\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Financial performance: the income growth is beautiful and the profit release is expected. In 2021, the company realized a revenue of 4.948 billion yuan (YoY + 87.93%), a net profit attributable to the parent company of 782 million yuan (YoY + 21.13%), a net profit attributable to the parent company of 663 million yuan (YoY + 16.74%) after deducting non share based payment, and a net profit attributable to the parent company of 868 million yuan (YoY + 34.33%). The company’s overall gross profit margin decreased by 3.34 PCT to 78.07%, the sales expense rate increased by 7.48 PCT to 49.24%, the R & D expense rate increased by 0.39 PCT to 5.75%, driving the net profit margin of parent company decreased by 8.83 PCT to 15.67%, and the net operating cash flow increased by 80.97% to 1.276 billion yuan during the period. Among them, Q4 achieved a revenue of 1.936 billion yuan (YoY + 86.77%) in a single quarter, a net profit attributable to the parent company of 227 million yuan (YoY + 9.01%), and the net interest rate decreased by 8.62pct to 11.45%. The company plans to distribute a cash dividend of 4.90 yuan (including tax) for every 10 shares, which is expected to account for 30.06% of the net profit attributable to the parent company.
Raw material business: the leading position of the industry is stable, and the production capacity is released in an orderly manner. The revenue from raw material business was 905 million yuan (YoY + 28.62%), accounting for 18.29% of the revenue and 72.19% of the gross profit margin (down 5.90 PCT). Among them, the revenue of pharmaceutical grade HA is 252 million yuan (YoY + 15.82%), that of cosmetic grade HA is 391 million yuan (YoY + 15.98%), and that of food grade HA is 108 million yuan (YoY + 36.85%). The overseas expansion benefits of cosmetic grade HA are remarkable, and the application and promotion of food grade HA in China is rapid. The company has a strong market share at home and abroad, with the revenue of exported raw materials accounting for 39%, and the internationalization strategy continues to be promoted. At present, the company’s overall hyaluronic acid production capacity has reached 470 tons, including 320 tons in Jinan plant and 150 tons in Dongying plant. The Tianjin plant has been completed in June 2021. It is estimated that the new production capacity will be 300 tons, 30 pilot production lines will enable the industry, and the energy of hyaluronic acid and other bioactive products will be released in an orderly manner.
Medical terminal: Technology endorsement, brand growth, new products help market expansion. The revenue of medical terminals was 700 million yuan (YoY + 21.54%), the revenue accounted for 14.15%, and the gross profit margin was 82.05% (with a decrease of 2.50 PCT). Among them, the revenue of skin medical products was 504 million yuan (YoY + 15.88%), and the revenue of orthopaedic injection products was 123 million yuan (YoY + 37.08%). 1) Orthopaedics & Ophthalmology: the orthopaedic product “hailida” has obtained the online sales qualification in 26 provinces, and the new “sectorlet rich plasma preparation kit” (PRP) has been sold in 100 tertiary hospitals throughout the year, and has obtained the online sales qualification in 25 provinces. 2) Medical beauty business: continue to gather the advantages of the whole category of hyaluronic acid, and successively launch large single products such as micro crosslinked products, doll needle and ironing needle. The direct sales channels cover 23 provinces and cities and more than 3000 medical beauty institutions in China. Since its launch in May 2021, the “imperial age twin needle” has been linked to 1000 pioneer medical institutions, and the total sales volume has exceeded 250 thousand in 21 years. The two-way cross-linked product “Runzhi No. 5” was launched at the end of 2021. The 800um super large particle size is suitable for deep injection; Another two single-phase products under development are about to complete clinical trials and are expected to be approved in 2022. The technical iteration continues to advance, the self-developed collagen raw materials have completed key technological breakthroughs, and the simultaneous development of polyl-lactic acid, polycaprolactone lyophilizer and water agent products has been realized. As of January 22, four items of medical dressings and class II Certificate of water light equipment have been approved, and the product matrix has been continuously improved.
