\u3000\u3000 Jahen Household Products Co.Ltd(300955) (300955)
The company is a leading enterprise in the design and production of daily chemical products OEM / ODM and plastic packaging containers. The senior executives have rich experience and stable ownership structure. From 2017 to 2020, the company's performance grew steadily, and the CAGR of revenue / net profit attributable to parent company reached 22.03% / 71.02% respectively. In terms of business, the daily chemical business increased rapidly, the proportion of cosmetics increased from 17.83% in 2017 to 50.88% in 2021h1, and the revenue of home care products decreased from 11.64% to 10.35%; Plastic packaging business is in its mature stage, accounting for 36.38% in 2021h1, down from 67.31% in 2017.
The industry is growing steadily, and the supervision is becoming stricter. The leader may benefit: the upgrading of residents' consumption drives the steady growth of the OEM market. Under the trend of consumption upgrading, brands focus more on R & D and marketing, highlight OEM value, and the rise of cutting-edge brands drives upstream demand. According to the calculation of Zhiyan consulting data, the scale of the global cosmetics OEM market was more than 180 billion yuan in 19 years. According to iResearch consulting, the Chinese cosmetics OEM market was about 30-50 billion yuan in 20 years, and the CAGR was 15-20% in 16-20 years. In the past 20 years, there were more than 5000 licensed cosmetics manufacturers in China. The industry competition pattern was relatively scattered. The strength of international and Chinese top manufacturers was strong, and the top five cities accounted for about 25%. Supervision will continue to be strengthened, or small and medium-sized enterprises with low configuration and weak technology R & D will be eliminated, and leading enterprises with qualifications and technical specifications are expected to gain a greater market share.
The company has R & D and technical advantages, and customer resources are stable and high-quality: the company has established precision molding technology systems such as blow molding, injection molding, injection blowing and hose, greatly improved production efficiency and product quality, and formed a capacity scale; Customers respond quickly. The average cycle of developing new products for customers is generally 3 months. For new products that do not need to redevelop molds, product production verification can be completed in about 15 days to realize mass production. The company has established long-term cooperation with Johnson & Johnson, Yunnan Botanee Bio-Technology Group Co.Ltd(300957) and other well-known brands. The supply conversion cost of big brands is high and the cooperation is stable.
The short-term capacity release promotes growth, and the gross profit margin may rise. The performance in 22-23 years is expected to accelerate: the company has full production and sales before the epidemic, and maintains a high capacity utilization rate + production and sales rate during the epidemic. With the expansion of business scale and the increase of orders year by year, in order to meet the growing market demand, the company has built a modern production base integrating cosmetics and plastic packaging containers in Huzhou. After putting into operation, the annual production capacity will increase by 38000 tons of cosmetics and 30000 plastic packaging containers. At that time, the production capacity of cosmetics and plastic packaging will be 2.8 times and 1.3 times that of now respectively. It is expected that phase I will be put into operation after the 22-year Spring Festival, releasing 40-50% of the production capacity throughout the year. The fully automated new production capacity is expected to dilute the operating cost, show the scale effect, relieve the pressure on the subsequent rise in raw material prices, and increase the company's gross profit margin.
Expand new customers of new products and establish integrated services in the medium and long term: the company cooperates stably with core customers, develops new customers and categories, gets involved in makeup OEM, and actively seeks increment. The proportion of customers in the first five years of H1 in 17-21 decreased from 83% to 77%, and customer expansion brought about increment. The company adheres to the coordinated development of daily chemical product OEM / ODM and plastic packaging business, continuously improves the proportion of ODM business, and provides all-round and one-stop R & D and production services.
Investment suggestion: the company has core advantages in production technology, stable cooperation with major customers, and continues to expand customers and categories. In the next 22 years, Huzhou plant will be put into operation gradually, the scale effect is obvious, the cost pressure is expected to be relieved, and the profit is expected to increase significantly. It is estimated that the company will achieve revenue of RMB 1.07 billion, 1.45 billion and 1.88 billion in 21-23 years, net profit attributable to the parent company of RMB 0.90 billion, RMB 150 million and RMB 200 million, and eps0.01 billion 9. 1.46, 1.97 yuan. With reference to the valuation of comparable companies and considering the growth of the company, the company will be given a PE 30x for 22 years, with a target market value of 4.5 billion yuan. It will be covered for the first time and given a "recommended" rating.
Risk warning: the risk of intensified industry competition, the risk of declining downstream demand and the risk of fluctuations in raw material prices
