occurrences

[First three quarters of 24] The company achieved operating income of 10.91 billion yuan (+13.0%); realized net profit of 0.95 billion yuan (+4.2%); and realized net profit of 0.84 billion yuan (+3.4%) after deducting non-return to mother.

[Q3 of '24] The company achieved operating income of 3.74 billion yuan (+27.1%); realized net profit of 0.26 billion yuan (+7.0%); and realized net profit of 0.24 billion yuan (+21.6%) after deducting non-return to mother.

Key points of investment

Overseas revenue continued to increase in 24Q3. Domestic yeast business revenue accelerated month-on-month by product. In the first three quarters of 24, yeast and deep-processed products/sugar products/packaging products/other products achieved revenue of 77.1/0.9/0.31/1.93 billion yuan respectively, +11.7%/-17.9%/-4.1%/+44.2% over the same period last year.

Yeast and deep-processed products/sugar products/packaging products/other products achieved revenue of 25.9/0.31/0.11/0.69 billion yuan respectively in the 3rd quarter of 2013, or +17.8%/+5.5%/+16.3%/+76.5% compared with the same period last year.

By region, domestic and foreign revenue of 6.58/4.26 billion yuan was achieved in the first three quarters of 24, respectively, or +6.9%/+21.8% over the same period last year. Domestic/foreign revenue of 2.27/1.43 billion yuan was achieved respectively in the third quarter of '24, +20.7%/+30.2% year-on-year.

Regarding dealers, as of the first three quarters of 24, the number of domestic/foreign dealers was 17,834/5846 respectively, totaling 23,680. There was a net change of +848/+479, a total net increase of 1,327.

The gross margin of 24Q3 was pressured by sea freight interference, and the efficiency of cost usage improved. The net profit margin was also pressured by the gross profit margin of 23.3% (-1.4pct) and the net interest rate of 8.9% (-1.0pct) in the first three quarters of 24. Sales expense ratio 5.3% (+0.1pct); management expense ratio 3.3% (-0.3pct); R&D expense rate 4.0% (-0.4pct); financial expense ratio 0.4% (+0.3pct).

The gross profit margin for the third quarter of '24 was 21.4% (-3.6pct), and the net profit margin was 7.0%. Sales expenses rate 5.6% (-0.1pct); management expenses rate 3.1% (-0.9pct); R&D expenses rate 3.8% (-1.1pct); financial expenses ratio 0.8% (+0.1pct).

Diversified layouts are poised to be launched, and overseas is expected to drive growth

As the world's largest YE supplier and second-largest yeast supplier, the company actively explores overseas markets and lays out production capacity expansion and future plans while maintaining a leading domestic competitive position. Factories in Egypt and Russia are expected to enjoy the advantages of low-cost local raw materials after being put into operation in 24, further enhancing international competitiveness. The company also plans to invest and set up a factory in Southeast Asia, and future overseas growth will be prominent.

Profit forecasting and valuation

Revenue for 2024-2026 is estimated to be 156.1, 17.53, and 19.57 billion yuan, respectively, up 15%, 12%, and 12%; net profit to mother will be 1.35, 1.51, and 1.67 billion yuan, respectively, up 6%, 12%, and 11%. Considering that the cost of molasses is expected to be further optimized, the holdings increase rating is maintained.

Risk warning: raw material prices rise, exchange rate fluctuations, overseas market development is blocked