Investment logic
Deep ploughing the development of biochemical field, medicine and food to build a large health business map: star Lake Science and Technology, a subsidiary of Guangxin holding Group, has continuously carried out biological fermentation and biochemical business layout for many years, forming the three major fields of medicine, food and feed, and built a "productive" production chain, while raw materials are shared among various parts of the business, and the structure of the industrial chain is optimized. In recent years, the company has integrated product profitability and overall development, reduced the volume of business in the field of feed, and gradually formed a development pattern of medicine and food.
ITung industry is still in the upward period of prosperity: as a food freshening agent and other condiments, the industry has experienced more than 5 years of industry trough, superimposed environmental protection requirements have become stricter, and small-scale backward production capacity has withdrawn from the industry competition; at the same time, the steady growth of downstream demand has digested the excess capacity, and the supply and demand pattern of the industry has been greatly improved. There are four major production enterprises in the world, which will be in the pattern of oligarchic competition for a long time. After experiencing a significant increase in product prices in 2018, we believe that the industry as a whole is still in the upward channel of prosperity in 2019, and prices can still be overlooked.
And show Jiuling Pharmaceutical, add new performance growth points: the company completed the acquisition of Jiuling Pharmaceutical in the first quarter of 2019. Jiuling Pharmaceutical has long been engaged in customized pharmaceutical intermediates business (CMO business), and has obtained a good layout in AIDS, hepatitis C, diabetes and other pharmaceutical intermediates. The pharmaceutical and pesticide intermediates industry has ushered in an excellent period of development under the background of increasing global R & D difficulties and increasing industry concentration. Jiuling firmly grasps the development opportunities of the industry and continues to release new production capacity in the second half of 2019. Provide new performance growth points for the company's future development.
Cooperation with Nestle may enter the harvest period: at the end of 2016, the company signed a strategic cooperation agreement with Nestl é to provide customers with food-grade ingredients; five years have passed since the two sides signed a pilot-scale agreement in 2014. according to the law of the operation of the food and beverage industry, we judge that the product is expected to gradually increase volume, or will become an important contribution area of the company's performance in the future.
Investment suggestion
We believe that the upward price of Itreg will provide the company with strong performance flexibility, while pharmaceutical intermediates and new food additives in cooperation with Nestle will support the company's future growth; the healthy layout of medicine and food will provide a broad space for the company's long-term development; the company's business inflection point has been confirmed, multi-business boom resonance will open a new chapter of the company's development. We forecast that the company's net profit in 2019-2021 will be 248 million yuan, 310 million yuan and 335 million yuan respectively, corresponding to EPS0.34 yuan, 0.42 yuan and 0.45 yuan, giving the company a target price of 8.4 yuan in the next 6-12 months, equivalent to 20x20PE, with a "buy" rating.
Risk
The risk of large fluctuations in product prices; the production progress of new production capacity of subsidiaries is not as expected; the macroeconomic downturn has greatly affected product demand.