\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 55 Jahen Household Products Co.Ltd(300955) )
After more than ten years of precipitation, it has finally become the leader of daily chemical OEM, with strong R & D and high production capacity driving growth
Jahen Household Products Co.Ltd(300955) is mainly engaged in the R & D, design and production of cosmetics, home care products OEM / ODM and plastic packaging containers, and has the integrated service ability of R & D, preparation and filling of cosmetics and home care products and the design and manufacturing of plastic packaging containers. Taking the coordinated development of daily chemical product OEM / ODM and plastic packaging business as the strategy, the company can provide one-stop services for daily chemical products and supporting plastic packaging for well-known daily chemical enterprises at home and abroad.
OEM / ODM downstream high boom demand is sufficient, and the packaging industry is developing steadily
As a downstream industry of OEM / ODM and packaging materials, the large market of cosmetics and home care has maintained steady growth and strong demand. From 2015 to 2020, the consumption scale of cosmetics in China increased from 204.9 billion yuan to 340 billion yuan, with a compound growth rate of about 10.66%. The scale and volume have increased rapidly. The stable and sustainable development of China’s cosmetics market has promoted the continuous improvement of OEM / ODM capacity demand in the middle reaches, It is estimated that the industrial market will reach 78.7 billion yuan in 2025. At the same time, the diversity and plasticity of plastics in packaging materials make plastic materials and their composites more and more widely used in the packaging of daily chemical products, becoming increasingly popular packaging materials, and the market demand has increased significantly. In 2017, the scale of China’s plastic packaging market was US $49.64 billion, and it is expected that by 2025, the market scale will reach US $69.82 billion, with an average annual compound growth rate of 4.4%.
Expand production capacity, increase business and build a core competition matrix
Driving force 1: the vigorous development of the cosmetics industry transmits the demand to the middle and upper reaches of the industrial chain. At the same time, the company stabilizes old customers and constantly expands new customers, resulting in strong overall demand. At present, the company’s capacity utilization rate and production and marketing rate remain high. After the new factory in Huzhou is completed in 2022, it will provide 38000 tons of cosmetics and 300 million pieces of packaging materials, which will help alleviate the company’s current tight capacity and provide a solid foundation for the company’s business growth.
Driving force 2: from OEM to ODM is the embodiment of the improvement of the company’s R & D ability and operation ability. The proportion of the company’s ODM business revenue increases year by year, which is the main development direction in the future. Compared with OEM, ODM business has higher requirements for technology and scale, and also has higher gross profit margin. The company continues to strengthen R & D investment and patent applications, and has filed more than 900 cosmetics formulas to provide technical support for the development of ODM business, which will help to improve the profitability of the company in the future.
Investment suggestion: as one of the few companies in China to realize OEM / ODM integrated services, relying on the double track of daily chemical makeup + plastic packaging, relying on the long-term cooperative relationship between R & D viscosity and product quality and the consolidation of many well-known b-end customers, we will steadily improve revenue and actively expand Huzhou phase I and phase II production lines. In the future, the production capacity of cosmetics will be increased to about three times the current level, which is expected to become a new profit engine in the future. It is estimated that the net profit of 21-23 years will be RMB 100 / 140 / 180 million, corresponding to pe23 / 16 / 13X, and the target price will be RMB 31.21, giving a “buy” rating.
Risk tips: the risk of market demand fluctuation, market competition risk, high customer concentration risk, the impact of covid-19 pneumonia on the company’s production and operation, the risk of litigation and punishment caused by product quality problems, and the risk of raw material price fluctuation
