(Report Producer/Author: Tianfeng Securities, Li Hui, Tang Jie, Zhang Feng)
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1.1. Sweeteners have been used in a variety of downstream applications
Sweeteners are food additives that give food a sweetness. According to the nutritional value, it can be divided into nutritional sweeteners and non-nutritional sweeteners; according to its sweetness, it can be divided into low sweetness sweeteners and high sweetness sweeteners; According to its source, it can be divided into natural sweeteners and synthetic sweeteners.
From the perspective of application areas, sweeteners are widely used in beverages, table condiments, personal care products, baked goods, pharmaceuticals, health foods, candy and chocolate, pharmaceutical supplies, chemical products and other fields. According to Zhiyan Consulting, the beverage field is the main application field of sweeteners, accounting for about 50%.
Visiting supermarkets, it was found that Haitian, Yili, Qiaqia, Guangming, Wahaha and other well-known brands have used sweeteners in products in different fields. It is worth noting that acesulfame potassium and sucralose are also used in well-known beverage products such as Sprite, Fanta, Qixi and other products that do not emphasize low sugar or sugar.
In addition to the above-mentioned food industry areas, feed is also an imaginative application scenario in the future. At present, most feed sweetener manufacturers take sodium saccharin as the main sweet source, and compound the masking agent and synergist of the bitter taste after covering up sodium saccharin, which is the mainstream of feed sweetener. With the lifting of the ban on the patent of New Sweet, a new type of sweetener represented by New Sweet appeared on the market, a sweetener that claimed to be free of sodium saccharin, and a sweetener that could mask the bitter taste after the drug. According to the "Research Progress on the Application of New Sweet to Feed Sweeteners", the addition of 20 mg/kg and 30 mg/kg of New Sweet to the diet significantly increased the feed intake of dairy piglets, and the mortality rate was significantly reduced or even avoided.
1.2. Sweetener substitution of sucrose has a similar taste and low cost
The reasons why sweeteners are widely used are: 1, the sweetener is similar to the taste of sugar after compounding; 2, the cost of sweetener use is low; 3, the public demand for health has increased, and the industry has shown a sugar-free trend.
Sweeteners added to foods as sucrose substitutes have a taste similar to sucrose and can be compounded into the taste of natural sweeteners. For example, Jinhe Industrial Sweetener Product Aile Sweet, compound using erythritol, stevia, sucralose, resistant dextrin and other top raw materials at home and abroad, and finally make the sweetness ratio of Aile Sweet products and white sugar is 1:1, the taste is infinitely close to white sugar, and there is no odor of traditional sugar substitute products. Solutions are already in place in the industry to accelerate the rate of sweetness, enhance flavor and texture, cut out sweet tongues and odors, and reshape the true whole sugar experience by improving the three elements of taste, flavor and texture.
Lower cost of use is another big driver for sweeteners. Synthetic sweeteners cost less than sucrose. Sweeteners tend to be many times more sweet than sucrose, and the commonly used artificial sweetener acesulfame potassium is 200 times sweeter than sucrose, and sucralose is 650 times sweeter than sucrose. The cost of sweeteners can be measured by the "sweet-price ratio", assuming that the sweetness of sucrose is 1, and the sweetness ratio of synthetic sweeteners at the same price is above 10.
Taking Coca-Cola as an example, according to the nutrition label, a 330ml canned Coca-Cola has a sugar content of 35g, the cost of sucrose is about 0.175 yuan / can, and the replacement with acesulfame and sucralose can reduce costs by 93.0% and 93.1% respectively, and each 100 million cans of sugar-free Cola can save 16.28 million yuan / 16.29 million yuan.
1.3. Sweetener industry drivers
1.3.1. Policy: Sugar Tax and Health Policy
Many countries in the world have raised sugar reduction to the level of national control, and gradually formulated and promulgated tax policies for foods in the field of high sugar, which will accelerate the development of the sweetener sugar substitute industry.
