\u3000\u3 China Vanke Co.Ltd(000002) 166 Guilin Layn Natural Ingredients Corp(002166) )
Event: the company released its annual report for 2021. In 2021, it achieved an operating revenue of 1.053 billion yuan, a year-on-year increase of 34.4%, a net profit attributable to shareholders of listed companies of 118 million yuan, a year-on-year increase of 37.74%, and a net interest rate attributable to the parent company of 11.21%.
The revenue of natural sweetener business has increased rapidly, and the development of Chinese market has achieved initial results
In 2021, the company’s plant extraction business achieved a total revenue of 1.015 billion yuan, a year-on-year increase of 55.7%, accounting for 96.4% of the total revenue. Among them, the natural sweetener business benefited from the rise of the trend of “sugar reduction and sugar free” outside China, and its performance increased rapidly. In 2021, the company achieved a revenue of 634 million yuan, a year-on-year increase of 55%, accounting for 60.2% of the total revenue, becoming the main driving force of performance growth. In terms of sales regions, the company’s plant extraction business achieved overseas revenue of 625 million yuan in 2021, accounting for 59.3% of the total revenue. Among them, the strategic cooperation between the company and its major customer fenmeiyi continued to promote. In 2021, the sales to fenmeiyi was US $60.25 million (about 418 million yuan), an increase of 71.16% year-on-year, accounting for 39.7% of the company’s total revenue. There is still about 1.7 billion yuan of order demand to accelerate the release in the future; In 2021, the domestic revenue of the company’s planting business was 391 million yuan, with a year-on-year increase of 77.72%, accounting for 37.09% of the total revenue, with a year-on-year increase of 9.04pct. Relying on Shanghai Asia Pacific Marketing Center and Guilin Sales Department, the company has reached cooperation with many well-known Chinese food and beverage brands to jointly launch sugar reducing and sugar free products, and the Chinese market development has achieved initial results.
We believe that the company’s natural sweetener business has established partnerships with many famous international customers such as Coca-Cola and PepsiCo. In 2018, we signed a exclusive distribution contract with us $400 million, the largest fragrance and essence company in the United States, to bind the big customers. It is also planning a non-public offering project. It is expected that the annual output of Stevia extract will be 4000 tons. It is expected that after the project is fully completed, it will achieve an average annual sales revenue of 1.46 billion yuan and an average annual net profit of 160 million yuan (excluding the construction period). In the future, it is expected to benefit from the appearance of scale effect and the steady improvement of profitability.
A number of medical marijuana related bills in the United States have been approved by Congress, and the demand for CBD extract is expected to accelerate the release
In terms of policy, on April 1, the US House of Representatives passed the federal medical marijuana legalization Act (moreact) for the second time; At the same time, the Senate federal legalization bill, the marijuana management and Opportunity Act (CAOA), is expected to be submitted in April, accelerating the legalization process of medical marijuana at the federal level; Previously, the house of Representatives and the Senate passed the medical marijuana research act and the marijuana diphenol and marijuana research expansion act respectively with absolute advantages to encourage FDA to develop medical marijuana derivatives, marking the further affirmation of the medicinal value of medical marijuana in the United States. The company officially laid out industrial marijuana in 2019. As of 2021q3, it has invested US $80 million to build “industrial marijuana extraction and application engineering construction project” in the United States. It is expected that the project will reach formal mass production in the first half of 2022. It is currently the world’s largest industrial marijuana extraction plant, which has been listed as a demonstration project by the Indiana state government. It is expected to process 5000 tons of raw materials per year, and the gross profit margin of the project can reach 50%; At the same time, it has signed an agreement on entrusted processing intention with a mainstream enterprise of global industrial marijuana, and it is expected that there will be more orders in the future. We believe that with the continuous improvement of American industrial marijuana regulations and policies, the company is expected to reuse its channel, customer and brand advantages in the field of plant extraction in the future, quickly open the CBD international market and enjoy the rapid growth dividend of the industry.
Profit forecast and investment suggestions: we believe that the company has benefited from the general trend of “sugar reduction”, the natural sweetener business has entered a period of rapid growth, while the relevant policies of American industrial marijuana continue to improve, and the demand for CBD extract is expected to accelerate. We raised the company’s revenue from 22-24 years to 1.745/3.638 billion yuan (the value from 22-23 years ago was 1.745/2.275 billion yuan), a year-on-year increase of 65.68% / 47.53% / 41.34%, The net profit was 210 / 351 / 550 million yuan (200 / 300 million yuan 22-23 years ago), a year-on-year increase of 77.60% / 67.09% / 56.39%, maintaining the “buy” rating. Risk tips: macroeconomic risk, technical risk, exchange rate fluctuation risk, epidemic risk; Policy risk; Strictly distinguish between industrial marijuana and intermediate marijuana, recreational marijuana and drugs, and resolutely oppose the legalization of recreational marijuana; At present, China has never approved industrial marijuana for medical use and food addition.
