Erythritol is in short supply, and the company's performance has been greatly improved. Supported by the shortage of supply this year, the price of erythritol continued to rise after the holiday. Thanks to this, the company's performance improved significantly in the second quarter. In the first half of this year, the company expects to achieve a net profit of 47.73 million yuan to 65.09 million yuan, of which the net profit in the second quarter is 38.9 to 56.26 million yuan, an increase of 62 percent over the same period last year and 439 percent on a month-on-month basis, based on a median of 47.58 million yuan.
In order to further expand production capacity, the company plans to raise no more than 712 million yuan for the construction of erythritol, aloxanose and other projects, and the controlling shareholders subscribe in full, demonstrating confidence.
Erythritol: the continuous growth of demand magnifies the capacity gap, and the price is expected to remain high. With the general trend of sugar-free and low-sugar, the demand for erythritol is expected to continue to grow, of which domestic demand will become the core driving force driving the growth of the industry. we expect the compound growth rate of domestic demand to exceed 40% in the future. the global demand for erythritol is expected to reach 285000 tons by 2025. At present, the market price of erythritol remains at 30,000 yuan / ton. although some new production capacity has been released recently, it still falls short of demand, and the price will remain high and strong throughout the year. In addition, as the new entrants as a whole will face high time costs and uncertainty, in the short term, existing enterprises are expected to fully enjoy the industry dividend, while in the long run, cost advantage will become the core competitiveness of enterprises.
Aloxetose: high value-added rookie, the next hot natural low-calorie sweetener. With the approval and certification of the FDA in the United States, aloxanose is currently licensed in 13 countries, including Japan, South Korea, Canada, Australia and New Zealand, but it is still not available for domestic use. If the subsequent approval of the National Health Commission is approved, then aloxanose is expected to be sold in the domestic market. At present, domestic manufacturers have begun to layout, with Baolingbao and Bailong Chuangyuan as the representative of enterprises, products have achieved export sales. Baolingbao will complete the trial production of aloxanose liquid and solid in 2020, and can produce crystal and liquid aloxanose, with export sales of 1.1215 million yuan. It is expected to build an annual output of 30,000 tons of aloxanose (dry base) items, which will be regarded as an important component of the core products in the future.
The company has outstanding competitive advantages and is expected to fully benefit from the general trend of reducing sugar. As a leader in the functional sugar industry, we believe that the company's core advantages come from three aspects: 1) R & D innovation advantages: the company leads the industry in R & D investment level, participates in the formulation of more than 20 industry standards and 1 international standard, and holds the voice of the industry. 2) the advantage of the whole industry chain: the company is the only manufacturer and service provider of all-product functional sugar products in the domestic market. after the new production capacity is completed, the production capacity of erythritol will reach 60,000 tons, and the production capacity of aloxone sugar will reach 30,000 tons. Fully meet the growing needs of downstream customers 3) Brand and market advantages: over the years, the company has continuously strengthened the ability of key customer marketing and program marketing, tailored solutions for customers, and strong customer stickiness.
Profit forecast and investment advice. Regardless of additional equity dilution for the time being, it is estimated that in 2021-2023, the net profit of return to the mother will be RMB 290 million, compared with the same period last year. 302%, 47%, 28%. Taking into account the rapid growth of the company's future performance and reference to comparable company valuation, given 22 years 30 times PE, the target market value of 9 billion yuan, corresponding to the target price of 24 yuan, to maintain the "buy" rating.
Risk tips: downstream customer demand fluctuations; raw material price fluctuations; increased competition in the industry; product sales are not as expected; the risk of approval failure