China has also introduced a number of policies to advocate a sugar-reducing life. The Healthy China Action (2019-2030) clearly advocates that urban high-sugar intake people reduce the consumption of sucrose-containing beverages and sweets, and choose natural sweeteners and sweeteners to replace beverages and foods produced by sucrose.
1.3.2. Demand side: the need for healthy life caused by diabetes and obesity
From the demand side, the healthy life problems caused by diabetes, obesity and other problems have increased consumers' demand for sugar reduction. According to IDF data, the number of people with diabetes (aged 20-79) worldwide in 2019 has reached 463 million, of which 116 million are diabetes in China. The IDF expects China, India and the United States, the world's largest number of people with diabetes, to reach 147 million, 134 million and 36 million, respectively, by 2045.
The Chinese Consumer Information Survey shows that compared with previous generations, post-90s consumers are more concerned about meter-related health problems, such as weight problems, skin health and other issues. Searching for "sugar control" and "sugar-free" on the Little Red Book, there are more than 80,000 and 360,000 articles sharing related science and recommending sugar-free foods, respectively.
1.3.3. Supply side: cost
Lower production costs are another big driver of sugar substitutes. According to a Tale & Lyle survey, consumers choose to focus on taste first, followed by health and price. Therefore, reducing costs is of great value to manufacturers. According to the previous calculation of Coca-Cola, the use of sweeteners such as sucralose will reduce the cost of sugar for manufacturers by about 93%, and the corresponding will have certain advantages in the price of the product.
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We have made a detailed calculation of the market space of the sweetener industry and believe that in the "sweetness war", sweeteners will have a wide range of market space and rapid development potential. We calculate the sweetness of the global annual consumption based on the basic condition that the sweetness of sugar is 1. From the perspective of the application classification of sweeteners, the substitution effect of sweeteners on sucrose in different fields of ToB terminal and ToC end is calculated, so as to estimate the market space of sweeteners.
From the perspective of the application direction of sweeteners, it can be divided into four kinds of sweetener application fields: large B-end, small B-end, large C-end, and small C-end, and we simply split the four application areas: large B-end: industrial production, commonly used as a food and beverage additive, and added to the product in the process of industrial production. Sugar is one of the main ingredients for most food and beverages. For example: Coca-Cola, Sprite and other production to add sweeteners. Small B-end: food and beverage stores, chain stores, offline stores uniformly use sweeteners to add to the product. For example: new tea drinks such as tea color, starbucks and other ready-made coffee shops. Big C-end: catering enterprises, catering enterprises actively choose to use sweeteners in the cooking process. For example: breakfast place, etc. Small C-end: residents consume, directly eat candy, leisure snacks and functional candy; solid sugar or syrup directly added to drinks and foods. For example: stir-frying, home cooking, etc.
2.1. Big B-end, industrial production: food and beverage space is the largest, BtoB mode, has widely penetrated condiments and other fields
According to Carlyco analysis, global sugar consumption in the 21/22 crushing season was close to 175 million tonnes, up 0.6% year-on-year. If the sweetness of sugar is 1, the sweetness of sugar consumed globally in a year is about 175 million and relatively stable. From the perspective of consumption structure, the sugar consumption structure in the United States presents a pattern of "industry as the mainstay and resident consumption as a supplement", of which about 37% is used for daily consumption of residents and 63% is used for industrial consumption.
The most widely used sweeteners in the food and beverage industry are beverages, taking the representative brand Coca-Cola and the Yuanqi Forest that exploded last year as examples. According to Coca-Cola's 2020 annual report, the company's sugar-free Coke sales increased by 4% for the whole year, of which 18 of the 20 top brands were sugar-free or low-sugar products, and sugar-free or low-sugar products accounted for 36% of the company's beverage portfolio. Yuanqi Forest, a phenomenon-level explosion in the beverage industry in the past year, mainly sugar-free sparkling water, according to 36Kr data, yuanqi forest sales in 2020 are nearly 2.9 billion yuan, of which the contribution of soda sparkling water series accounts for about 70%. At the previous Yuanqi Forest Dealer Conference, founder Tang Binsen revealed that Yuanqi Forest's offline channel sales target in 2021 is 7.5 billion yuan.