Functional skin care products: the matrix of four brands is formed, and the refined operation helps to improve the profit. In 2021, the revenue of functional skin care products was 3.320 billion yuan (YoY + 146.57%), accounting for 67.10% of the revenue and 78.98% of the gross profit margin (with a decrease of 2.90 PCTs). The transportation expenses were included in the adjustment of operating cost. The differentiation positioning of the four brands has entered the stage of large-scale, with the growth rate of more than 100% in 2021. The product end has built star large single products, with a total of 7 single products with an annual income of more than 100 million, and formed differentiated advantageous categories. 1) Embellish Baiyan: with a revenue of 1.229 billion yuan (YoY + 117.42%), open up the growth space with the help of “hyaluronic acid + active substance”, upgrade from smart hyaluronic acid to technology skin care head brand, and create Star products such as barrier repair and moisturizing series; 2) Kwadi: with a revenue of 979 million yuan (YoY + 150.19%), build a series of secondary throwing and ct50 products, and establish a leading position in domestic products of anti-aging track with the help of the success of frost products; 3) Mibel: with an income of 420 million yuan (YoY + 111.12%), as a representative brand of sensitive muscle repair, it has been recognized by generation Z and created star products such as powder and water; 4) BM muscle activity: with a revenue of 435 million yuan (YoY + 286.21%), based on fermentation and control technology, build a star single product of brown rice series and establish a new brand image of more professional, more dynamic and happier. The overall skin care product structure of the company is more diversified, and the income of the sub class is increased by 107% from 47% to 41%. The proportion of mask / creams emulsion has increased by 7/8pcts to 24%/13%. Tiktok continued to optimize, online platform to Tmall dependence decreased, trembling ratio increased 14pcts to about 17%, run Bai Yan in Tmall channel master live broadcast ratio dropped to about 19% (-8pcts). Offline channels began to work, runbaiyan opened 3 physical stores, and kwadi developed more than 200 franchise stores. In addition, the company has 12 cosmetic R & D studios and more than 100 cosmetic grade raw material SKUs, which can quickly adapt to the changes of new regulations in the efficacy skin care market and promote new products. During the period, the company promoted about 309 new products (an increase of 80 at the same time). With the rapid expansion of skin care sector to high-quality growth, it is expected to build 3-5 national brands in the future.
Functional food: in the first year of business, the brand pattern was initially opened. Aiming at the functional food business, the company established a research and development center in Wuxi / Shanghai, focusing on beauty, joint health and sleep health. In 2021, the company launched 23 new products of three major brands: 1) hyaluronic acid water brand “shuijiquan”: launched China’s first hyaluronic acid water and upgraded “water capsule”. The channel end combined with medical and beauty institutions to promote packages, covering 16 cities and 384 institutions, At the same time, it settled in KKV and HEMA fresh to promote offline sales; 2) hyaluronic acid food brand “black zero”: tiktok launched 15 SKU, of which 2 GMV broke millions, initially completed Tmall, jitter, Jingdong and other channels laid. 3) Hyaluronic acid fruit drink brand “no way corner”: launched 3 innovative drinks of 1.0 series, and the new products of 2.0 series aimed at the health problems of people staying up late are expected to be launched successively in 22 years. With the healthy upgrading trend of China’s food market and the company’s advantages in raw material R & D, it is expected to continue to contribute to its performance in the future.
Profit forecast and investment suggestion: the company has a solid leading position in the global hyaluronic acid industry, and four in one connects the whole industrial chain of raw material production, medical terminal, functional skin care products and food. Based on the performance of the 2021 annual report, we predict that from 2022 to 2024, the company will achieve revenue of RMB 6.944 billion / 94.27/12.442 billion and net profit attributable to the parent company of RMB 985/13.37/1.868 billion respectively, corresponding to 55 times PE in 22 years. We believe that Bloomage Biotechnology Corporation Limited(688363) as a high-tech enterprise based on the research and production of fermentation bioactive substances, it has broad downstream market space and sufficient growth potential, and maintains the “buy” rating.
Risk tip: the industry competition intensifies, the promotion of new products is less than expected, and the epidemic situation repeatedly affects the terminal demand.
