Based on the main business of enzyme preparations and microecology, the probiotic business is building a new space for development. The company is a leading domestic biotechnology enterprise. Its main business includes three segments: enzyme preparations, microecology, and animal health products, and fully serves various industries such as agriculture, food, washing, health, environmental protection, and biocatalysis. In 2022, the company achieved revenue of 1,163 million yuan, up 1.07% year on year; achieved net profit of 70 million yuan, a year-on-year decrease of 47.32%; in Q1-3 in 2023, the company achieved operating income of 880 million yuan, an increase of 6.06% year on year; realized net profit of 55 million yuan, up 2.05% year on year.
Enzyme preparations: The feed sector is the first to welcome domestic substitutions, and the core bacteria+technology platform creates a core advantage.
Enzyme preparations are derived from organisms and have characteristics such as low material usage, high catalytic efficiency, high specificity, mild reaction conditions, and reduced energy consumption. Currently, they are widely used in various fields such as feed, food, and energy. After years of development, the international enzyme preparation market ushered in rapid development. In 2019, the global enzyme preparation market reached DKK 31,263 billion, with a total market share of 65% in 2019, with a total market share of 65% in 2019. At the same time, domestic enzyme preparations are also developing rapidly, but since China started relatively late, the domestic market was dominated by multinational companies for a long time. Benefiting from the rapid development of the downstream feed industry in recent years, China's feed enzyme preparations have taken the lead in replacing domestic production, and are expected to benefit from further downstream growth on the feed side in the future. As the first company in the industry to lay out the enzyme formulation field, Weilan Biotech has built four high-efficiency protein expression systems, including Trichia, Aspergillus niger, and Bacillus niger, and corresponding large-scale fermentation systems. The technical advantages are outstanding. At the same time, the company is also continuously strengthening expansion in industrial, food and other fields and continuing to develop new products.
Microecology (probiotics): The upstream monopoly of bacterial powder is highly monopolized, and production is arranged with leading international companies. Microecological preparations mainly include three types of probiotics, prebiotics, and synbiotics. Among them, probiotics are currently the most popular microecological formulation products studied and are widely used downstream. In recent years, as consumers' awareness of probiotic products has increased, probiotic products have continued to appear. In 2019, the global probiotic industry market reached 512 US dollars. China is the second largest probiotic consumer market in the world. In 2020, China's probiotic market reached 87.98 billion yuan, and the future market potential is sufficient. Looking at the probiotic industry chain, the upstream probiotic powder is the core link, and most of China's upstream probiotic powder is monopolized by international brands, and domestic probiotic raw material manufacturers represented by Blue Bio are also gradually developing. As an early domestic enterprise to enter the microecology field, the company has formed a technological innovation system integrating 10,000 strain resource banks, basic research, industrial research and applied research and development. The platform has outstanding technical advantages, and cooperation with the world's leading companies ADM (food probiotics direction) and Evonik (feed probiotics direction) continues to deepen. The company's influence on probiotics products is expected to increase further in the future.
Investment suggestions: The enzyme preparation and probiotics industry has high barriers and the trend of domestic substitution is obvious. Blue Biotech is a representative enterprise that first laid out enzyme preparations and probiotics-related fields in China, and has outstanding advantages in technology research and development and platforms.
We expect the company's 2023-2025 net profit to be 1.05, 1.32, and 160 million yuan, respectively, EPS 0.42, 0.52, and 0.63 yuan, respectively, and the PE corresponding to the current price (2024/2/6) is 22X, 17X, and 14X, respectively.
We are optimistic about the company's future growth space, covered for the first time, and gave it a “recommended” rating.
Risk warning: increased market competition, fluctuating raw material prices, aquaculture diseases and natural disasters.