Core views
The company continues to increase its global market share through endogenous and epitaxial expansion, continuous optimization of supply chain efficiency, continuous release of management efficiency, good endogenous recovery, significant improvement in endogenous profitability, and quarterly improvement in BF operations, which is expected to gradually increase profitability under the company's global collaboration capabilities. As a leading domestic nutritional health food CDMO, the company has full-dosage platform development capabilities. It has established production bases and marketing centers in China, the US and Europe. Using the dividends of Chinese engineers and the global supply chain, the market share of the global nutritional health food CDMO market is expected to continue to increase.
occurrences
The company released the 2024 semi-annual report
In the first half of the year, the company achieved operating income of 1.99 billion yuan, a year-on-year increase of 29%; net profit to mother of 0.154 billion yuan, an increase of 53%; net profit of 0.154 billion yuan after deduction, an increase of 55 percent over the previous year. Q2 The company achieved revenue of 1.039 billion yuan, a year-on-year increase of 23%, and net profit to mother of 0.091 billion yuan, an increase of 27% year-on-year.
Brief review
Steady growth in the first half of the year, and overseas markets continued to expand
The H1 domestic business achieved sales revenue of 0.832 billion yuan, an increase of 4.22% over the previous year; the overseas business achieved sales revenue of 1.159 billion yuan, an increase of 55.16% over the previous year.
By product, the company's revenue for softgels, tablets, powders, gummies, drinks, hard capsules, other dosage forms, and other business in 24H1 was
8.89/1.42/1.42/4.86/1.40/0.098/0.09/0.014 billion yuan, a year-on-year increase of 26.8%/-17.5%/13.29%/60.55%/-14.36%/70.16%/315.23%/270.72%.
The fondant category is in the consumer penetration stage, and customer orders are still climbing, and the good trend can continue in the future.
Looking at the subregions, revenue for 24H1 China/ Americas/ Europe/ other regions was 8.32/0.729/0.295/0.136 billion yuan respectively, up year-on-year
4.22%/65.42%/13.78%/185.71%. After the company acquired BF, the synergy was further enhanced. In 2024, the company continued to expand its sales force to help the order business continue to grow, penetration in overseas America and Europe continued to deepen, and emerging markets such as the Asia-Pacific region were gradually laid out.
Production capacity climbed, BF reduced losses, and profits continued to improve
The gross profit margin of 24H1 is 32.05%, +2.6 pcts year over year, mainly due to improvements in the gross margin of the company's various business regions. The most significant gross margin in the US is +6.89% to 27.47%. It is expected that in the future, as BF production capacity climbs and the American business grows in tandem, the gross margin of the American business is expected to be on par with China (35% gross profit margin) and Europe (34% gross profit margin).
The company's sales expense ratio/management expense ratio in 24H1 was 7.83%/9.93%, respectively, with a year-on-year change of 0.43/-0.78pcts. The increase in sales expenses was mainly due to the expansion of the sales force. H1 incurred equity payments of 6 million but at the same time, business hospitality expenses were reduced. The net interest rate to mother was 6.83%, a year-on-year change of +1.66pcts, which mainly benefited from the quarterly decline in BF orders and reduced losses, driven by the company's global collaborative efficiency improvement.
Equity motivation+employee shareholding stimulates vitality. The increase in executive holdings shows confidence that the company is currently implementing equity incentive plans and employee stock ownership plans at the same time, stimulating the company's organizational operation vitality and employee enthusiasm. At the end of July, Yao Zhuangmin, the company's director and deputy general manager, announced plans to increase his holdings of the company by no less than RMB 3 million and no more than RMB 5 million, demonstrating confidence in the company's medium- to long-term development.
Profit forecast and investment advice: The company's endogenous business continues to recover, and BF improves quarterly. We expect 2024-2026 revenue of 4.401/5.154/5.84 billion yuan, respectively, and net profit of 0.408/0.487/0.558 billion yuan, respectively, to maintain a “buy” rating.
Risk warning:
1. Food safety issues; the company's products focus on health and health benefits, and strict control is required during processing and production. If there are many adverse reactions or food safety accidents, it will have a negative impact on the company's image.
2. Risk of fluctuations in raw materials: The upstream of the company is dominated by raw materials such as fish oil and gelatin. If the price of raw materials continues to rise, it will erode the company's profitability and may have a great impact on the company's net profit.
3. The economy falls short of expectations: If demand from Europe and the US weakens, domestic exports fall, or if the domestic economy weakens, consumer spending power declines, and residents' desire to buy health care options declines, it will affect the company's revenue.