Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 5.51, based on a current price of HKD 4.24 [1][3]. Core Insights - The company reported a revenue of CNY 13.37 billion for the first half of 2024, a decrease of 1.6% year-on-year, and a net profit of CNY 1.04 billion, down 32.3% year-on-year. The decline in revenue is primarily attributed to significant reductions in the revenue from the colloid and other segments, which offset growth in other business areas [2][9]. - The company maintains a diversified revenue mix with stable fundamentals in food additives and animal nutrition, despite short-term profit pressures [2][9]. - The report highlights the company's leading position in the global market for monosodium glutamate and xanthan gum, supported by strong biotechnological capabilities and resource integration [7][12]. Revenue and Profitability Analysis - For the first half of 2024, the revenue breakdown by segment is as follows: food additives (CNY 6.92 billion, +5.5%), animal nutrition (CNY 4.20 billion, +2.5%), high-end amino acids (CNY 1.08 billion, +29.9%), colloids (CNY 0.90 billion, -44.9%), and others (CNY 0.28 billion, -40.1%) [2][12]. - The overall gross margin for the first half of 2024 was 17.2%, down 5.1 percentage points year-on-year, with a net margin of 7.8%, down 3.4 percentage points year-on-year. The decline in gross margin is mainly due to significant drops in profitability in the colloid and other segments [15][16]. Future Earnings Forecast - The forecast for net profit attributable to the parent company for 2024-2026 is CNY 2.19 billion, CNY 3.23 billion, and CNY 4.32 billion, respectively, with corresponding EPS of CNY 0.87, CNY 1.28, and CNY 1.71 [3][23]. - The report anticipates revenue growth rates of 1.9% for 2024, 1.6% for 2025, and 8.3% for 2026, with a projected increase in gross margins over the same period [23][22]. Business Segment Performance - The food additives segment is expected to maintain stable revenue contributions, while the animal nutrition segment is projected to benefit from improved pricing dynamics for threonine and lysine due to favorable breeding cycles [22][23]. - The high-end amino acids segment is anticipated to see significant growth, driven by new product launches and market share expansion [12][22]. - The colloid segment is expected to face challenges due to price volatility, particularly in xanthan gum, but is projected to recover as market conditions stabilize [22][23]. Cost Management and Efficiency - The company has maintained stable expense ratios, with sales and management expense ratios at 6.9% and 3.5%, respectively, for the first half of 2024. The report indicates ongoing efforts to optimize logistics and reduce unit transportation costs [20][22].
阜丰集团：生物发酵龙头，多品类蓄势待发