Incident (1) The company released its 2023 annual report, achieving total revenue of 15.117 billion yuan, -5.13% year on year; net profit to mother of 2.704 billion yuan, -25.30% year over year; net profit after deducting non-return to mother of 2,614 billion yuan, -27.12% year on year. Among them, the fourth quarter achieved revenue of 4.104 billion yuan, +2.00% year over month; net profit to mother of 603 million yuan, -1.02% year on month, -2.42% month on month; net profit after deduction of 664 million yuan, +0.65% year on month, +15.34% month on month (2). The company issued a performance forecast for the first quarter of 2024, which is expected to achieve net profit of 836-10 million yuan, an increase of 30%-40% year on year; realized net profit of 836-80 million yuan year on year. (3) The company announced the 2023 profit distribution plan and distributed a cash dividend of 0.45 yuan per share. The performance was in line with expectations.
The decline in nutritional prices in 2023 weighed on the business, and the 24Q1 rebound in core nutrition prices helped improve performance. In 2023, due to weakening demand for downstream pig and poultry farming, the average prices of the company's core nutritional products VA, VE, and methionine fell, putting pressure on the business. The average annual VA price was 84.71 yuan/kg, or -47.13%; the average VE price was 70.04 yuan/kg, -16.66% year over year; and the average price of methionine was 18.70 yuan/kg, -10.57% year over year. Since 24Q1, the average prices of VA, VE, and methionine have been 79.52 yuan/kg, 63.18 yuan/kg, and 21.95 yuan/kg, respectively, +11.45%, +7.27%, and +3.54% month-on-month respectively. Prices of major nutritional products have been rising steadily, helping to improve performance in the first quarter.
The development and construction of new products for the new project was carried out in an orderly manner, and projects under construction such as methionine opened up room for future growth. In 2023, the company built a new 150,000 tons/year methionine project process route and completed construction with the 180,000 tons/year liquid egg project built by Sinopec. Construction of the 4,000 tons/year cystine project began; the 30,000 tons/year taurine project, the 2,500 tons/year VB5 project, the 5,000 tons/year menthol project in the fragrance sector, and the 7,000 tons/year PPS project in the new materials sector were all produced normally; the adiponitrile project was successfully piloted, the HA project was put into trial, and pharmaceutical-grade Q10 was launched, effectively opening up space for the company's future growth.
Maintain the profit forecast, add the 2026 profit forecast, and maintain the “buy” rating. We expect the company's revenue for 2024-2026 to be 18.6.69/216.60/24.557 billion yuan, respectively, and the net profit to mother for 2024-2026 will be 39.09/48.42/5.439 billion yuan. The corresponding PE is 15X/12X/10X, maintaining the “buy” rating.
Risk warning: Project construction falls short of expectations, prices of main products have dropped sharply, etc.