.01/+1.28pcts;
24Q1 achieved sales/management/R&D/finance expense ratios of 3.73%/1.99%/3.55%/-0.14%, respectively, -1.64/0.05/-0.89/-0.16pct.
The company's net interest rate in 2023 was 22.23%, +1.34pct year on year; 24Q1 was 21.24%, -1.61 pct year on year.
Production capacity continues to expand, providing growth momentum for the company's subsequent growth. At the end of 2023, the company's “functional sugar drying project with an annual output of 20,000 tons” was fully put into operation. After completion, the project can produce 8,000 tons of fructooligosaccharide (powder), 5,000 tons of resistant dextrin (powder), and 7,000 tons of polydextrose products (powder), which is expected to increase annual revenue of 375 million yuan. The company's fund-raising project “Project with an Annual Output of 30,000 Tons of Soluble Dietary Fiber” and the “Project with an Annual Output of 15,000 Tons of Crystalline Sugar” invested and built with its own capital are progressing in an orderly manner according to the planned schedule and are expected to be successfully put into operation in May 2024.
Thailand is building a production base to enhance international competitiveness and reduce production costs.
The company announced in October 23 that it will invest in the construction of a production base in Thailand. It will invest 452 million yuan to build a functional sugar project in Thailand. Among them, the allodonose production line also produces crystalline sugar products such as allodonose, crystalline fructose, and isomalt sugar; resistant dextrin production lines can co-produce prebiotic products such as oligofructose, oligomeric isomalt, and oligogalactose. Since Thailand has an obvious advantage in raw material costs, it can effectively reduce the company's production costs; at the same time, effectively reducing the level of tariffs will also enhance international competitiveness.
Maintaining a buying rating
The company is expected to achieve revenue of 12.54 billion yuan, 16.52, and 1,988 billion yuan respectively in 2024-2026, up 44.44%/31.76%/20.33% year-on-year; realized net profit to mother was 3.02, 4.03, and 503 million yuan, respectively, with year-on-year increases of 56.29%, 33.54%, and 24.94%, respectively. EPS is expected to be 1.21, 1.62, and 2.02 yuan respectively in 24-26, and the corresponding PE is 23.01, 17.23, and 13.79 times, respectively.
Risk warning: Production capacity expansion falls short of expectations, weak terminal demand, food safety issues, etc.