Incidents. On April 26, 2024, the company released its 2023 annual report and 2024 quarterly report. Throughout 2023, the company achieved revenue of 1,199 billion yuan, a year-on-year increase of 3.07%; achieved net profit of 81 million yuan, an increase of 15.56% over the previous year; and realized net profit of 42 million yuan after deduction, an increase of 6.21% over the previous year. Among them, in 2023Q4, the company achieved revenue of 319 million yuan, a year-on-year decrease of 4.34%; realized net profit of 25 million yuan, a year-on-year increase of 62.41%; and realized net profit of 0.7 billion yuan after deduction, an increase of 269.27% over the previous year.
With 2024Q1, the company achieved revenue of 287 million yuan, an increase of 23.32% over the previous year; achieved net profit of 13 million yuan, an increase of 20.45%; and realized net profit after deduction of 0.04 billion yuan, a decrease of 4.33% over the previous year.
The enzyme preparation, microecology, and animal health products business grew steadily. By product, enzyme preparations, microecology, and animal health products achieved revenue of 441 million yuan, 237 million yuan, and 297 million yuan respectively, with revenue of +4.69%, -5.56%, and -0.62%, respectively, accounting for 37.49%, 20.14%, and 25.24% of revenue, and gross margins of 60.80%, 41.15%, and 41.74%, respectively, an increase of 8.10 percentage points, an increase of 0.50 percentage points, and a decrease of 0.16 percentage points. In terms of profit margin and period expenses, the company's gross margin and net margin achieved 46.23% and 8.58% respectively in '23, with a period expense ratio of 30.40%, an increase of 4.35 percentage points over the same period; the R&D expenses ratio in '23 reached 9.26%, an increase of 0.49 percentage points over the previous year.
Join hands with leading international companies to actively promote systematic production capacity layout. (1) In the field of enzyme preparations, the company deepened the upgrading of enzyme preparation technology, and the gross margin of the product was increased. Based on the platform advantages of enzyme preparations, the company's cooperation with ADM, the world's top 500 company, continues to deepen, and the joint laboratory research and development project between the two sides has made substantial progress. The focus of laboratory work has moved from joint research to the product development stage; (2) in the field of microecology, Shandong Weilan Biotechnology Co., Ltd., a wholly-owned subsidiary of the company, and Evonik (China) Investment Co., Ltd. have jointly established Evonik Blue Biotechnology (Shandong) Co., Ltd., where Shandong Weilan Biotechnology Co., Ltd. will be commissioned by the joint venture to exclusively produce GHS products for the joint venture company through OEM processing. The joint venture was officially put into operation in January 2024. We believe that, relying on the innovative capabilities and application technology sessions of the two parent companies, the company's profitability can be further improved; (3) Continuously improving the animal health system, the company has established a VLAND-PCP product refinement platform based on a big data system for feed enzyme applications around the field of animal health. After years of solid accumulation, the platform has been recognized by many major customers and can continuously and efficiently provide users with comprehensive solutions to reduce costs and increase efficiency; in August '23, the company acquired 51% of Runbote's shares. Runbot has a rich background in antibiotic substitution, especially in research on tannins. It complements the company's existing business to form a complete system of antibiotic substitution.
Investment suggestions: The enzyme preparation and probiotics industry has high barriers and the trend of domestic substitution is obvious. Blue Biotech is a representative enterprise that first laid out enzyme preparations and probiotics-related fields in China, and has outstanding advantages in technology research and development and platforms.
We expect the company's 2024-2026 net profit to be 0.97, 1.08, and 121 million yuan, respectively, EPS 0.39, 0.43, and 0.48 yuan, respectively, and the PE corresponding to the current price (2024/4/26) is 30X, 27X, and 24X, respectively.
We are optimistic about the company's future growth potential and maintain a “recommended” rating.
Risk warning: increased market competition, fluctuating raw material prices, aquaculture diseases and natural disasters.