AHB(688639) 华泰证券·2024-10-24 04:03Investment Rating - The report maintains a "Buy" rating for Huaxing Biology (688639 CH) with a target price of RMB 51.22 [1][4] Core Views - The private placement of Huaxing Biology has been successfully completed, raising a total of RMB 700 million (net amount of RMB 684 million), which is expected to facilitate the smooth implementation of new projects [1] - The issuance price for the private placement was RMB 33.14 per share, with the majority of investors being state-owned enterprises and private equity funds [2] - The new projects, including the 50,000 tons/year succinic acid and 50,000 tons/year malic acid projects, are expected to gradually enter production and contribute to future growth [2][3] Financial Projections - The report forecasts net profit attributable to the parent company for 2024-2026 to be RMB 350 million, RMB 490 million, and RMB 620 million, respectively, with year-on-year growth rates of -22%, +40%, and +25% [4] - The EPS for 2024-2026 is projected to be RMB 1.41, RMB 1.97, and RMB 2.47, respectively [4] - The company's revenue is expected to grow significantly, with 2024E revenue projected at RMB 3.263 billion, a 68.37% increase year-on-year [8] Industry and Market Conditions - The amino acid market remains weak, with prices of valine, tryptophan, and arginine down by 25%, 29%, and 19% respectively compared to the beginning of the year [3] - The new projects are expected to compensate for the weak market conditions by increasing production volume [3] Valuation - The report values the company at 26x PE for 2025, based on the average PE of comparable companies [4] - The target price of RMB 51.22 is derived from the 2025 EPS of RMB 1.97 multiplied by the 26x PE [4] Key Financial Metrics - The company's ROE is expected to be 12.78%, 16.34%, and 18.14% for 2024-2026, respectively [8] - The PE ratio is projected to be 26.14x, 18.63x, and 14.85x for 2024-2026, respectively [8] - The PB ratio is expected to decrease from 3.35x in 2024 to 2.70x in 2026 [8]