\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Performance overview: the company released the annual report of 2021. In 2021, the company achieved a revenue of 4.948 billion yuan / + 87.93%, and a net profit attributable to the parent of 782 million yuan / + 21.13%. After excluding the impact of share based payment, the adjusted net profit attributable to the parent was 868 million yuan / + 34.33%. In 2021q4, the revenue in a single quarter was 1.936 billion yuan / + 86.77%, and the net profit attributable to the parent company was 227.8 million yuan / + 9.01%.
Revenue: the four major businesses grew well, and the functional skin care products business increased year-on-year.
1) raw material business: the growth rate is much higher than that of the same period last year, including the steady growth of hyaluronic acid raw materials and the rapid growth of other raw materials. In 2021, the revenue of raw material business was 905 million yuan / + 28.62%, accounting for 18.29% of the company’s main revenue. Among them, the revenue of pharmaceutical grade / cosmetic grade / food grade hyaluronic acid increased by 15.82% / 15.98% / 36.85% to 252 / 391 / 108 million yuan respectively year-on-year, and that of other raw material businesses increased by 120.33% to 154 million yuan year-on-year. At present, the company has an overall production capacity of 470 tons of hyaluronic acid, including 320 tons in Jinan plant and 150 tons in Dongying plant. It is expected that 300 tons of hyaluronic acid and other bioactive substances will be added in Tianjin plant in the future. We believe that the company’s raw material business has deep barriers and is expected to remain a leader in the industry for a long time. The company is actively exploring the development of other bioactive raw materials and their application fields, and the construction of bioactive platform enterprises is further formed.
2) medical terminal business: the strategy of “big single product” + “strengthening the middle and Taiwan” of medical beauty has been upgraded, and orthopedics and other businesses have grown steadily. In 2021, the revenue of medical terminal business was 700 million yuan / + 21.54%, accounting for 14.15% of the company’s main revenue, of which the revenue of skin medical products / orthopedic injection / other products increased by 15.88% / 37.08% / 42.70% year-on-year to 504 / 123 / 072 million yuan respectively. 2021 is the first year of strategic adjustment of the company’s medical and beauty sector, and the product matrix is constantly improved. In May 2021, the “Royal age twin needle” was sold to more than 250 thousand sales by the end of 2021, and reached strategic cooperation with more than 300 medical and American organizations, and links more than 1000 pioneer medical institutions to create explosive products successfully. The two-way cross-linking product “Runzhi No. 5” was launched at the end of 2021, and the clinical trial of two single-phase products under development is about to be completed, which is expected to be approved in 2022. The company strives to build the “Runzhi” brand. In the future, it will continue to improve the anti-aging product matrix of all parts and all levels, and expand more demand scenarios.
3) functional skin care products business: the four brands have significant growth, and the brand matrix is gradually improved. In 2021, the functional skin care products business realized 3 billion 320 million yuan /+146.57%, accounting for 67.10% of the company’s main revenue. Relying on Tmall, Jingdong, vip.com, jitter, WeChat ecology and tiktok diversified sales channels, functional skin care business achieved rapid growth. By brand, runbaiyan achieved revenue of 1.229 billion yuan / + 117%, kwadi achieved revenue of 979 million yuan / + 150%, mibel achieved revenue of 420 million yuan / + 111%, and BM muscle activity achieved revenue of 435 million yuan / + 286%; Tiktok channels accounted for an increase of 14pcts to 17% compared with the same period last year, and the number of Tmall channels with master’s live broadcast decreased. The master grandpa’s live broadcast decreased by 8pcts to 19% compared to the same period last year. Besides, the company started the layout of offline channels in 2021, and ran Bai Yan opened 3 stores, and more than 200 stores in the KD development line. Sub category, sub parabolic products increased by 107% over the same period, but accounted for a decrease of 6pcts to 41%, and the proportion of facial mask and cream products increased by 7pcts/8pcts to 24%/13% respectively.
