Coenzyme Q10 leading enterprise, 2020Q1-3 homing net profit increased by 50.41% compared with the same period last year. The company is engaged in the production and sales of raw materials and health food terminal products in the food nutrition fortifier industry. The main business covers vitamin A series products, coenzyme Q10 series products and nutrition and health food. According to wind, the company's operating income from 2017 to 2019 was 20.85,28.73 and 3.192 billion yuan respectively, and its net profit was 4.74,6.87 and 451 million yuan respectively. The company's operating income grew at a compound rate of 23.73% from 17 to 19.

The company 2020Q1-3 realized operating income of 2.569 billion yuan, an increase of 11.85% over the same period last year, and the net profit of the company was 794 million yuan, an increase of 50.41% over the same period last year. The company's sales, management (including R & D) and financial expense rates changed by-0.45%,-0.34% and 0.22% to 8.05%, 9.82% and 1.74% respectively, and the total expense rate decreased by 0.57% to 19.61%.

The company's annual production of 800 tons of vitamin An and 200 tons of vitamin D3 oil project is expected to trial production in 2021, the price of coenzyme Q10 raw material products has increased since the fourth quarter of 2019, we expect the company's future profitability will increase. 1) the construction of the company's "annual production of 800 tons of vitamin An oil and 200 tons of vitamin D3 oil" in 2019 is progressing smoothly and is expected to enter the trial production phase in the first half of 2021. 2) the competition of coenzyme Q10 raw material products is fierce, and the price has been hovering low for a long time in the first three quarters of 2019. Affected by climate change and safety and environmental protection factors, the output of coenzyme Q10 raw materials decreased throughout the year, and prices rebounded sharply from the fourth quarter of 2019, resulting in an increase in net profit in 2020 compared with the same period last year. According to wind, the gross profit margin of coenzyme Q10 products in 2019 is 50.77%. The gross profit margin of H1 in 2020 is as high as 79.78%. We expect that the increase in the price of coenzyme Q10 raw material products will further enhance the company's future profits.

The company continues to cultivate carefully in the field of nutrition and health products in accordance with the established development strategy, and the product matrix is constantly enriched. With the progress of science and technology to promote the introduction of new formulations and new dosage forms in the health products industry, as well as the revolutionary changes brought about by the sales channels and marketing means of health products, the company dares to compete with international well-known brands in the launch of new products and the establishment of new sales channels, and strive to overtake in the corner to meet consumers' demand for cheap and high-quality products. At the same time, the rapid channel strategy in the Chinese market has been well implemented and achieved preliminary results. Doctor's Best Dortbeth has established close cooperative relations with various types of e-commerce channels, such as Tmall International, JD.com, Koala, Vipshop Holdings Limited, Xiao Hongshu, Yi Tiao, Bei Dian, Zebra members and so on, realizing the full coverage of China's e-commerce channels. Doctor's Best's total sales on Singles Day increased by 525% over the same period last year, winning the Tmall International "New Product Incubator Award". During the Singles' Day, the transaction and search index growth rate of Doctor's Best coenzyme Q10 was higher than that of the TOP1 of coenzyme Q10 similar products.

Profit forecast and investment rating. We estimate that the 20-22 year net profit of the company will be 12.17,14.43 and 1.618 billion yuan respectively, and the corresponding EPS will be 1.97,2.34,2.62 yuan respectively. Overall, we give 2021 Jindawei 19-22 times PE valuation multiple, corresponding to the reasonable value range of 44.46-51.48 yuan, which is better than the big city rating.

Risk hints: the risk of falling prices of products such as vitamin An and coenzyme Q10; declining market demand; and less-than-expected production capacity.