Main points of investment
Event: the company announced 19H1 results, achieving operating income of 250.93 million yuan, an increase of 17.04% over the same period last year, and a net profit of 33.98 million yuan,-9.03% of the same period last year. 19Q2 made a net profit of 1987 per cent in a single quarter.
10000 yuan, an increase of 49.33% over the same period last year and 40.8% month-on-month.
The company is mainly engaged in the research and development, production and sales of food and feed additives. The products mainly include vitamins such as biotin and folic acid and biological antistaling agents such as nisin, natamycin and ε-polylysine.
The company is one of the earliest domestic enterprises engaged in the production of biotin and biological antistaling agents. through years of business accumulation and continuous technological innovation, process optimization and application development, the company has developed into a leading enterprise in product market segmentation. it is a global leader in large-scale production capacity, technological level, product market share, brand awareness and so on. Through the acquisition of Tongliao Shengda in 2018, Q4 has a 75% stake and will add new production capacity of vitamin B2, xanthan gum and biological antistaling agents.
Vitamins: the sales and revenue of biotin and folic acid, the main products of the parent company, have increased to varying degrees. In the case of falling market demand and prices, the operating income of biotin increased by 8.44% compared with the same period last year, while folic acid increased both the price and the sales volume, and the operating income increased by 45.80%.
Biological antistaling agent field (New Silver Elephant subsidiary): sales revenue of the subsidiary New Silver Elephant increased by 16.00% year-on-year, and net profit increased by 84.44%, further consolidating the company's leading position in the field of biological antistaling agent.
Anhui Shengda subsidiary: the upgrading and transformation was basically completed, and the loss was turned into profit in the second quarter.
Tongliao Shengda subsidiary: in the steady progress of the upgrading project, the amount of loss decreased compared with the same period last year.
Biotin and folic acid prices are expected to rise at the bottom. The price of biotin is at an all-time low, and the price of folic acid has begun to rise. Based on the analysis of the market quotations of biotin and folic acid from 2007 to 2018, the current price of biotin (pure) is around 2500 yuan, the lowest price in history, and there is little chance of further downward quotation; after the low price of folic acid, the price of 18Q4 has begun to rise. We are optimistic about the follow-up price trend of biotin and folic acid: the driving factors of the price rise of biotin and folic acid: first, the strengthening of environmental protection leads to a substantial lack of production capacity at the supply end and a shortage of raw material supply. the company relies on the leading position to obtain competitors' orders and stable supply of raw materials; second, the price of products on the industrial chain caused by the increase in the end cost of biotin and folic acid. Boya and Xun information, on May 9, Haijianuoti biotin quoted 90 yuan / kg; August 26, some folic acid manufacturers received the impact of insufficient supply of raw materials, production is now suspended; on August 28, Anhui Tiger raised the folic acid quotation by 1000 yuan / kg, and the export price was 125USD / kg.
Acquisition of Tongliao Shengda amalgamation table, integration of business resources, give play to synergy.
(1) the main products of Tongliao Shengda are xanthan gum, vitamin B2 and Shengda's products in the sales market.
There is a certain overlap in the customer base of Xiang. After the completion of this acquisition, Shengda Biological's rich industry experience, management capabilities and high-quality customer resources will help to expand the sales channels of Tongliao Yellow River Dragon products.
(2) the existing production capacity of nisin has seriously restricted the expansion of the product scale and the improvement of market share. In addition to the project with an annual output of 1000 tons of nisin and an annual production of 2000 tons of sucrose fermentation, the company has also planned projects such as vitamin B12, polylysine and β-thymidine in Tongliao Shengda to enrich the variety of products and increase profit contribution points.
(3) it is helpful to reduce production cost and improve the profitability of the company. Tongliao Shengda is located in the west of Sautéed Sweet Corn with Salted Egg Yolk belt in the northeast, which is rich in raw materials, close to national roads and highways, convenient transportation, and rich in local coal resources. Compared with Tiantai County, Zhejiang Province, Tongliao Shengda has obvious cost advantages.
Profit forecast: we expect the company to achieve operating income from 2019 to 2021 as follows:
The corresponding net profit is 85.71, 94.16, and 116.58 million, respectively, and the corresponding PE is 46.65, 42.46, 34.30 times of 46.65, respectively, with a "buy" rating.
Risk tips: the price increase of vitamins is lower than expected; the sales volume of vitamins shrinks due to the price increase; Tongliao Shengda products can not be put into production on schedule.