The company is a giant in the domestic corn deep processing industry, committed to reshaping the corn deep processing industry with modern biotechnology. The company has been focused on corn deep processing for more than 30 years. Based on the systematic low-cost raw material control ability, overall optimal production and processing capacity and continuous fine deepening technological change ability of the leading industry, it has formed a product matrix with fuel ethanol, starch and starch sugar as the core, modified starch and special syrup as the vanguard, and polylactic acid, cellulose ethanol and sugar substitute as backup. We believe that the company's bio-based energy business has a stable output scale and profits, the bio-based raw materials business continues to optimize profitability, and the bio-based materials business shapes the second growth curve. Considering the company's business performance, industry status, technical capability and growth space, we give the 2022 target market capitalization of 27.9 billion yuan and the target price of 15 yuan. Cover for the first time, giving a "buy" rating.
Bio-based energy business: cost leadership to build a strong position in the clean energy market. The company is the leader of the domestic fuel ethanol industry, and its production capacity and market share are the first in the industry. The company controls costs based on the adaptability of diversified raw materials, increases the gross profit of flexible production lines, stabilizes the selling price of market-oriented price negotiation, expands the space of non-grain technological change, and effectively hedges the two major risks of price and policy. firmly stabilize the remarkable leading position of corn fuel ethanol market, at the same time, be the "regulator" of national grain market and the "absorption pool" of problem grain. And lead the industry to explore the new development space of non-grain fuel ethanol. We believe that the bio-based energy business, as the company's basic business, has the ability to continue to generate stable revenue and profits for the company.
Bio-based raw materials business: intensive processing and dedication of high value-added food raw materials. The company is one of the largest starch and starch sugar processing enterprises in China and an important manufacturer of organic acids and amino acids. Starch, through continuous process optimization to reduce costs, upgrade products; starch sugar, strengthen the starch to starch sugar extension processing, and to the "small special new" product direction comprehensive upgrade, improve the added value. We believe that the bio-based raw materials business can continuously optimize profitability, improve the overall gross profit level, and promote the upgrading of the company from traditional bulk product production to customized, small batch, functional product production.
Bio-based materials business: technological breakthroughs to break through the whole process of biodegradable materials. Under the "double carbon" goal and the national plastic restriction policy environment, the biodegradable materials industry has great potential. The company actively laid out in the early stage of the industry, and has broken through the whole industrial chain of polylactic acid, especially the key technological breakthrough of propyl ester.
At the same time, the company's related capacity construction projects have progressed steadily, the cost advantage of corn raw materials has initially emerged, and a more forward-looking layout of PHA technology has been launched. We believe that the company is expected to become a leader in the biodegradable materials industry. The bio-based materials business is expected to become the most important source of growth for the company in the future, leading the company into the second growth curve.
Core competitive advantage: based on the advanced management concept and mature business model of the whole corn industry chain, the company has established systematic and low-cost raw material control capacity, overall optimal production and processing capacity, and continuous and deepening technological change ability. build a high comprehensive competition barrier. Although the company's product matrix is diverse but homologous, the category is rich and distinct, the channel network and customer resources are stable, and the price and policy risk control is effective. Bio-based energy, bio-based raw materials and bio-based materials are all based on corn raw materials, which become the fulcrum of company scale, profit and growth respectively, providing growth and high certainty for the company's performance growth.
Risk factors: raw grain price fluctuation risk; crude oil price fluctuation risk; demand uncertainty caused by COVID-19 epidemic; poor progress of the company's construction project; food safety risk; production safety risk.
Investment suggestion: the company's comprehensive operating capacity of bio-based energy business continues to improve, which has been able to effectively stabilize the impact of food prices and international oil price fluctuations on performance. The bio-based raw material business is expected to continuously improve the company's profitability through product structure optimization. The bio-based materials business has achieved major technological breakthroughs and launched the key capacity layout, which is expected to provide sufficient flexibility for the company's future performance growth. We predict that the return net profit of the company from 2022 to 2024 is 1.546 billion yuan, corresponding to the EPS forecast of 0.68 yuan per share, and the current price corresponding to PE is 14-13-12 times. Considering the company's operating performance, industry status, technical capability and growth space, and referring to the average valuation level of about 22 times PE of comparable companies in 2022, we give the company 22 times PE in 2022, corresponding to a target market value of 27.9 billion and a target price of 15 yuan per share. Cover for the first time, giving a "buy" rating.