4) functional food business: the company has launched three major brands, including hyaluronic acid water brand “shuijiquan”, hyaluronic acid food brand “black zero” and hyaluronic acid fruit drink brand “Wuxiang corner”. For the emerging competition of functional food, the company will implement the pioneer mission and focus on consumer education. In the future, it will accurately target the target population, optimize marketing channels and improve the product supply chain.
Profitability: the gross profit margin is stable at a high level, and the marketing investment is active during the brand construction period. In terms of gross profit margin, affected by the change of accounting standards in which performance costs such as freight are adjusted to operating costs, the overall gross profit margin of the company decreased by 3.34pcts to 78.06% year-on-year in 2021. By business, the gross profit margin of raw material business is 72.19%, that of medical terminal business is 82.05%, and that of functional skin care products business is 78.98%. In terms of expense rate, the expense rate of the company during 2021 increased by 7.86pcts to 61.10% year-on-year. Moisturizing dolls and age twins are in the new stage in 2021. In addition, functional skin care products are putting more into the brand assumption and higher marketing expenses, resulting in an increase of 7.49pcts to 49.24% year-on-year. The rate of administrative expenses decreased slightly from 0.03 PCTs to 6.12%; R & D investment increased by 101.43% year-on-year to RMB 284 million, the number of R & D personnel increased by 194 year-on-year, and the R & D expense rate increased slightly by 0.39 PCTs to 5.75% under the high growth of operating revenue.
Future development: health, beauty and empowerment, clear sector planning. In the short term, under the superposition of innovative business incubation, strategic adjustment of medical and American business, early stage of capacity expansion, impact of equity incentive and other factors, the profit growth rate of the company is lower than that of revenue. The company relies on deep scientific research at the bottom, mature pilot manufacturing and industrial transformation technology, and continuously enhanced market transformation capacity. At this stage, the four major businesses are making concerted efforts. With the steady growth of raw material business and the strengthening of raw material production barriers, the construction of bioactive platform enterprises has further taken shape. In the future, the company will continue to focus on polysaccharides and amino acids that contribute to human health. We are optimistic about hyaluronic acid γ- The future development of raw materials and end products such as aminobutyric acid and etodyne; The medical beauty business accelerates the adjustment process and is expected to usher in a large profit release space after the adjustment period; The top four brands of functional skin care products developed gradually, and maintained a high growth trend. Among them, the core brand of Bai Yan has gradually reduced its dependence on head anchors, and the rate of operating expenses in the private area of Qudi has been decreasing. Mivel has relied on the two advantages of facial mask and toner, and the muscle activity relies on the brown rice essence water, a large single product, with a stable flow base. We believe that the proportion of the company’s C-end business continues to increase. Although there may still be large sales expenses in the short term, the company’s profits in the medium and long term are expected to be released to a large extent when the medical beauty line is straightened out and the profit models of various brands of functional skin care products run through.
Profit forecast and investment suggestion: under the industry dividend, the company, as the global leader of hyaluronic acid raw materials, has prominent cost advantages. Its business expansion to medical terminals, functional skin care products and functional foods is natural. The company adheres to long-term ism and deserves long-term attention. We estimate that the operating revenue of the company from 2022 to 2024 will be RMB 6.902905/11.340 billion respectively (growth rate of 40% / 30% / 26%), the net profit attributable to the parent company will be RMB 978/12.83/1.620 billion respectively (growth rate of 25% / 31% / 26%), the EPS will be RMB 2.03/2.67/3.38 respectively, and the corresponding performance of the current market value will be 56x / 43x / 34xpe respectively. The company takes the technology platform as the underlying logic, extends it to the industrial transformation platform for pilot test, and finally deepens channel marketing on the market transformation platform. We are optimistic about the company’s ability to shift from the layout of the whole industrial chain to a platform enterprise. Considering the company’s diversified business and strong ability to resist risks, we give the company 2xpeg in 2023 (the CAGR of 20212023 is 28%, corresponding to about 56xpe in 2023), The corresponding target price range is 149.52-150.59 yuan, maintaining the company’s “recommended” rating.
Risk tip: capacity expansion of competitors; The progress of new expansion areas is less than expected; The market acceptance of new products is lower than expected; Risk of cosmetic medical malpractice.
