Company profile: plant extraction industry leader, large single product strategy is clear. For more than 20 years, the company achieved revenue of 1.053 billion yuan in 2021, + 34.4% year-on-year, and net profit of 118 million yuan, + 37.7% compared with the same period last year, of which the total income of planting business was 1.016 billion yuan, accounting for about 96% of revenue. In terms of product structure, the company insists on substituting sugar, industrial hemp and tea extract in parallel. Among them: 1) Natural sweeteners are the main driving force for performance growth: production capacity and sales are among the top three global suppliers of natural sweeteners, with revenue of 634 million yuan in 21 years, + 54.86% compared with the same period last year, accounting for about 60% of revenue. 2) when the industrial hemp was officially mass produced and the territory was opened up and expanded. In 2019, it officially entered the field of industrial marijuana, and at present, the US industrial marijuana project has officially entered the stage of mass production. 3) with the acquisition and distribution of tea extract, the business income has increased steadily. After the acquisition of Huagao Biology in 2020, the revenue of tea extraction business reached 164 million yuan in 21 years, accounting for about 16% of the revenue.
Core advantages: covering the whole industry chain, deeply binding major customers to provide performance guarantee. The company is one of the few layouts of the whole industrial chain in the industry, and its competitive advantage is obvious: 1) upstream: unique resource advantage, obvious geographical advantage of raw material procurement. The company is located in Guangxi, the main endemic varieties of Luohanguo and other extract raw materials are local specialties; continue to ensure the supply of raw materials and price stability through seedling research and development, cooperation mode innovation and so on. 2) Mid-stream: adhere to the "cost leading" strategy and steadily promote the release of production capacity. Adhere to strict production standards, continue to promote technological reform, continue to increase research and development, to achieve cost reduction and efficiency; steadily promote capacity expansion, the new plant 4000 tons of annual production capacity of stevia extraction capacity is expected to rank first in the world. 3) downstream: strategic cooperation global spice leader, continue to develop customer resources. In 2018, the company is the global leader in strategic cooperation in spices. in terms of guaranteed orders, there is still US $163 million in procurement demand waiting to be released in the future. It has achieved remarkable results in accelerating the expansion of the domestic market. The domestic income of the business in 21 years is 390 million yuan, which is + 77.72% compared with the same period last year. At the same time, it has initially launched the C side to enrich the performance contribution points.
The future space: the sugar substitute industry is booming and the industrial hemp has a broad space. The size of the global plant lift market is expected to reach US $59.4 billion in 2025, and the market size of China's plant lift industry is expected to exceed 60 billion yuan in 2025. The leading advantage is significant, and the improvement of concentration in the future is the trend of the industry. 1) Natural sweeteners: taking advantage of the sugar reduction boom: from the perspective of substitution rate, the industry is expected to double the increment space. 2) Industrial marijuana windward, the new performance growth point can be expected in the future: if the US industrial marijuana project is fully put into production, we conservatively estimate that it will contribute about US $120 million to the company's revenue each year.
Profit forecast and investment rating: natural sweeteners have entered a period of rapid growth; follow-up industrial marijuana is expected to open a new growth pole. We estimate that the net profit of homing from 2022 to 2024 is 2.13,3.29 and 478 million yuan respectively, which is + 80%, 54% and 45% respectively compared with the same period last year. The current market capitalization corresponds to a 2022-24 PE of 33gam21x15X, covered for the first time and given a "buy" rating.
Risk hints: exchange rate fluctuation risk, epidemic risk, policy uncertainty.
