Incident: Aidimeng Weilan Biotech announced a microecological formulation research and industrialization project. The total investment amount was about 400 million yuan. The funding source was the investment amount of RMB 160 million (80 million each) promised by Qingdao Weilan Biotech Group (a wholly-owned subsidiary of the company) and ADM Singapore. The remaining capital requirements were carried out by shareholder loans or shareholder capital increases according to the project progress in stages according to the shareholding ratio.
Comment: This microecological formulation research and industrialization project mainly invests in the construction of a food probiotic production plant. The construction site of the project is located in the Aidimeng Blue Biological Plant area. It is expected to be officially put into production and operation in early 2025. After completion of the project, production capacity is expected to be realized: 100 tons of raw materials for functional probiotic powder and 100 tons of probiotic liquid products. As a joint venture between China and foreign countries, Aidimeng Weilan Biotech has a unique resource advantage. As a bridge connecting ADM's global probiotic resources with Azure Biotech's probiotic technology and strain reserves, it uses patented strains from various parties to provide customers with high-quality products and services, and is supported by the cost advantages of local production, and its cost performance ratio has improved.
The probiotic industry has received great attention, and the prospects for the company to cooperate in developing a multi-field layout are promising. Probiotics help regulate human physiological function and improve immunity. They are an industry where national industrial policies encourage development. China's “Healthy China 2030” Plan Outline has been released and implemented, which has become a powerful driving force for stimulating the development of the healthcare industry. At the national strategic level, there is a requirement to actively expand preventive health services and promote the shift from traditional disease treatment to health promotion. According to research agency ZION Market Research, the global probiotic production value is expected to exceed 77 billion US dollars in 2025. The company grasps the growing demand for human probiotics in the consumer market and cooperates with leading international companies. ADM Group has rich experience in the development and production of ingredients, additives and flavors for food, beverages and supplements. In the future, the two sides will work together to jointly provide R&D and technical support to Weifang Weizilan (AIDU Weilan). In addition to this, the company is exploring the application of probiotics in the field of skincare and going deep into the development of high-value barley products, which is expected to lead to increased performance.
The company helped the development of green aquaculture by resisting the Iron Triangle, and used feed enzyme preparations to improve farming efficiency. In order to promote green farming and ensure food safety, from July 2020, the addition of growth-promoting antibiotics will be completely banned on the feed side of China. Livestock and poultry resistance requires an adaptation process. The company uses enzyme preparations, probiotics, and plant extracts to form an “replacement iron triangle” layout: microecological preparations will adjust the balance of intestinal flora, biological antagonism, regulate immune function, resist pathogen infection and promote absorption. In addition, it can provide a diversified anti-enzyme plan focusing on enzymes, glucose oxidase, mycotoxin degrading enzyme, and lysozyme. The ability to provide system solutions, one after another Establish strategic cooperation with core customers to form customized, differentiated and cross-border solutions, establish a database of animal microecological replacement applications, and prepare for iterative product upgrades. In terms of feed enzyme preparations, the company's main products are complex enzymes, including phytase, amylase, xylanase, etc. Due to the high price of feed raw materials, the Ministry of Agriculture and Rural Affairs formulated the “Guidelines for the Identification and Safety Evaluation of Direct Feed Microorganisms and Fermentation Products Production Strains” in November 2021. As a leading enzyme preparation enterprise, the company's products are highly recognized in the market and are expected to see an increase in performance.
Profit forecasts and investment recommendations. It is estimated that 2022-2024 EPS will be 0.49 yuan, 0.63 yuan, and 0.77 yuan respectively, and the corresponding dynamic PE will be 28/22/18 times respectively, maintaining the “hold” rating.
Risk warning: R&D progress falls short of expectations; product sales fall short of expectations, etc.