\u3000\u3 China Vanke Co.Ltd(000002) 166 Guilin Layn Natural Ingredients Corp(002166) )
Event: the company released the quarterly report of 2022q1. In 2022q1, the operating revenue was 282 million yuan, with a year-on-year increase of 27.76%; The net profit attributable to the parent company was 38 million yuan, a year-on-year increase of 78.44%; The net profit attributable to the parent company after deduction was RMB 30 million, with a year-on-year increase of 128.35%.
Scale effect + technological transformation continued to consolidate the cost advantage, and the profitability continued to improve
In 2022q1, the company achieved an operating revenue of 282 million yuan, a year-on-year increase of 27.76%, and the net profit attributable to the parent company was 38 million yuan, a year-on-year increase of 78.44%. After deducting non profits, the net profit attributable to the parent company was 30 million yuan, a year-on-year increase of 128.35%; In terms of profitability, the gross profit margin of 22q1 company was 27.83%, with a year-on-year increase of 2.85pct; The net profit margin was 14.16%, with a year-on-year increase of 3.91pct, mainly because 22q1 company continued to strengthen the market expansion of major varieties such as natural sweeteners and tea extracts, and further strengthened cost control through technological transformation, driving the increase of gross profit margin. In 2021, the company has completed more than 40 process optimization tasks to effectively improve the daily processing capacity and recovery rate of raw materials in the production line, reduce losses and achieve cost reduction and efficiency increase. We believe that the company’s main product, natural sweeteners, has established cooperative relations with Coca Cola, Pepsi and many other international well-known customers. At the same time, in 2018, the company signed an exclusive distribution contract with the largest essence and fragrance company in the United States with a cumulative target revenue of $400million, strategically binding large customers; In addition, a non-public offering project is planned. It is expected that the annual output of Stevia extract will increase by 4000 tons, and the production capacity will continue to expand. In the future, it is expected to benefit from the scale effect and steadily improve the 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 “marijuana management and Opportunity Act” (CAOA) is expected to be submitted by the end of August, and the legalization process of medical marijuana at the federal level is accelerated; 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%, After being put into operation, it can contribute about 1.5 billion yuan to the company; At the same time, an agreement of intent on entrusted processing has been signed with a mainstream enterprise of global industrial marijuana, and more orders are expected 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”, and the natural sweetener business has entered a period of rapid growth. At the same time, the relevant policies of American industrial marijuana continue to improve, and the demand for CBD extract is expected to accelerate. It is expected that the company’s revenue in 22-24 years will be 1.745/2.574/3.638 billion yuan, with a year-on-year increase of 65.68% / 47.53% / 41.34%, and the net profit will be 210 / 3.51/550 billion yuan, with a year-on-year increase of 77.60% / 67.09% / 56.39%, Maintain 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.
