向特定对象发行A 股落地，补充资金保驾公司未来发展。华恒生物此前公告2022 年度向特定对象发行A 股股票发行情况报告书，本次发行募集资金总额699,999,981.40 元。此次发行有助于公司丰富公司产品品类，延伸公司业务范围，提高公司核心竞争力，募集资金主要用于年产5 万吨生物基丁二酸及生物基产品原料生产基地建设项目与年产5 万吨生物基苹果酸生产建设项目。Huaheng Biotech released its results report for the third quarter of 2024. In the Q1-Q3 quarter of 2024, the company achieved operating income of 1.54 billion yuan, +12.8%; net profit to mother of 0.17 billion yuan, or -46.9% year-on-year; net profit after deducting non-return to mother of 0.17 billion yuan, or -47.4% year-on-year.
In a single quarter of 2024Q3, the company achieved operating income of 0.52 billion yuan, +1.7% YoY, +1.4%; net profit to mother 0.02 billion yuan, -84.3% YoY, -68.0% month-on-month; net profit of 0.02 billion yuan after deducting non-return to mother, -85.6% YoY and -70.6% YoY.
The company's gross margin declined due to changes in product prices. Huaheng Biotech's gross profit margin for the 2024 Q3 single quarter was 21.4%, down 19 percentage points from the same period last year and 8.3 percentage points from the 2024 Q2 single quarter. The price of mainly valine products decreased compared to the same period last year. According to the Tonghuashun iFind market price, as of October 23, 2024, the price of 98% valine was 12 yuan/kg, which is relatively stable in terms of trend. Affected by the decline in gross margin, the company's net profit margin for the 2024 Q3 quarter was 3.9%, and the profit side declined year-on-year and month-on-month.
Issuing A shares to specific targets will secure the company's future development with additional capital. Huaheng Biotech previously announced a report on the issuance of A-shares to specific targets in 2022. The total capital raised in this offering was 699,999,981.40 yuan. This release helps the company to enrich the company's product range, extend the company's business scope, and enhance the company's core competitiveness. The capital raised is mainly used for the construction project of a production base with an annual output of 0.05 million tons of bio-butanedioic acid and bio-based product raw materials and a bio-based malic acid production and construction project with an annual output of 0.05 million tons.
Continue to enrich the product matrix and pay attention to the pace of new product implementation. Based on existing products, Huaheng Biotech continues to expand the range of products, laying out amino acid series products, vitamin series products and bio-based new material monomer products, showing cost and industrial chain advantages. At the same time, relying on the benchmarking effect in the industry, the company has now accumulated a number of high-quality customer resources in many downstream markets such as chemicals, pharmaceuticals and health products, food additives, animal nutrition, etc., laying a good foundation for the marketing of 1,3-propanediol, succinic acid, malic acid, tryptophan, and arginine. At present, it is focusing on the pace of new product launch and release.
Maintain a “Highly Recommended” investment rating. We are optimistic about Huaheng Biotech's leading position in the field of synthetic biology. It is expected that with the gradual release of new products, Huaheng Biotech will usher in sustainable growth. Considering changes in the prices of the company's main products, we lowered Huaheng Biotech's profit forecast for 2024-2026. We expect the company's net profit for 2024-2026 to be 0.24 billion yuan, 0.32 billion yuan, and 0.43 billion yuan, respectively, -47%, +36%, and +32%. The corresponding PE is 37x, 27x, and 21x respectively, maintaining a “highly recommended” investment rating.
Risk warning: Risk of product prices falling short of expectations, increased risk of competition, risk of new product delivery falling short of expectations, risk of downstream customer expansion falling short of expectations.
