Industry core view:
As the most abundant protein in human body, collagen has the functions of repairing skin barrier, stimulating cell regeneration and providing structural support. It is widely used in downstream functional skin care, medical dressing, skin rejuvenation, biomedical materials and other fields. China’s collagen industry has high growth rate, strong profitability and certain R & D and marketing barriers, which has attracted many well-known capital to invest in companies in the industry, while related companies such as chuang’er biology and Jinbo biology also applied for listing earlier. Subsequently, in May this year, the leading giant of recombinant collagen skin care products also planned an IPO in Hong Kong stocks. In the face value era, the downstream sensitive skin care, medical beauty and other markets of the collagen industry are developing rapidly. Benefiting from the breakthrough of collagen technology, the market penetration of collagen based products is expected to be further improved in the future. We are optimistic about the development of the collagen industry. It is suggested to pay attention to the leading collagen skin care companies with rich product pipelines, R & D investment, production advantages and doctor endorsement.
Key investment points:
Industry analysis: downstream “beauty” and “health” industries are widely used, and the penetration rate of recombinant collagen has increased rapidly. Collagen is an important component of skin care products, and recombinant collagen is more widely used in downstream efficacy skin care products, medical dressings, skin rejuvenation and biomedical materials market by virtue of its biological activity, higher compatibility and lower immunogenicity. ① Efficacy skin care: from 2017 to 2021, the industry scale of efficacy skin care products in China reached 23.4%, of which the market scale of efficacy skin care products based on recombinant collagen was 52.8%; The company ranks third in the market share of efficacy skin care products (11.9%); ② Medical dressings: from 2017 to 2021, the market scale of medical dressings in China reached 40.0%, of which the market scale of medical dressings based on recombinant collagen reached 92.2%; The market concentration of medical dressings is relatively scattered, and the market share of the company ranks second (9.0%). ③ Skin rejuvenation application: from 2017 to 2021, the market scale of skin rejuvenation application in China reached 19.7%, and collagen accounted for a relatively small proportion in this market; ④ Biomedical materials: from 2017 to 2021, the market scale of collagen based biomedical materials in China reached 33.5%, and recombinant collagen is an ideal bioactive component for implantable medical devices. Overall, the demand for products based on recombinant collagen is expanding rapidly, and the penetration rate of recombinant collagen is also increasing.
Company profile: the leader of recombinant collagen skin care products. Giant biological is a pioneer and leader in China’s professional skin care products industry based on bioactive ingredients. It is also the first company in the world to realize mass production of recombinant collagen skin care products. The predecessor was first established in 2000. Now it has many brands, such as kefumei, kelikin, kepre, Keji and shenglycoside. The ownership concentration of the company is high, the founder and his wife hold more than half of the shares in total, and many institutions participate in financing. In recent years, the company has developed rapidly, and the revenue CAGR from 2019 to 2021 reached 27.39%; The gross profit margin increased to 87.23% year by year.
Competitive elements: technology as the root, innovation as the soul, diversified product matrix + multi-channel to help brand development. ① Brand & Products: 105 SKUs of 8 major brands are distributed in the fields of medicine, medical beauty, skin care products and food. The re purchase rates of major brands kefumei and kelijin tmall mall reached 42.9% and 32.4%. 85 products under development are expected to further expand the future product matrix. ② Channel & marketing: the dual track sales strategy of “medical institutions + mass consumer market” promotes the formation of a complete sales and distribution network, and promotes product breaking through “academic exchange + Wuxi Online Offline Communication Information Technology Co.Ltd(300959) marketing”. ③ R & D: the company’s R & D personnel account for 12%, and the core R & D personnel have more than 10 years of R & D experience in fermentation technology, biomedical materials and natural active products. R & D investment has increased year by year. At present, the company has obtained 75 patents and patent applications, and actively carries out R & D cooperation with medical institutions and academic institutions, with good R & D and innovation ability. ④ Production: the company is one of the companies with the highest production capacity of recombinant collagen and rare ginsenoside in the world. The production capacity utilization rate of recombinant collagen and rare ginsenoside is more than 83%. The powerful end-to-end manufacturing platform ensures the high quality and large-scale production of products, and has the ability of rapid launch and cost advantage.
Financial comparison: the company has a large scale, high growth and leading profitability in the industry. Compared with companies in the same industry, the scale of the company ranks first, and the net profit attributable to the parent company in 2021 is 830 million yuan, ranking second; With high growth, the revenue CAGR from 2019 to 2021 reached 27.39%, and the net profit attributable to the parent company CAGR reached 22.46%; The profitability is excellent. From 2019 to 2021, the gross profit margin and net profit margin are stable at more than 80% and 50% respectively, both of which are at the leading level in the industry; High level of financial leverage; The operation capacity is leading in the industry.
Risk factors: the risk of epidemic counterattack, the risk of intensified competition, and the risk that the expansion of brand categories does not meet expectations.
