\u3000\u3000 Sirio Pharma Co.Ltd(300791) (300791)
The world’s major VDS markets continue to expand, and the company’s share and scale are expected to benefit for a long time. (1) The VDS market outside China is in a period of steady expansion. In 2025, the VDS market scale in China / North America / Western Europe is expected to reach RMB 2352 / 3576 / 124.1 billion, and the average growth rate from 2022 to 2025 is expected to reach about 5%. (2) The company is in the midstream contract production link. In 2025, the volume of global VDS OEM business is expected to reach 120 ~ 150 billion yuan. At present, the market share of the company is only about 2%, and the share is expected to increase in the future. (3) The concentration and penetration of VDS market in China are low, and there is still room for expansion in the Chinese market. At present, the Cr5 market share of China’s VDS market is only about 30%, and the VDS penetration rate of all ages is between 10% – 30%. There is still a gap with the European and American markets. The company is expected to benefit from the market dividend in the period of deepening the development of China’s VDS industry.
The company has strong R & D capability, and its products are deeply bound to downstream customers. (1) The company’s main source of revenue is contract production, and its core customers are well-known VDS enterprises outside China. The company is deeply bound with its core customers. In 2019h1, Pfizer / nowhealthgroup / Melaleuca (China) / htcgroup / Angel Yeast Co.Ltd(600298) was the company’s top five customers. From 2015 to 2020, the average revenue of the top five customers accounted for 28.99%. (2) The company’s R & D expenditure and investment intensity rank in the forefront of the industry. The R & D expenditure / R & D expense ratio of 2021h1 company is 40 million yuan / 3.47% respectively. In 2020, the company has 269 R & D personnel, accounting for 12.30% of all employees. The investment intensity of R & D expenses, the scale and proportion of R & D personnel of the company are in the forefront of the industry. (3) The company holds a large number of health food registration approvals, has strong R & D ability, and can cooperate with customers to develop products. By the beginning of 2022, Sirio Pharma Co.Ltd(300791) had 156 / 101 health food registration approvals / registered products respectively, ranking in the forefront of the industry.
Capacity continues to expand, and the scale effect is expected to strengthen. The company has four production bases in China and Germany, and the product dosage forms are rich, basically covering all mainstream dosage forms. In 2019, the IPO raised funds for the construction of Anhui Ma’anshan production base (which has been put into operation), which is mainly used to improve the production capacity of new dosage forms including soft candy, powder and oral liquid. In 2020, the company raised 1.025 billion yuan through convertible bonds and invested in Ma’anshan production base expansion and other projects. Ma’anshan expansion project plans to add 2.6 billion pieces of nutritional soft candy, 282 million bags of functional drinks and 5960 tons of powder. Among them, 800 million pieces of nutritional soft candy production line and 100 million bags of functional drinks production line have been put into operation in January 2021 and 2021q4 respectively, and 1.8 billion pieces of nutritional soft candy production line is expected to be put into operation in 2022q1. Other new production capacity will also be put into operation as planned.
Investment suggestion: the company is a leading enterprise of functional food ODM, with perfect product layout. Ma’anshan base and other new capacity will be put into operation in 22 years, with abundant capacity reserves. At present, the company’s valuation is equivalent to that of comparable companies, slightly lower than the average level of other food sectors. It is estimated that from 2021 to 2023, the company will realize operating revenue of RMB 2.527/3.092/3.779 billion; The net profit attributable to the listed company is 288 / 370 / 470 million yuan, corresponding to EPS of 1.60/2.06/2.61 yuan. At present, the corresponding PE share price is 23 / 18 / 14 times. Considering that the average PE level of other food industries is 20 times in 22 years, and the growth rate of the company’s main business is higher than the average level of the sector, 22xpe is valued in 2022, corresponding to the target price of 45.32 yuan / share. It is covered for the first time and given a “recommended” rating.
Risk tips: the impact of the epidemic is more than expected, the demand of downstream customers is less than expected, the cost rise is more than expected, food safety problems, capacity expansion is less than expected, etc.
