Key points of investment

Next Wednesday (November 29), a company listed on the Main Board, “Soapol Protein,” asks for a quote.

Soybean Protein (603231): The company is mainly engaged in R&D, production and sales of soy protein series products. The products include soy protein isolate, soy protein concentrate, tissue protein and non-GMO soybean oil. In 2020-2022, the company achieved operating income of 1,279 million yuan/1,586 million yuan/1,847 billion yuan, YOY in that order of 20.25%/24.05%/16.44%, a compound annual growth rate of 20.20% in three-year operating income; realized net profit of 98 million yuan/124 million yuan/168 million yuan; YOY was 48.12%/26.80%/35.57% in that order, and a compound annual growth rate of 36.55% in net profit for three years. In the latest reporting period, from January to September 2023, the company achieved operating income of 1,288 million yuan, a year-on-year change of -5.49%; net profit of 119 million yuan, a year-on-year change of -4.07%. According to preliminary forecasts, the company is expected to achieve a net profit range of about 161 million yuan to 172 million yuan for the full year of 2023, a change of -4.18% to 2.37% over the same period last year.

Investment highlights: 1. With nearly 20 years of deep technology cultivation and market development, the company has accumulated rich customer resources and formed a certain brand advantage; the sales scale of soy protein and non-GMO soybean oil is leading in China. With nearly 20 years of deep cultivation, the company has mastered core production processes such as high-end protein isolation technology and concentrated protein modification technology; and has actively explored domestic and foreign markets, and has accumulated a number of stable customer bases, including Haidilao, Shuanghui Development, Luhua Group, China Pet Co., Ltd., Sanquan Foods, Yanjin Store, Federal Pharmaceutical, etc., and has gradually formed a high brand awareness through registered trademarks such as “Sobao” and “Wandefu” in various fields such as functional concentrated protein and organized protein. The company's soybean protein production and sales volume of non-GMO soybean oil rank among the highest in the industry. Among them, the sales volume of soy protein accounts for about 10% of the domestic market, and the processing volume of non-GMO soybean oil by its subsidiary Biotech ranks in the top five in the industry (7.17%). 2. Through the model of complementary categories of parent and subsidiary companies, the company has built up the advantages of one of the few soybean protein deep processing industry chains in the industry; and cooperated with Bungie of the United States, the world's top four food merchants, to lay out fields such as plant-based meat and functional foods. The company implements an integrated strategy. The products between parent and subsidiary companies have an upstream and downstream relationship, and the two extend the industrial chain through complementary categories. Among them, the parent company Suobao Co., Ltd. is positioned to produce deep-processed products such as functional concentrated protein and structured protein. In addition to being engaged in the research, production and sale of soybean meal, soybean protein isolate, soybean oil, and organized protein, etc., the subsidiary Biotech has also entered the “big raw materials” market. Through the construction of a new 30,000 tons/year alcohol-based non-functional soybean concentrated protein project, it has expanded production scale and exploited the green advantages of low energy consumption and low pollution; so far, the company has become one of the few enterprises in the industry with the most complete and product-rich products in the deep processing industry chain of soybean protein. Furthermore, as of the signing date of the prospectus, Bungie of the US, one of the world's top four food merchants, held 5% of the company's shares through its wholly-owned subsidiary Shanghai Bungie, and strategically cooperated with the company to lay out fields such as plant-based meat and functional foods, which may help develop the international market for the “5,000 tons of soy granulated protein” fundraising project.

Comparison of listed companies in the same industry: Taking into account aspects such as business and product types, Shuangta Food, Arowana, and Jiahua Co., Ltd. were selected as comparable listed companies for Saobao Protein; however, considering the differences in business structure with comparable companies, we tend to think that the reference significance is limited, which may be more similar to Jiahua shares. Judging from the comparable companies mentioned above, the average revenue scale in 2022 was 87.160 billion yuan, and the gross sales margin was 8.00%; in comparison, the company's revenue scale was lower than that of comparable companies in the industry, and the gross margin was higher than the average of comparable companies in the industry.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.