The current situation of the company
Jieya shares announced that it intends to set up a joint venture with Chuangjian Medical to improve the layout of functional skin care products such as medical dressings and enhance the core competitiveness of cosmetics business. We believe that this cooperation is expected to give full play to the advantages of both sides and is optimistic about Jieya's broad growth space for the cosmetics business.
Comment
1. Set up a joint venture company to deepen the layout of cosmetics business, and the products are expected to expand from cosmetic brands to mechanical brands.
Jieya shares plan to set up a joint venture with Chuangjian Medical Co., Ltd. Anhui Jiechuang Medical Devices Co., Ltd. (tentatively), the bill has been examined and approved by the board of directors and does not need to be submitted to the general meeting of shareholders for approval. The registered capital of the joint venture company is proposed to be 5 million yuan, of which Jieya shares and Chuangjian Medical hold 52% and 48% respectively. According to the official website, Chuangjian Medical was founded in 2015, focusing on the R & D and production of recombinant collagen-based biomaterials. At present, it has achieved large-scale and standardized production of recombinant collagen type Ⅰ, Ⅱ, Ⅲ and ⅩⅦ collagen, with an annual production capacity of 2.5 tons. We believe that the establishment of a joint venture company by Jieya Co., Ltd. is expected to take advantage of Chuangjian Medical's advantages in the field of reorganized collagen and other biomedical materials, combined with Jieya's high-quality customer resources and advanced production quality control system, improve the layout in the field of functional skin care products such as medical dressings, and provide strong technical support for the follow-up development of high-end functional skin care products.
2. Set up Shanghai R & D Center to strengthen the company's R & D capability and business development ability. The company announced on December 1 that it plans to set up a branch in Shanghai and set up a Shanghai R & D center, which will form a dual R & D center pattern with Tongling R & D center. We believe that this move is conducive to relying on Shanghai's advantages in talent, information, technology and geographical location in daily chemical, big health and other industrial fields, to improve the company's R & D capability and market development ability, and to enhance the overall operation and management efficiency, so as to strengthen the company's comprehensive competitive advantage.
3. Be optimistic about the broad growth space for the leading manufacturer of high-quality wet wipes to the cosmetics business. The company has long-term cooperation of international head customer resources, leading product development capabilities, advanced production equipment and perfect quality control system. Looking forward to the follow-up, we think: ① wipes business: with the gradual recovery of orders for sterilized wipes due to head customer inventory digestion and the decline in sea freight, and the steady growth in downstream demand for other series of wipes, such as babies, further volume is expected to be achieved. ② cosmetics business: actively expand cosmetics such as hair care, cream cream and baby care on the basis of facial masks and hand and foot masks. The annual output of 3000 tons of natural care products has produced emulsion, essence and shampoo products for L'Or é al. We expect to contribute to incremental performance as capacity utilization increases. Be optimistic about the broad growth space of the company in the medium and long term.
Profit forecast and valuation
We maintain a profit forecast of 146x183m for 2022max in 2023, and the current share price corresponds to 16x Pmax E in 2022max 2023. Maintain an outperform industry rating and target price of 45.2 yuan, corresponding to 20 times Pmax E in 2023, which has 26% upside compared to the current stock price.
Risk.
Business expansion is not as expected, raw material prices and exchange rate fluctuations risk, capacity utilization is lower than expected.