Main points of investment
We previously focused on recommending Epp shares, and recently issued an announcement to increase capital to control Shenzhen Yingcan Biotechnology Co., Ltd., to help the rapid landing of the company's e-cigarette oil business, we hereby reiterate the recommendation logic and point of view, and continue to focus on recommendation!
Capital increase Yingcan Biotechnology Co., Ltd., 51% shareholding
The company announced that it intends to increase its capital in Shenzhen Yingcan Biotechnology Co., Ltd. in the form of cash, and signed a framework agreement with Shenzhen Yingcan and its existing shareholders Shenzhen Lei Yan and Shenzhen Yingcan actual controller. After the completion of the capital increase, the company will hold a 51% stake in Shenzhen Yingcan.
We believe that this capital increase will contribute to the rapid landing of the company's e-cigarette oil business.
1) obtain license: holding Shenzhen Yingcan through this capital increase will enable the company to quickly obtain the production license of electronic aerosol.
2) obtain orders and market: through this capital increase and holding, the company will establish a close cooperative relationship with the atomized electronic cigarette head enterprise [Magic Flute]. Because the two sides occupy advantages in market and technology respectively, it is conducive to the follow-up and rapid market expansion.
3) promote the expansion of the business of flavors, fragrances and e-cigarettes: electronic atomization is a very important application field of flavors and fragrances, the addition amount of flavors and fragrances is much higher than that of ordinary food, and the company's tobacco business forms scale effect in the later stage. it will play an obvious role in promoting the company's flavor and flavor business.
There is a broad space for follow-up, continue to focus on the recommendation!
Epp shares, as our previous key recommended target, the second quarter is the low point of operation and performance. With the landing of the e-cigarette oil business and the production capacity of the food ingredients business, the company will enter the trend upstream channel, and the performance is expected to improve quickly. In the long run, the company's business has good growth, and the follow-up is expected to become an integrated supply chain leader that can provide product solutions. The company's edible flavors and fragrances are already the first company with domestic investment. After the chocolate business is put into production next year, it will become the largest chocolate factory in China. Chocolate and jam will cooperate with the original flavors and fragrances. Combined with the company's own supply advantages, it will help the company to become the leader in providing comprehensive compound product solutions, with long-term growth. This capital increase holding Shenzhen Yingcan, the company's e-cigarette oil business will quickly land, will also open the follow-up imagination space.
Profit forecast and valuation
Maintain the previous earnings forecast and maintain the buy rating. It is estimated that the realized income from 2022 to 2024 will be RMB 40.24 billion, respectively, which is 6.15%, 13.35% and 14.24% respectively compared with the same period last year. The net profit of returning to the mother is RMB 249 million, RMB 1.92 billion, respectively, and the year-on-year income is-20.29%, 27.43% and 24.68%, respectively, and the quality of operation has been improved. It is estimated that the EPS of the company from 2022 to 2024 is 0.39ax 0.50, respectively, and the corresponding PE is 0.62 times as much as that of 28-22-18.
Risk tips: COVID-19 epidemic repeatedly affected terminal demand, raw material costs continue to rise, and so on.
