Deeply cultivate high-end fragrance production and actively expand the natural fragrance market. Since its establishment, the company has been deeply involved in high-end fragrance production, focusing on expanding natural fragrance categories. The downstream mainly involves the food, daily chemicals, tobacco, pharmaceutical, textile and leather industries. With large-scale production advantages, rich product categories and strict quality control, the company has accumulated high-quality and stable customer channels and resources, and has established long-term and stable cooperative relationships with the top ten international fragrance companies.

The supply and demand pattern of natural fragrances improved, and the company ushered in growth opportunities. As end consumers' demand for natural products continues to rise, the demand for downstream customers to purchase natural flavors continues to grow. At the same time, due to the stricter national environmental protection policy, some enterprises with poor environmental treatment capacity have stopped production and closed down, the number of suppliers participating in market competition has decreased, and sales prices of natural products have risen. As a domestic enterprise developing natural flavors, the company's market prospects are optimistic.

A new production base in Thailand was established, and the company is actively expanding production. According to the “Notice on Investing in the Construction of a Production Base Project in Yaxiang Thailand”, the first phase of the project plans to build a fragrance production plant and production line with 1,000 tons of vanillin, 200 tons of oak moss, 100 tons of benzaldehyde, 50 tons of benzyl alcohol, 100 tons of methyl laurate, 150 tons of coolant, and 150 tons of folic acid. At that time, the company's natural fragrance production capacity will be greatly increased to meet the growth in downstream demand.

R&D investment continues to grow, and new products are recognized. In 2018-2022, the company's R&D expenses increased from 15.03 million yuan to 36.57 million yuan. The company's newly developed natural fragrance products in 2021, and synthetic fragrance products synthetic oak moss and synthetic leaf alcohol have been widely recognized by customers.

Profit forecasting and investment advice. The company's EPS is expected to be 1.28, 1.92, and 2.83 yuan/share in 2023-2025, respectively. Referring to comparable company valuations, the company was given a PE valuation of 20 times 2024, corresponding to 38.35 yuan/share, and given a “buy” rating.

Risk warning. The risk of new product development; risk of loss of core technology and loss of core technical personnel; environmental risk; risk of price fluctuations of major raw materials; risk of production safety; risk of the impact of changes in consumer behavior on downstream industries.