Event description
Recently, we have tracked the operation of Dongbao Bio, the main contents and viewpoints are as follows.
Event comment
Since the beginning of the year, the national supervision of food and drug safety has continued to increase, the elimination of low-end gelatin enterprises has been further accelerated, and the market demand for high-end gelatin has increased.
As the leader of the domestic gelatin industry, the company has the technical support of the Institute of Science and Technology of the Chinese Academy of Sciences, and is expected to fully benefit from the improvement of industry concentration. In addition, the company plans to raise 376 million yuan in non-public offerings to invest in the "annual production capacity of 3500 tons of new process gelatin construction project" and "R & D center construction project", and supplement part of the working capital. The fixed increase project has been accepted by the CSRC on September 29th, 2014, and the approval date is approaching, which will inject sufficient impetus into the expansion of the company's gelatin business.
With the decline of raw material prices, the performance is expected to pick up: the production cycle of gelatin products is longer, and the decline of raw material costs has a strong lag. In the first three quarters, under the superimposed influence of the weak price of gelatin (the positive effect of the event of "capsule chromium exceeding the standard") and the lag of raw material cost response, the company's performance entered a phased low. At present, the market price of gelatin is basically stable, while the purchasing price of raw materials of the company has a significant downward trend in the first three quarters. We believe that the gross profit margin of the company's gelatin products is expected to bottom out and pick up, driving the company's performance back to the upward path.
"Yuansu" has a foothold, and the prospect is worth looking forward to: "Yuansu" is the key collagen brand cultivated by the company, including bone collagen (peptide) powder, effervescent tablets, beverage, mask and other products. The company is committed to building it into the first national brand of collagen in China. In the domestic market, the company has enriched its collagen management team and actively laid out ground sales outlets, and the sales of collagen products have increased steadily; in overseas markets, the cooperation between the company and Lipond International is progressing smoothly, and relevant sales work has been started, and participated in the "American Western Natural products Exhibition" in March this year, won the technical support of UCLA and other famous universities, and the growth space is worth looking forward to.
Coverage for the first time, given a "recommended" rating: the company is the leader in the domestic gelatin industry and will fully benefit from the increase in industry concentration; the downward price of gelatin raw materials is expected to drive the company's performance to pick up; and the "Yuansu" brand is based on high level. we are optimistic about the company's potential in the new collagen business, and the development prospect is worth looking forward to. It is estimated that the company's EPS from 2014 to 2016 will be 0.05,0.17,0.32 yuan, covering it for the first time and giving it a "recommended" rating.