The introduction of new middle and high-end products has led to the growth of the absorbent hygiene products market. As residents' per capita income levels and hygiene awareness have increased, disposable hygiene products have gradually replaced non-disposable hygiene products. Among them, baby hygiene products are benefiting from changes in parenting attitudes of a new generation of parents. The frequency of use of baby diapers in Tier 1 and 2 cities is expected to increase. Tier 3 and 4 cities are expected to bring new volume to the baby hygiene products market through an increase in the number of newborns. At the same time, the market share of middle and high-end diapers will gradually increase, driving an increase in the overall gross margin level. Feminine hygiene products are also benefiting from consumption upgrades. The market share of high-end products such as menstrual pants continues to increase, driving continued market growth. Currently, the penetration rate of the adult incontinence products market is low. As the consumption attitudes of incontinent people in China change, an increase in the aging population will drive the adult incontinence products market to continue to grow.
The launch of new products and the fall in raw material costs have led to an increase in the company's gross margin. The new products, easy to wear and take off menstrual pants and easy to put on and take off baby pants, will be promoted and applied to the market. The company's own brand has entered major supermarkets in Thailand, and overseas business is expected to bring new growth. The main raw materials of the company's products are petroleum derivatives. Since the second half of 2022, international oil prices have continued to fall, and the company's gross margin is expected to improve.
New production capacity is put into operation and high-quality customer resources guarantee the company's performance continues to grow. The company's fund-raising project “Intelligent Manufacturing Production Base Construction Project with an Annual Output of 1.2 billion tablets of absorbent hygiene products” will reach the scheduled usage state in April 2024. The company's production capacity will be further increased. At the same time, under the advantage of scale, it is expected that fixed unit costs and other operating costs will be further reduced, and the company's competitiveness is expected to be further strengthened. The company's customers include world-renowned brands such as Kao and Unijia, as well as domestic brand customers such as Chongqing Baiya. At the same time, the company is actively building its own brands. Stable and high-quality customer resources are expected to ensure the company's performance continues to grow.
Company profit forecasting and valuation
The company's revenue for 2023-2025 is estimated to be 32.42, 37.95, and 4.462 billion yuan respectively; YOY is 15.71%, 17.05% and 17.57% respectively; EPS is 3.35, 3.99, and 4.70 yuan respectively. According to reasonable valuation estimates, combined with catalytic factors in stock prices, the company was given a target price of 67.00 yuan/share within six months. The company's valuation level was lower than that of comparable companies, and the company was given a “recommended (first)” investment rating.
Investment risk tips
Macroeconomic risk, market competition risk, risk of fluctuations in raw material prices, risk of declining infant birth rates