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科拓生物(300858):国产替代进行时 益生菌第一股加速转型

Cotuo Biotech (300858): The first probiotic strain accelerates transformation during domestic substitution

東吳證券 ·  Apr 23, 2024 08:02

Key points of investment

The rapid expansion of downstream demand is driving the growth in the scale of the upstream market. In 2022, China's probiotic terminal market has reached 100 billion, with dairy/dietary supplements accounting for 68%/19% respectively. Dietary supplements are growing strongly, driving rapid upstream expansion. It is estimated that in 2021, the upstream market size of edible probiotics in China is about 9.9 billion yuan, which is expected to reach 181 billion yuan in 26 years. CAGR = 13% in 21-26, with a compound growth rate of 5%/17% for dairy products/supplements. The layout of China's probiotic industry chain has been improved, upstream ODM companies have lowered entry barriers for downstream dietary supplements, and the terminal long-tail market is seriously homogenized, but with the gradual improvement of industry standards, consumer awareness of probiotic strains has deepened in recent years, and high-quality “water sellers” have become a differentiation breakthrough point.

Upstream barriers are high, and domestic substitution is underway. The upstream market pattern for probiotics in China is concentrated. In 2021, DuPont in the US and Chr. Hansen in Denmark had a market share of 50%/35% respectively, and domestic manufacturers had a total market share of 15%. There is plenty of room for domestic replacement, and the company is at the top of the domestic asset capacity. The core reason for the high upstream concentration is: 1) Strain development barriers are high: strains are specific, it is difficult to find core strains suitable for industrialization, and functional research and patent applications for strains require time to settle, and production and storage are also difficult; 2) Star strains have high terminal exposure, and the brand effect is strong under trademark protection. In recent years, domestic capital has made efforts to rapidly catch up with scientific research, and domestic substitution has continued to advance.

The introduction of combat investment+incentives were implemented, and the first probiotic strain accelerated strategic transformation. Since its establishment in 2003, the company has mainly been engaged in the compounding business. From 2015-2016, it entered the probiotic circuit through mergers and acquisitions. 2023H1 already accounts for 62% of the revenue from edible probiotics, and probiotics have become the focus of the business. In August 2023, the company introduced individual investment Lin Wei. Currently, he is the company's director. He is rich in industrial resources and is expected to empower the company's business in the future. In February 2024, the company issued a restricted stock incentive plan for 24-28 years. This equity incentive assessment has high goals and a long period of time, demonstrating the company's confidence in medium- to long-term development.

With R&D and service two-wheel drive, the company's probiotic business can be expected to grow. Competitiveness: 1) Well-known experts in the industry serve as chief probiotics scientists and have strong research capabilities; 2) Local strains are rich in resources and can bring differentiation to downstream; 3) scientific research endorsements are better than other domestic investors, pricing is 20% off foreign investment, which is relatively cost-effective; 4) Providing diversified terminal solutions with strong services to enhance stickiness. Growth: 1) Raw bacteria powder: Co-sold with the compounding business. Existing customers such as Mengniu have more room to replace domestic production, and new customers such as Yunnan Baiyao are expected to continue to contribute more; 2) ODM business: old customers such as Xinyi are growing strongly, and new and old customers are expected to continue to contribute to the increase in the future. 3) Own brand: With the combination of own brand and in vitro incubation, C-side competitiveness is expected to improve.

Profit forecasting and investment ratings. Based on growth in probiotic business volume, compound formulation bottomed out, and improvements in animal and plant microecological formulations accelerated, the total revenue forecast for 23-25 years was raised to 3.4/5.1/660 million yuan (previously estimated at 3.3/43/54 billion yuan), -8.2%/+51%/+28% year-on-year; net profit to mother was 0.9/1.3/180 million yuan, respectively (previously estimated at 0.98/13/170 million yuan), -17%/+43%/+34%, corresponding to PE 42/30/22x, respectively, compared to 2024 Average PEG=0.82x. Considering that the company's edible probiotics are expected to grow rapidly, 0.8 times PEG was given in 2024, corresponding to a price-earnings ratio of 34 times in 24, corresponding to a target market value of 4.5 billion yuan in 24, and raised to a “buy” rating.

Risk warning: There are risks such as a concentration of customer types, large fluctuations in raw material prices, falling short of expectations in developing new customers, food quality and safety issues, and increased industry competition affecting profits after the increase in new entrants.

The translation is provided by third-party software.


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