In addition to beverages, sweeteners are also used in a variety of other food fields, and have been widely used in more than 100 countries and regions, and there are more than 4,000 kinds of food varieties that use sucralose as a sweetener. China's current "Standards for the Use of Food Additives" (GB2760-2014) stipulates that New Sweet New Sweet, Ammonium Glycyrrhizinate, Monokalglycite and Potassium Trikalate, D-Mannitol, Cyclamate, Maltitol and Maltitol Liquid, Lactitol, Sucralose, Aspartame, etc. can be used as sweeteners in bread, pastries, biscuits and other foods.
It is also common to add sweeteners to condiments. For example, the condiments that use sucralose include soy sauce, vinegar, sauce products, curd milk, cooking wine, powder condiments and so on. The amount of sucrose used in high-grade soy sauce is 0.5 to 1%, and the amount of low-grade use is 2%. Sucralose replaces the sweetness of half of the sucralose. The addition of sucralose can effectively suppress the salty taste and increase the sweet taste of soy sauce; and it is stable under low pH and high temperature conditions, stable during shelf life; good heat resistance, no loss of sweetness during cooking, more secure; can reduce production costs.
Based on the judgment that sugar-free/low-sugar products such as Coca-Cola account for 36% of the product portfolio and that the future sugar-free trend will further improve in the food and beverage industry, we assume that sweeteners in the food and beverage industry can eventually replace 40% of them, and the sweetness of sweeteners is 44.1 million.
2.2. Small B-end, food and beverage stores: large space, low penetration rate, taste priority
As far as to small B is concerned, the main application scenarios are new tea drinks, coffee shops, and hand-roasted shops. The main market for new tea drinks is China, according to cbdDX Naixue's tea forecast data, the size of the new tea market will exceed 100 billion yuan in 2020, and will exceed 110 billion yuan in 2021. According to a questionnaire survey (N=1518), quality and safety surpass taste and taste as the primary consideration, and 93% of consumers will focus on this factor. Followed by taste and brand reputation, the degree of attention is 90% and 80% respectively. Health has also become an important part of consumer concern, nearly 70% of consumers choose to reduce sugar, 0 calorie sugar in all the ingredients of Nesher drinks the highest sales.
Based on the unit price of 15 yuan / cup, the average sugar content per cup is about 60g, and the sugar consumption is 440,000 tons. Assuming that the sweetener can eventually replace 50% of it, the sweetness of the sweetener substitution is 220,000.
According to Statista data, the global coffee industry revenue scale in 2019 was 430.983 billion US dollars, of which the revenue scale of fresh coffee was 114.566 billion US dollars, assuming that the 19-year level recovered after the epidemic in 2021. Based on the unit price of 5 US dollars / cup, the average sugar content per cup is about 80g, and the sugar consumption is 1.832 million tons. Assuming that the sweetener eventually replaces 30% of it, the sweetness of the sweetener is 550,000.
According to statistics from Euromonitor International and iResearch, the global scale of baked goods reached $326.5 billion in 2016 and is expected to be $370 billion in 2021, with a total consumption of 143.9 million tons of bakery products. Among them, China's hand-baked category accounts for 72.8%, far more than other countries. Based on the proportion of 60% of hand baking, manual baking consumes 86.34 million tons of products.
The sugar content of toast products is about 5%-8%, the sugar content of sweet bread products of meal bags is about 10%-15%, and the sugar content of pastry products is about 20%-30%. The average sugar content of bakery products is about 20%, and the sugar consumption is 17.268 million tons. Since sugar often plays a role in water absorption, browning, fermentation and so on in baking, the proportion of sweetener substitution will be relatively low, assuming that the sweetener can eventually replace 20% of it, the sweetness of the sweetener is 3.454 million.
