\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 873 Meihua Holdings Group Co.Ltd(600873) )
Event overview
The company issued the annual report of 2021. During the reporting period, the company achieved an operating revenue of 22.837 billion yuan, yoy + 33.94%; The net profit attributable to the parent company was 2.351 billion yuan, yoy + 139.40%; The disposal of Shanxi Guangsheng pharmaceutical packaging Co., Ltd., a subsidiary of the company, generated an investment income of 269 million yuan. In the fourth quarter alone, the company achieved an operating revenue of 6.552 billion yuan, yoy + 31.74%; The net profit attributable to the parent company was 1.024 billion yuan, yoy + 528.42%. Meanwhile, the company plans to distribute cash dividends of 4.0 yuan (including tax) to all shareholders for every 10 shares, and is expected to distribute cash dividends of about 1.239 billion yuan (including tax).
Analysis and judgment:
The operating revenue increased steadily, and the gross profit margin gradually recovered year-on-year
During the reporting period, the company achieved an operating revenue of 22.837 billion yuan, yoy + 33.94%, mainly due to the release of monosodium glutamate production capacity, the growth of sales volume, the simultaneous increase of threonine volume and price and the rise of other product prices. The rise of the price of main products was greater than that of raw material prices, and the comprehensive gross profit margin increased by 4.67pct to 19.34%. Specifically, in terms of animal nutritional amino acids, during the reporting period, the company achieved an operating revenue of 11.587 billion yuan, yoy + 33.39%, and the gross profit margin increased by 7.71 PCT to 19.87%, mainly due to the rise in the prices of main products and other feed amino acids; In terms of food taste trait optimization products, during the reporting period, the company’s food taste trait optimization products achieved an operating revenue of 8.518 billion yuan, yoy + 41.61%, and the gross profit margin decreased by 0.62pct to 15.29%; In terms of other businesses, during the reporting period, the company realized an operating revenue of 566 million yuan, yoy + 9.22%; Other businesses achieved operating income of 1.834 billion yuan, yoy + 32.57%.
Capacity release & sales strategy transformation, monosodium glutamate sales increased significantly
In 2021, the margin of monosodium glutamate production capacity release of Jilin Meihua phase II, a subsidiary of the company, combined with the impact of covid-19 pneumonia, weakened, catering consumption recovered, and the volume and price of monosodium glutamate increased, driving the operating revenue of the company’s food taste trait optimization products to increase by 41.61% over the same period of last year. In addition, the cost of nucleotide products increased due to the rise in the price of raw materials, and the gross profit margin decreased by 0.62pct to 15.29% year-on-year. Looking forward to 2022, with the normalization of the epidemic, the gradual recovery of catering consumption will boost the company’s product demand. In addition, by adjusting the sales strategy and making use of multi product portfolio sales to realize the maximum production and sales of new capacity, it is expected to give full play to the advantages of multi products. We believe that at present, the company’s monosodium glutamate production capacity has reached the level of one million tons, and the leading position in the industry is stable. Under the oligarch competition pattern, the head enterprise has the pricing power, superimposing the advantages of scale, multiple products and cost, and the company is expected to further increase its profits.
Increase both volume and price, release profit elasticity, expand production capacity and consolidate the leading position
The company is the world’s largest manufacturer of amino acids, and the production capacity of threonine and lysine ranks first in China. We judge that the company’s amino acid demand is expected to improve steadily. The main logic lies in: 1) amino acid demand is closely related to the downstream pig stock. According to the Ministry of rural agriculture, by the end of January 2022, the number of sows that can be bred was 42.9 million, and the number of pigs in China remained stable at more than 400 million. The stock of fertile sows and pigs remained high, and the demand for amino acids remained strong. 2) Since the implementation of the alternative antibody policy, threonine and lysine have been used as mainstream alternative antibody products to ensure the efficiency of livestock and poultry breeding, and there is a strong demand. As of March 11, 2022, the prices of threonine and lysine were 11900 / 12200 yuan / ton, up 22.68% / 35.63% respectively compared with the beginning of 2021. 3) Jilin Baicheng phase III 300000 tons of lysine and its supporting projects have been officially put into operation in November 2021. After completion and operation, the company’s lysine production capacity will reach the level of one million tons. In 2022, the company will continue to promote the construction of Tongliao raw material ammonia project and other major projects. With the continuous release of the production capacity of various projects, the scale advantage of the company is becoming more and more prominent. The economies of scale will drive the company to increase the volume and reduce the cost. The driving force for the rise of superimposed amino acid prices is strong, and the profit elasticity of the company is expected to be realized steadily.
Investment advice
Under the background of strong production capacity & substitution policy, the production capacity will be maintained at a high level and the cost of pig feed will be gradually released. Based on this, we update the operating revenue of the company from 2022 to 2023 to be RMB 26.443/30.663 billion respectively (the former value is RMB 26.290/30.501 billion respectively) and the net profit attributable to the parent company to be RMB 2.791/3.370 billion respectively (the former value is RMB 2.775/3.358 billion respectively). It is estimated that in 2024, the operating revenue of the company will be RMB 35.602 billion and the net profit attributable to the parent company will be RMB 3.914 billion. To sum up, we expect that from 2022 to 2024, the company’s EPS will be 0.90/1.09/1.26 yuan respectively, corresponding to the closing price of 8.40 yuan / share on March 14, 2022, and PE will be 9 / 8 / 7X respectively, maintaining the “buy” rating.
Risk tips
The production capacity of live pigs was removed more than expected, the product sales were less than expected, the price of corn, the main raw material, rose more than expected, and the policy was disturbed.
