STAR LAKE SCIENCE(SH:600866)2024-10-31 00:34Investment Rating - The report maintains an "Outperform" rating for the company with a target price of RMB 7.92, based on a 12x PE for 2024 [1][11]. Core Insights - The company achieved a recurring net profit growth of 62.99% year-over-year in the first three quarters of 2024, with operating income of RMB 12.79 billion, up 0.48% year-over-year [2][7]. - The gross profit margin improved to 15.72%, an increase of 3.03 percentage points year-over-year, driven by lower procurement costs and optimized production processes [8][9]. - The company’s overseas sales accounted for 46.20% of total revenue in the first three quarters, reflecting a year-over-year increase of 10.47 percentage points [3][9]. Financial Performance - For the first three quarters of 2024, the company reported a net profit of RMB 677 million, a year-over-year increase of 38.38%, while the net profit after deduction was RMB 762 million, up 62.99% year-over-year [2][7]. - In Q3 2024, the company’s revenue was RMB 4.303 billion, showing a quarter-over-quarter increase of 0.38% but a year-over-year decline of 3.56% [2][7]. - The forecasted earnings per share (EPS) for 2024, 2025, and 2026 are RMB 0.66, RMB 0.73, and RMB 0.81, respectively [11]. Product Segmentation - Revenue from the food additives business decreased by 1.27% year-over-year to RMB 3.335 billion, while feed additives revenue increased by 1.13% to RMB 8.453 billion [3][9]. - The biochemical raw materials and preparations business saw a revenue decline of 6.53%, and pharmaceutical intermediates revenue dropped by 24.15% year-over-year [3][9]. Market Conditions - Prices for lysine and threonine have risen, with lysine prices in Shandong reaching RMB 10,950 per ton, up RMB 150 from late October 2024 [4][10]. - The report indicates a widening price spread for lysine and threonine, which is expected to positively impact the company's profitability [10].