Investment Rating - The report maintains an OUTPERFORM rating for Fufeng Group (546 HK) with a target price of HK$6.51 [2][9] Core Views - Fufeng Group's net profit in 2023 decreased by 18.57% YoY to RMB 3.144 billion, primarily due to reduced gross profit in the food additives, animal nutrition, and other segments [2][6] - The company achieved a 1.94% YoY increase in main business revenue to RMB 28.007 billion, while gross profit declined by 13.38% to RMB 6.247 billion [2][6] - Fufeng Group plans to distribute a total cash dividend of approximately RMB 1.342 billion, with a dividend payout ratio of 42.68% and a dividend yield of 13.39% [2][6] Business Segment Analysis - Food Additives Segment: Revenue increased by 1.5% YoY to RMB 13.495 billion, driven by stable MSG revenue and increased starch sweetener contributions, but gross margin declined by 3.5 pct to 16% [7] - Animal Nutrition Segment: Revenue decreased by 7.1% YoY to RMB 8.901 billion, with gross margin dropping by 10.8 pct to 17.1%, mainly due to price declines in 98% and 70% lysine [7] - High-Grade Amino Acid Segment: Revenue surged by 64.2% YoY to RMB 1.973 billion, with gross margin increasing by 7.6 pct to 39.6%, driven by new product launches and improved customer portfolio [7] - Colloid Segment: Revenue grew by 26.3% YoY to RMB 2.828 billion, with gross margin rising by 4.5 pct to 59.1%, supported by increased demand for xanthan gum [7] Domestic and Overseas Expansion - Domestically, Fufeng Group's new MSG production capacity is in trial operation, with further capacity additions expected in 2024 to optimize cost advantages and consolidate market leadership [8] - Overseas, the company is conducting feasibility studies in the US and Eastern Europe to establish production bases for threonine and lysine, aiming to enhance efficiency by sourcing local raw materials and selling locally [8] - The company has successfully set up regional marketing centers in Vietnam, the US, and the Netherlands to better serve overseas customers [8] Financial Forecasts - Revenue is expected to grow by 5% YoY in 2024 to RMB 29.496 billion, with further growth of 8% and 9% in 2025 and 2026, respectively [4] - Net profit is projected to decline by 3% YoY in 2024 to RMB 3.061 billion, followed by growth of 10% and 11% in 2025 and 2026, respectively [4] - EPS is forecasted at RMB 1.21, 1.32, and 1.47 for 2024, 2025, and 2026, respectively [4]
2023年股东应占溢利同比下降18.57%，公司积极布局海外生产基地