Tianjin Yiyi Hygiene Products Co.Ltd(001206) (001206)
Recommendation logic: 1) there is sufficient market space for pet hygiene products. At present, the pet markets in the United States and Japan are relatively mature, and the category penetration rate in China and Europe is still low. It is estimated that the market scale of pet hygiene products in the United States, Japan and Europe is about US $8.5 billion. It is expected that with the steady growth of pet consumption and the change of consumption habits, the global pet hygiene products market is expected to expand; 2) The company is a high-quality manufacturer of pet sanitary products mainly engaged in export OEM, with high-quality downstream customers and saturated orders. The planned production capacity of pet urine pads in the raised investment project is 2.25 billion pieces, which is nearly doubled after reaching the production capacity, and the production capacity bottleneck has been alleviated; 3) This year, due to the price fluctuation of raw materials and the difficulty of shipping by sea, the performance is temporarily under pressure, and the profitability is expected to improve marginally after the cost falls in the future.
The pet hygiene products industry still has a large growth space. The growth comes from 1) the pet raising penetration rate and the number of pets have increased. The pet industry in Europe, America and Japan is relatively mature, and the pet raising number has increased steadily. The pet raising penetration rate in China and other emerging markets is still low; 2) Older dogs have a higher demand for pet hygiene products. The aging of pets in the United States / Japan and other countries drives the demand growth; 3) Pet owners generally have high consumption power, and the consumption upgrading trend is to increase the cost of single pet.
The industry structure is relatively stable: 1) the market share of the company accounts for more than 35% of the export amount of the customs. Wuhu youpai, the second largest manufacturer of pet hygiene products in China, has half the income scale of the company, and the market share of the company is high; 2) The efficiency of the company’s production line is leading in the country, and the possibility of customers switching to other small factories is low; 3) The gross profit margin of adult and infant diaper manufacturers is higher, and the power to enter the pet industry is insufficient.
Core competitiveness of the company: 1) key customer advantages: the company’s main key customers are Petsmart, Wal Mart, Amazon, etc., all of which are core channel providers, with long cooperation time, high customer stickiness and rapid growth of customer demand. The company is an exclusive supplier in most of its main customers; 2) Production capacity advantage: the company’s production capacity is relatively saturated. The production line of the raised investment project will be expanded in Hebei. After reaching the production capacity, it will add 2.25 billion pet pads, 220 million pet diapers and 31000 tons of non-woven fabrics. The production capacity is nearly doubled. It is expected to reach the production capacity in 2023; 3) Supply chain advantage: grasp the production capacity of non-woven fabrics to ensure stable supply.
Profit forecast and Valuation: considering the accelerated release of the company’s production capacity in the next two years, it is expected that the performance elasticity will be strong after the decline of raw material costs and the decline of sea freight, the company will be given a valuation of 30 times in 2022, corresponding to the target price of 57.6 yuan, and a “buy” rating for the first time.
Risk tip: the risk of intensified industry competition; Risk of sharp fluctuation of raw material cost; There is a risk of repeated outbreaks outside China, and the release of production capacity is less than expected.
