Angel Yeast Co.Ltd(600298) (600298)
Event: 1) it was announced that Yichang company implemented the deep processing project of hydrolyzed sugar with an annual output of 150000 tons. The company plans to build a production line with an annual output of 150000 tons of 30% concentration hydrolyzed sugar and 6500 tons of crude protein powder in Yuting Angel Biotechnology Industrial Park, including 115000 tons of hydrolyzed sugar for yeast fermentation and 35000 tons of hydrolyzed sugar for deep-processing projects such as the production of glucolactone. The project is divided into two phases to build the production line of hydrolyzed sugar and glucolactone. In phase I, it is planned to partially transform the existing plant to build a hydrolyzed sugar workshop, and in phase II, it is planned to use the existing plant to build a glucolactone production line. The investment in phase I of the project is 39.66 million yuan. The project is planned to start construction in March 2022 and put into operation in May 2022, with a construction cycle of 3 months. 2) Announcement: ① implement the annual output of 8000 tons of compound surface modifier project (the main products are cake oil and emulsifier) and the annual output of 18000 tons of compound microbial green manufacturing project (phase I) (optimizing brewing capacity) is expected to be put into operation in November and December of 22 respectively; ② a new Mexican subsidiary is expected to complete the registration process by March 2022 and start normal operation in April to help expand the Latin American market.
Core view
The company is expected to alleviate the cost pressure through the hydrolyzed sugar project. At present, the company is expected to face certain cost pressure in 22 years: 1) molasses cost: at present, the spot price of molasses in Nanning has dropped to about 1400. Although it is more likely that molasses price will fall with the increase of molasses supply in the Spring Festival, we expect that the molasses purchase cost this year will still rise compared with last year; 2) Freight cost: the molasses used in Yichang factory mainly comes from the south, with a freight of about 300 yuan, and the freight has also increased to a certain extent this year; 3) Increased demand for molasses: according to the production capacity planning, the company’s 41500 ton new production line in Yichang is expected to be put into operation in the second half of 22. At that time, the possibility of simultaneous operation of the old and new production lines in Yichang will not be ruled out. The demand for molasses will increase and push up the molasses price. We believe that the project is expected to alleviate the cost pressure of the company in 22 years: 1) the construction period of the project is short, and it will be put into operation in May 22. After being put into operation, it can replace part of the 22-year demand for molasses; 2) Generally speaking, when the price of molasses exceeds 1300, it is more economical to use hydrolyzed sugar. The project is expected to further set the upper limit of molasses use cost for the company; 3) The main raw material of this project is broken rice. Compared with molasses, the price volatility is low, which is expected to stabilize the fluctuation of the company’s cost side. In the long run, the company is expected to further expand the use of hydrolyzed sugar and alleviate the demand for molasses raw materials through this project, which is an important strategic measure.
In addition, 1) modifier project for compound surface (the main products are cake oil and emulsifier) it is expected to enhance the global competitive advantage of the company’s food raw materials and help the company explore new business growth points; 2) the compound microbial green manufacturing project is expected to optimize the production capacity structure of the company’s brewing products and ensure the market supply of brewing products; the project is expected to increase an average annual revenue of 260 million yuan and an average annual net profit of 20 million yuan. 3) market development in Mexico With large space, rich molasses resources and an important position in Latin America, the company also plans to carry out marketing and yeast plant research through its Mexican subsidiary, so as to further promote its overseas expansion strategy. In short, on the one hand, since this year, the company has further deepened the reform under the pressure of the industry, with unprecedented efforts and determination in price increase, hydrolyzed sugar project construction and other measures, and the reform effect of the company is expected to gradually appear; On the other hand, the company has actively explored new business growth points and continued to promote overseas expansion.
Financial forecast and investment suggestions
At present, the company’s price increase effect and the purchase cost of new molasses are better than expected in Q3. The fixed increase dilution is not considered for the time being. The EPS forecast of the company for 21-23 years is adjusted to 1.68/2.10/2.36 yuan (1.66/2.01/2.31 yuan before adjustment). The historical valuation method is used to give a 22-year 32 times valuation (taking the average of nearly three years), and the corresponding target price is 67.20 yuan, maintaining the “buy rating”.
Risk statement
The centralized production capacity is depreciated sharply, the cost rises, the price increase is less than expected, and the production capacity is less than expected.
