Jinhe Biology is a high-tech enterprise whose business includes animal health products, environmental protection sewage treatment and corn deep processing. In terms of animal chemicals, the company is a leading manufacturer of chlortetracycline, accounting for about half of the world's production and sales. In terms of veterinary vaccines, as a strategic business, the company has actively promoted mergers and acquisitions of veterinary vaccine enterprises and R & D capacity layout in recent years, which is expected to open up room for growth in the future.
Animal chemicals: 1) the market space of chlortetracycline is expected to be improved. First, the feed "ban resistance" brings the alternative market. After the announcement No. 194 of the Ministry of Agriculture and villages in the past 20 years, the reduction of the use of veterinary antimicrobials has progressed steadily, and the abolition of 15 other drug feed additives has left more room for the continued use of chlortetracycline in the market. The second is the promotion of the use of ruminants. There is a large gap in the use of chlortetracycline in ruminants between China and the United States and other countries, and it is expected to open up the application market space in the future. 2) upstream and downstream cycles support the improvement of profitability. Upstream, the cost pressure of bulk corn and coal is expected to ease; downstream, the breeding cycle is improved, and the demand for animal chemical products is expected to increase. 3) the expansion capacity of the company is expected to be released gradually. The company's sixth phase of the project is expected to be completed in the fourth quarter, and will be officially put into production next year, with an additional capacity of 60,000 tons, supporting the further growth of the company's dominant chemical business.
Biological vaccine: 1) the company actively promotes the strategic business of veterinary vaccine. The company's strategic layout of pig vaccines, cattle and sheep vaccines, pet vaccines and diagnostic reagents, through the acquisition of Youben, Fama Wei, Best Vanke and other high-quality targets to form four bases and three major scientific research centers in Inner Mongolia, Hangzhou, Jilin and the United States. 2) brucellosis vaccine is expected to be popularized. The company's brucellosis vaccine has unique advantages over the previous vaccine, high biosafety, non-contagious; can be used for pregnant animals, will not lead to miscarriage. At present, the company has actively promoted the examination and approval of live brucellosis vaccine, has passed the review meeting, and is waiting for approval. 3) the strategic layout of non-plague vaccine. The company acquired Jilin Best Wanke, the strategic layout of non-plague vaccine. The freeze-dried inactivated vaccine against African classical swine fever has been developed and jointly declared with well-known domestic enterprises, which is currently under review by the Ministry of Agriculture and villages. The market space of African classical swine fever vaccine is large, and the product approval and promotion are worthy of continuous attention.
Investment advice:
Jinhe Biology is a high-tech enterprise whose business includes animal health products, environmental protection sewage treatment and corn deep processing. The company leads the production and marketing of chlortetracycline, the market is expected to expand capacity and replace it, and the improvement of upstream and downstream cycles supports the improvement of profitability.
In addition, the company's veterinary vaccine strategy business is actively promoted and the R & D and approval of subdivided superior vaccines is promoted, which is expected to bring new growth to the company's performance. We estimate that the return net profit of the company from 2023 to 2025 is 147 million yuan, 165 million yuan and 228 million yuan respectively, and the EPS is 0.19,0.21,0.29 yuan respectively, corresponding to 25.59,22.80,16.47 times of PE for 23,24 and 25 years, respectively.
Risk hint
The risk that the approval of new products is not as expected: there is uncertainty in the regulatory approval of veterinary vaccines, and there is a risk that the results and pace of approval are not as good as expected.
Fengxia whose market promotion is not as expected: there is a certain industrial application cycle and uncertainty in the promotion of new animal protection products.
The risk that R & D is not as good as expected: the R & D technology of new vaccine products may be affected by changes in industrial technology.
The risk of capacity landing climbing less than expected: the company's future capacity expansion or product category layout is not as expected.
The risk of upstream cost price fluctuation: upstream corn, coal and other bulk prices have a greater impact on the cost of the company's related products, there is the risk of price fluctuation.
The risk of lower-than-expected demand in the downstream market: low pig prices, lower-than-expected profits at the breeding end, weak consumption, affected by other diseases such as classical swine fever.