AHB(688639) 长江证券·2024-11-15 01:46Investment Rating - The report maintains a "Buy" rating for Huahong Biotech (688639 SH) [4] Core Views - Huahong Biotech's Q1-3 2024 revenue reached 1 54 billion yuan (+12 8% YoY) but net profit attributable to shareholders dropped to 170 million yuan (-46 9% YoY) [4] - Q3 2024 revenue was 520 million yuan (+1 7% YoY +1 4% QoQ) with net profit of 20 million yuan (-84 3% YoY -68 0% QoQ) [4] - The company's profitability was impacted by price declines in existing products and slower-than-expected new product ramp-up [6] - New products including 1 3-propanediol succinic acid malic acid tryptophan and arginine are expected to drive future growth [8] Financial Performance - Q3 2024 gross margin was 21 4% (-19 0% YoY -8 3% QoQ) and net margin was 3 8% (-21 1% YoY -8 2% QoQ) [6] - The company's under-construction projects total 1 83 billion yuan including a 50 000-ton bio-based succinic acid project and a 50 000-ton 1 3-propanediol project [5] - Forecasted net profits for 2024-2026 are 220 million 360 million and 530 million yuan respectively [9] Market Conditions - Q3 2024 saw significant price declines for valine (-8 2% QoQ) tryptophan (-8 0% QoQ) and arginine (-12 6% QoQ) [5] - Inositol prices dropped 20 8% QoQ to 46 9 yuan/kg in Q3 2024 [5] - Soybean meal prices fell 9 6% QoQ to 3 098 yuan/ton in Q3 2024 impacting demand for small amino acids [5] Future Outlook - The company recently raised 700 million yuan through a private placement to fund new product development [8] - With its established customer base in chemical pharmaceutical food additive and animal nutrition markets the company is well-positioned for new product commercialization [8] - Despite current challenges the company's technological barriers and product pipeline make it a leading player in bio-manufacturing [9]