The world's leading functional sugar alcohol company, continuously enriches and optimizes product structures. The company initially started with xylitol and has seized many opportunities to iterate on sugar substitute products on its growth path. The product line and production capacity continue to expand, and focus on the field of crystalline sugar alcohol with high technical content and high added value. Currently, the company has a xylitol production capacity of 50,000 tons/year, sorbitol production capacity of 50,000 tons/year, maltitol production capacity of 10,000 tons/year (20,000 new tons/year under construction), 30,000 tons/year of erythritol, and 100,000 tons/year of fructose syrup. It is one of the world's major manufacturers of xylitol, crystalline sorbitol and crystalline maltitol. Furthermore, the company currently has a self-sufficiency rate of 70%-80% of xylitol, the highest in the industry.
The rise of sugar-free and low-sugar consumption has driven a high demand for sugar substitutes, opening up market space for sweeteners. As public health awareness heightens and consumption upgrades, combined with the promotion of sugar control and sugar reduction policies at home and abroad, sweeteners have become the mainstream trend, and low-sugar/sugar-free drinks and foods have gradually become consumption trends. Major companies are making efforts in the sugar-free sector, driving rapid growth in the sugar substitute market. Sugar alcohol sweeteners optimize the non-health factors of artificial sugar substitutes. The sweetness is closer to sucrose and has a fresh taste. They are widely used in food, beverages, pharmaceuticals, daily necessities, etc., and there is broad scope for future development.
Continuously improve the layout of the entire industry chain, ensure the supply of raw materials upstream, strengthen product development and technical process improvements in the middle stream, and build channels and customer barriers downstream. Since its establishment, the company has continued to improve the layout of the entire sugar alcohol industry chain. It has successively set up a wholly-owned subsidiary, Jiaozuo Huakang, and a joint venture, Yahua Biotech. At the same time, it has acquired high-density co-profit, continuously expanded xylose production capacity to ensure a stable supply of xylitol raw materials for the company's core product, and help the company continue to make stable profits. At the same time, the company has established relatively complete sales channels, effectively covering domestic and major markets in Europe, America, Asia, etc., and is developing the domestic e-commerce market through its subsidiary Huakang Trading to develop the C-side market. With excellent product quality and good reputation, the company has established long-term stable cooperative relationships with many well-known domestic and foreign food and beverage industry enterprises.
The endogenous extension lays out a new track, revolves around big health products, and opens up space for future growth. The company participated in the fixed increase of Ningbo Traditional Chinese Medicine and subscribed for 8.518 million shares. After the change in equity, the shareholding ratio was 20%. The production process of natural plant extracts, the main business of traditional Chinese medicine in Ningbo, is compatible with the process of sweetener companies extracting stevia glycosides and rohan guts. Participating in this fixed increase will help the company integrate resources and lay the foundation for future new business layout. At the same time, the company signed an investment agreement with Zhejiang Dinghai Industrial Park to invest in the “2 million ton corn deep processing health food ingredient project” to produce a series of deep-processed products such as starch sugar/sugar alcohol, dietary fiber, modified starch, etc., and use advanced technologies such as synthetic biological green manufacturing to produce various products such as alloketone sugar, lactic acid/polylactic acid, amino acids, etc., to enter a wider range of fields to expand business scope and open up future growth space.
Profit prediction and valuation: A leading international functional sugar alcohol company, continuously improving the layout of the entire industry chain, enriching and optimizing the product structure, laying out a new track for internal and external expansion, and starting new growth. We anticipate that the company's net profit for 2022-2024 will be 308, 446, and 570 million yuan, corresponding to EPS of 1.35, 1.95, and 2.49 yuan respectively. The current market value corresponds to PE of 22, 15, and 12X respectively. This is the first coverage, giving it an “increase in holdings” rating.
Risk warning: raw material prices have risen sharply; product prices have fluctuated greatly; industry competition has intensified.