Adisu released its 2024 mid-year report: The first half of 2024 achieved operating income of 7.261 billion yuan, YoY +14.74%, net profit to mother of 0.608 billion yuan, and YoY +1719.14%.
The quantity and price of methionine, the main product, have risen sharply, driving the company's profits to increase dramatically. On the revenue side, ① the revenue of the functional products sector increased 20% year on year to 5.39 billion yuan. The main product methionine grew well. Among them, the penetration rate of liquid methionine continued to increase, solid methionine sales also achieved double-digit growth, and product price increases, driving methionine business sales to continue to grow; ② the revenue of the specialty products segment increased 1% year over year to 1.87 billion yuan, and specialty products business performance continued to be stable, mainly due to rapid growth in the specialty products business in the North American dairy industry, offsetting the impact of the weakness in the North American dairy industry. On the profit side, the company's comprehensive gross margin increased sharply by 10.35% to 31.36%. In addition to the price increase of methionine products, the decline in raw materials and energy costs also contributed to the increase in gross margin. Additionally, the company has implemented stricter cash and working capital controls, as well as cost pressure reduction plans. A series of measures have led to a significant increase in the company's net profit.
Methionine production capacity continues to increase, consolidating the leading position. ① The company currently has 2 methionine production platforms, located in Europe and Nanjing, China. Since the 3rd quarter of 2021, the European production platform expansion project has successfully increased annual production capacity by a total of 0.08 million tons. The production platform in Nanjing, China now has a total production capacity of 0.35 million tons, making it one of the largest liquid methionine production platforms in the world. ② In order to meet global methionine demand and further strengthen the company's leading position in the methionine industry, the company built a new solid methionine plant in Quanzhou, with an annual production capacity of 0.15 million tons, which is expected to be put into operation in 2027. We expect the company to further expand production capacity through continuous industrial investment and continue to maintain its leading position in the world's first tier in the future.
Company profit forecast and investment rating: The company is a leading enterprise in the global animal nutrition industry and the second largest methionine manufacturer in the world. It can simultaneously produce solid and liquid methionine. At the same time, the company actively implements the “double pillar” strategy to continuously consolidate its leading position in the methionine industry and accelerate the development of the specialty products business. Based on the company's 2024 mid-year report, we adjusted the company's profit forecast for 2024-2026 accordingly. We forecast that the company's net profit for 2024-2026 will be 1,284 billion yuan, 1,462 million yuan, and 1.604 billion yuan respectively, corresponding EPS of 0.48, 0.55, and 0.60 yuan, respectively. The P/E values corresponding to the current stock price will be 21, 19, and 17 times, respectively. Maintain a “Highly Recommended” rating.
Risk warning: Product prices are falling; new production capacity in the industry is being invested too fast; demand in the feed industry is falling.