Incident: Blue Biotech Group, a wholly-owned subsidiary of Weilan Biotech (Company), and World's Top 500 AIDU (ADM) jointly established a probiotic joint venture, Aidimeng Weilan Biotechnology (Shandong) Co., Ltd., in May 2022. The two parties each invested 80 million yuan in cash, each holding 50% of the shares. The joint venture Aidimeng Weilan Biotech invested about 400 million yuan to implement the “Microecological Formulation Research and Industrialization Project” with the intention of building a new food probiotic production plant, which is expected to be officially put into operation in early 2025.
After operating Aidimeng Weilan Biotech, it mainly produced and sold food probiotic products in a B2B model to the global market.
In terms of production and sales, Aidimeng Weilan Biotech combines the cost advantages of localized production, benchmarks the world's advanced production processes and quality standards, and integrates international resources provided by ADM, the world's leading human nutrition and health ingredient supplier, to help promote the application and customer expansion of probiotic products.
In terms of product development, Aidimeng Blue Biotech focuses on developing high-quality food probiotic products and star strains. Based on the existing probiotic technology and strain reserves of the two parties, the joint venture uses ADM's probiotic science and technology centers in Spain (Biopolis), the United States (Deerland), the United Kingdom (Protexin), and Jiangnan University in Wuxi, China, and links Weilan Bio's nutrition and health technology center in Qingdao to form a global R&D network to provide customized full services around customer needs. After the joint venture is put into operation, it can feed back Blue Biotech, optimize the company's probiotic supply chain, export diversified and specialized products, attract the attention of global consumers, and enhance the company's market competitiveness in the field of probiotics.
The company actively laid out the food probiotic circuit to accelerate the implementation of the project. The microecological formulation research and industrialization projects invested by the joint venture cover the construction of production facilities such as production workshops, warehouses, power distribution rooms, doorman rooms, and office R&D buildings. After completion, it can achieve a production capacity of 100 tons of functional probiotic powder raw materials and 100 tons of probiotic liquid products.
The probiotic industry is in line with the concept of big health, with high market prosperity and bright prospects; probiotic products have high added value and unlimited potential. The company's microecological revenue for 2022/2023/2024 is estimated to be 2.38/257/282 million yuan, an increase of -5.0%/8.0%/10.0%, and gross margin of 43.0%/44.0%/46.0%.
Investment advice: Research on microecological formulations and promotion of industrialization projects will help the company open up global resources and lay out global businesses. Based on the above analysis, the company's revenue for 2022/2023/2024 is estimated to be 1,111/1235/1,390 million yuan respectively, net profit of the mother is 1.07/1.28/155 million yuan respectively, EPS is 0.42/0.51/0.61 yuan respectively, and PE corresponding to the current stock price is 33.1/27.4/22.8 times. Maintain a “buy” rating.
Risk warning: Risk of R&D results falling short of expectations; marketing and sales risks; downstream aquaculture industry cycle and risk of sudden outbreaks; risk of fluctuations in raw material prices; there may be risks of information being delayed or not updated in a timely manner in the public information used in research reports.