Key points of investment:
The company is the only enterprise that can produce lanolin cholesterol on a large scale in China. After banning animal-derived cholesterol, the company's advantages in integrated production of VD3 were highlighted; when it expanded downstream, the company broke through the DSM monopoly, and the second company in the world achieved mass production of 25-hydroxyVD3, and there is plenty of market space for product replacement.
The company is committed to building VD3 Jinxi Science Park
The company is headquartered in Dongyang, Jinhua, Zhejiang. The actual controller is Zhejiang Shao Qinxiang's family. Currently, the company's production line is gradually being relocated to the Jinhua production base. At Jinxi Science and Technology Park, 3,600 tons/year of food grade VD3, 1,200 tons/year of lanolin cholesterol, 1,200 tons/year of lanolin cholesterol, 1,200 tons/year of hydroxy25-hydroxyVD3 production capacity are expected. All projects are expected to be put into operation within the year, and the scale advantage will be further expanded.
The new national standard was implemented, and the company's integrated operation advantages were highlighted
The company is one of the few companies in the world that has mastered lanolin-derived cholesterol technology, and is also the only company in the world that has a complete “lanolin-NF cholesterol-VD3” industry chain. With the implementation of the new national standard, animal brain stem cholesterol is banned, and lanolin cholesterol will become the only legal source of VD3 raw materials in the world. Benefiting from the optimization of the industry pattern, the company's business barriers have been raised, and the advantages of integrated management have been highlighted.
There is a large market space for 25-hydroxy VD3 substitutes. Further opening up growth space 25-hydroxy VD3 can effectively solve the problem of animal liver damage. Theoretically, it can completely replace the market size of about 6,000 tons of feed-grade VD3, and there is plenty of market space for replacement. The company broke the DSM monopoly and became the second company in the world to systematically master 25-hydroxy VD3 production technology, and the company's chemical synthesis method had a higher yield and lower cost, further opening up room for growth.
Profit Forecasts, Valuations, and Ratings
We expect the company's operating revenue for 2022-2024 to be 1,513 million yuan, 1,960 million yuan, and 2,422 million yuan respectively, and net profit of the mother is 510 million yuan, 645 million yuan, and 797 million yuan respectively, with year-on-year increases of 6.30%, 26.42%, and 23.65% respectively. The corresponding EPS is 0.93 yuan, 1.17 yuan, and 1.45 in accordance with the FCFF valuation method, when the corresponding stock price corresponds to PE
The target price for the company in 2022 is 16.74 yuan, which is 18 times the corresponding PE. Given the integrated advantages of the company's VD3 and the gradual opening of 25-hydroxyl VD3 applications, it was covered for the first time and given a “buy” rating.
Risk warning
The release of production capacity under construction fell short of expectations; marketing of 25-hydroxy VD3 fell short of expectations; risk of COVID-19.
