What happened: recently, the company received a "reply on approving the non-public offering of shares of Epp Spice Group Co., Ltd." issued by the Securities Regulatory Commission, approving the non-public offering of no more than 96 million new shares. The funds raised will be used for the construction of the R & D and manufacturing base of food ingredients, which is the expansion and R & D project of industrial chocolate and jam.
Flavor and fragrance business: occupies the leading position in the industry, "horizontal expansion" strategy to strengthen competitiveness. "Aipu" is a well-known brand in the flavor and fragrance industry, with a leading scale, mature business and stable income growth, which is the main source of gross profit. In the past few years, we have accumulated a large number of high-quality customers and implemented a horizontal expansion strategy to enter the field of food ingredients. In the future, we will further enhance customer stickiness and the company's overall competitiveness by providing compound products, comprehensive food ingredients and flavor solutions.
Food ingredients manufacturing: expand production capacity + strong research and development, to create a high-speed growth engine. 1) the company has technical advantages in industrial chocolate, rich customer resources, product quality is recognized, and the scale is in the lead in China. In the future, the downstream OEM demand will be released and incremental customers will be opened up. This expansion will provide a guarantee for the improvement of market share. In addition, under the upgrading of consumption, the proportion of pure fat chocolate with high gross margin will further increase and is expected to release profit elasticity. 2) the income of the jam business has grown rapidly in recent years, and the gross profit margin has also entered a rebound stage, which will have more market space in the future and is expected to continue to contribute to growth. The company has leading jam technology, R & D capability, sustainable development of new customers of catering and chain drinks, development of customized and high-end products, and thickening profit margins.
Future development orientation: food flavor comprehensive solution provider. Food consumption pursues the background of "natural and green", which gives rise to high-end demand and drives the growth of the industry. the products of some middle and high-end customers begin to pay more and more attention to natural and health. the company is positioned as a "comprehensive solution provider for food flavor", changing from the original single food ingredients or food flavors to providing comprehensive compound food ingredients, while making use of advanced technology and R & D capabilities. Continuously improve the comprehensive service level of providing customers with "comprehensive food ingredients and flavor solutions".
Investment advice: with the rise of food ingredients, the company's layout in the chocolate and jam industry is expected to seize the industry dividend, and the increase in capacity will expand its leading position in the industry. In the future, we will position the food flavor comprehensive solution provider, extend the industrial value chain, and enhance the company's core competitiveness in an all-round way. It is estimated that the company's EPS from 2021 to 2023 will be 0.86,1.22,1.60 yuan, corresponding to 18 times, 13 times and 10 times of PE respectively, maintaining a "buy" rating.
Risk tips: uncertainty of overseas epidemic situation; intensified competition in the industry; risk of price war; project construction is not as expected; customer expansion is not as expected; food safety issues.
