\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Event: the company released the performance express for 2021. During the reporting period, the company achieved revenue of 4.948 billion yuan, an increase of 87.93%, net profit attributable to parent company of 782 million yuan, an increase of 21.13%, deduction of non attributable net profit of 663 million yuan, an increase of 16.74%, and EPS of 1.63 yuan. The company’s revenue growth exceeded expectations, mainly due to the rapid growth of functional skin care products business revenue.
Comments:
Four wheel drive has made steady progress and all businesses have grown steadily. In terms of business, 1) the sales revenue of raw materials business increased rapidly in 2021, with a same increase of about 28.62%, an increase of 36.24pct compared with last year, which is mainly due to the company’s continuous expansion of major customers outside China in the field of pharmaceutical and cosmetic raw materials on the one hand, and the gradual opening of new markets for food grade raw materials and other raw materials on the other hand. 2) In 2021, the revenue of functional skin care products business accelerated, with an increase of 146.57% at the same time. Thanks to the company’s emphasis on R & D and innovation and the support of product strength with scientific and technological strength, the four brands formed a large single product matrix, the customer repurchase rate continued to increase, and multi-point efforts were made to jointly build a high brand potential. 3) In terms of functional food, “black zero”, “shuijiquan” and other innovative brands are in the early stage of brand incubation and market expansion, and have made a good start. 4) In the medical terminal sector, the moisturizing product matrix continues to advance, and the “twin needle” has reached the customer touch, which is expected to become a new performance growth point.
We will further improve basic capacity-building and consolidate and upgrade long-term barriers to competition. 1) Based on science and technology, the company has built a synthetic biology R & D platform, which will be put into use at the end of 2021 to improve R & D strength and enable high achievement conversion rate. 2) The four major brands have successively entered the three-year brand strategy. Internally, they have made innovative investment in technology, composition and texture to maintain long-term competitiveness. Externally, they have achieved insight into the consumer market and comprehensively improved the brand power of functional skin care products through investment and reserve data collection, so as to achieve the goal of entering the rising channel of synchronous income and profit increase. 3) The company adheres to the middle office strategy, completes intelligent management by upgrading the organizational structure, further strengthens the effective links between the front, middle and back offices, improves organizational efficiency, creates industry 4.0 and builds a large operation system. 4) Forward looking layout of production capacity, the company’s sodium hyaluronate related projects were completed on schedule, leaving room for future sales growth.
Profit forecast and investment rating:
Due to the large strategic investment of the company and the short-term impact on profits, we lowered the EPS in 2021 to 1.63 yuan (the original value is 1.72 yuan). Due to the higher than expected growth of the company’s revenue and the continuous improvement of its profitability in the future, we raised the EPS in 202223 to 2.36/3.04 yuan (the original value is 2.26/2.92 yuan). The current share price corresponds to 51.89 times PE in 22 years. We are optimistic about the company’s focus on R & D and innovation for a long time, Relying on the six technical platforms of microbial fermentation technology, we continued to launch active substances, enrich and optimize product structure, and with strong achievement transformation ability, we helped the rapid development of business in the four sectors, consolidated our dominant position, expanded market share and maintained the “buy” rating.
Risk factors: covid-19 epidemic rebounded, the acceptance of new products in the market was lower than expected, the industry competition intensified, the increase of flow cost affected the profit margin, etc.
