Net profit after 2024H1 deduction increased 128.03% year over year. The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 8.486 billion yuan, a year-on-year increase of 2.66%, net profit to mother of 0.506 billion yuan, an increase of 119.91% year-on-year, and net profit after deducting 0.534 billion yuan, an increase of 128.03% year-on-year. The gross profit margin on sales was 15.84%, up 4.15pct year on year, and the net profit margin was 6.01%, up 3.19pct year on year. 2024Q2, the company's total revenue was 4.287 billion yuan, up 2.08% month-on-month, 4.48% year-on-year, and net profit to mother was 0.255 billion yuan, up 1.27% month-on-month, up 132.28% year-on-year, and net profit after deducting 0.28 billion yuan, up 10.12% month-on-month and 146.15% year-on-year.
The company's profit growth in the first half of the year was mainly due to the reduction in procurement costs of major materials, the reduction in operating costs due to the optimization of production processes, and the increase in the company's gross margin.
The increase in revenue benefited from a countermarket increase in sales of main products. The market price of the company's leading products declined year on year, but sales of the main products bucked the trend, and the increase in sales volume offset the impact of the price drop on revenue. By product, the company's food additives business revenue was 2.257 billion yuan, down 0.47% year on year; feed additive revenue was 5.575 billion yuan, up 4.30% year on year; biochemical raw materials and formulations business revenue was 66.646 million yuan, down 15% year on year; pharmaceutical intermediates business revenue was 918.37 billion yuan, down 35% year on year; organic fertilizer business revenue was 0.165 billion yuan, up 11.26% year on year.
Yipin Biotech has exceeded its performance promises. The original shareholders of Yipin Biotech promised that the audited net profit achieved by Yipin Biotech in 2024 (net profit deducted from non-recurring profit and loss as confirmed by an accounting firm qualified to practice securities) was not less than 413.7913 million yuan, 377.8422 million yuan, and 408.5935 million yuan, respectively. According to the company's estimates, Yipin Biotech's cumulative net profit after deduction for the first half year of 2024 was 2218.6828 million yuan, and the cumulative completion rate of performance promises was 184.86%. It exceeded the gambling performance, and it is expected that the promised performance can be achieved during the commitment period.
The company began building a 0.6 million ton corn deep processing line. In the first half of 2024, the company established a new wholly-owned subsidiary, Guangzhen Biotech, to invest in the construction of a 0.6 million ton corn deep processing project. The project plans to invest 3.712 billion yuan. Most of the capital comes from bank loans. The specific construction details of the project include the construction of a 0.6 million ton corn deep processing line to produce 0.115 million tons/year of various small varieties of amino acids. The main products are: valine, isoleucine, tryptophan, arginine, and supporting production of related by-products; supporting construction and office With production service facilities, the construction of the project is expected to take 2-3 years. As of June 30, 2024, the project is still under construction, with a total investment of 61 million yuan.
Maintain profit forecasts and investment ratings. We expect the company's EPS from 2024 to 2026 to be 0.66, 0.73, and 0.81 yuan respectively. Referring to the same industry valuation, we will give the company 12 times PE in 2024, corresponding to the target price of 7.92 yuan (unchanged), maintaining the “superior to the market” rating.
Risk warning: Prices of raw materials and products fluctuate greatly, project construction and commissioning progress falls short of expectations, downstream demand for coal chemicals falls short of expectations, production safety and environmental compliance risks.