Adisseo (600299): Significant performance of industry lows Methionine price rises

Adisseo (600299): Significant performance of industry lows Methionine price rises

The company announced the 2019 third quarter report.

The company achieved operating income in the third quarter of 201929.

5.5 billion, net profit attributable to mother 2.

7.8 billion (previously +26.

18%, +16.

87%), net of non-attributed net profit1.

9.5 billion (decade-9).

79%, MoM-1.

04%).

African swine fever has affected the demand for feed additives, and the company has grown significantly against the trend.

Q3 VA average price is 370.

77 yuan / kg, up 3 from Q2.

47 yuan / kg, but the price of the entire Q3 VA continued to decline, mainly because of African swine fever affecting feed demand.

Q3 solid egg, liquid egg average price 17.

84, 14.

50 yuan / kg, down Q2 from 0.

86, 0.

54 yuan / kg.

Relatively speaking, since methionine is the second amino acid of pigs and the first amino acid of poultry and ruminants, methionine demand is less affected by African swine fever.

Facing the severely unfavorable demand and product prices in Q3, the company realized gross profit from functional products by reducing costs and expanding sales6.

5.8 billion 杭州夜网 (+18.

92%), gross profit margin 30.

23% (+ 1% qoq.

04pct), a leading performance indicator at industry lows.

Revenue from special products continued to grow.

Q3 company special product revenue 6.

2.1 billion (+7 qoq.

01%, highest in history), gross profit 2.

9.4 billion (+1.

77%), gross margin of 47.

31% (mom–2.

44pct).

Facing the US dairy crisis, the company maintained its revenue growth rate through market expansion, and its gross profit margin remained basically stable.

Enzyme preparations, selenium selenium, anti-premonition animal protein amino acids, aquatic products, and mycotoxins management products increased by 14%, 26%, 16%, 15%, and 10% respectively.

Anti-dumping of methionine is expected to land, and the bottom of the price is already expected to rebound.

Since April 10, 2019, the Ministry of Commerce has carried out anti-dumping on imported solid eggs originating in Singapore, Malaysia and Japan, and has lifted the anti-dumping hearing on October 10.

Evonik and other companies have responded significantly to anti-dumping. Both April and October have effectively raised the domestic market price. The current price is 19 yuan / kg.

We believe that the bottom of the methionine price was basically rebuilt in Q3. With the stabilization of the pig inventory and the official landing of anti-dumping, the price is expected to rise. We forecast the company’s net profit attributable to mothers in 2019/20/2110.

82/11.

93/13.

5.7 billion, EPS 0.

40/0.

44/0.

51 yuan, corresponding to the current price of PE 26.

5/24.

0/21.

1x, maintain “Buy” rating.

Risk warning: methionine production capacity expansion exceeds expectations; VA price declines; this anti-dumping and half-year investigation period, the final ruling of the Ministry of Commerce may not be established