2.3. Big C-end, sugar for catering enterprises: small space, difficult to penetrate
As far as the big C-end is concerned, the main application scenario is catering enterprises. In the global sugar consumption structure, catering sugar accounted for 0.9%, that is, 1.575 million tons of catering cooking sugar. Assuming that the sweetener eventually replaces 10% of it, the sweetener has a sweetness of 158,000.
2.4. Small C-end, residents directly use sugar: the space is large, and the penetration is difficult
As far as the small C-end is concerned, residents directly consume sugar, including candy, candy for stir-fry cooking, etc. The direct consumption of sugar by non-industrial sugar in addition to other uses was 43.635 million tons. This part is difficult to penetrate with sugar, except for some diabetic patients and obese patients, few residents directly choose sweeteners. Assuming that the substitution ratio is 5%, the estimated substitution sweetness is 2.182 million.
2.5. Summary of sweetener substitution calculations
Based on the total sweetness of sugar 175 million, of which the B-end accounts for 74.0% and the C-end accounts for 26.0%. Among the 175 million sweetness, the alternative sweetness was 50.88 million, accounting for 29.0%.
The total sweetness that can be replaced by sweeteners is 50.664 million, of which the B-end accounts for 95.4% and the C-end accounts for 4.6%. The B-end market space is large, the penetration difficulty is small, the application field is extensive, and the sweetener replacement will be promising. C-end market space is small, penetration is more difficult, sweetener consumption is mostly out of active choice, diabetes, obesity will bring the demand for healthy life, downstream consumers' awareness of sugar reduction will also force upstream manufacturers to choose sweeteners.
Calculated with sucralose, 50.664 million sweetness is equivalent to 78,000 tons of sucralose equivalent sweetness, and at a price of 220,000 yuan / ton, the market space is about 17.15 billion.
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3.1. Lai'an County Fertilizer Factory to Sweetener Faucet
Anhui Jinhe Industrial Co., Ltd. (hereinafter referred to as "Jinhe Industry" or "the Company"), formerly known as Lai'an County Fertilizer Factory, was founded in 1974, listed on the Shenzhen Stock Exchange in 2011, and then shifted from basic chemical business to focus on the food additive industry, and has now become a leading domestic sweetener company. The company's products are traditional chemical products such as sulfuric acid, carbonic acid, hydrogen peroxide, formaldehyde, and other traditional chemical products, and the other is food additives such as acesulfame potassium, sucralose, methylethyl maltol and so on. In 2020, the company achieved revenue of 3.67 billion yuan and net profit attributable to the mother of 720 million yuan.
The company's development process is divided into four stages:
1) Traditional production stage (1974-1995): The company was formerly known as Lai'an County Fertilizer Factory, mainly based on traditional fertilizer products such as ammonium bicarbonate and urea, and accompanied by the production and sales of liquid ammonia and methanol, the necessary basic chemical products in fertilizer production. 2) Key promotion stage (1997-2007): The company expanded formaldehyde, melamine and other products in the basic chemical product chain, and at the same time entered the spice industry with high added value and introduced maltol production technology. 3) Comprehensive layout stage (2006-2016): Since 2006, Jinrui Investment, Jinhe Chemical and the company have entered the comprehensive layout stage in product expansion, one is in the field of food additives, the introduction of acesulfame potassium products, maltol and acesulfame potassium production technology continues to innovate, while enriching the food additive product line, establishing a leading position in the subdivision product industry. Second, the development ideas of industrial chain extension and comprehensive utilization of resources are becoming more and more mature, and nitric acid, sulfuric acid, neopentyl glycol and pentaerythritol products have been developed, and they have expanded in all directions in the field of basic chemicals. The third is to re-examine the status of fertilizer products, make full use of the company's development experience in the field of fertilizers, find suitable new fertilizer products, and revitalize the company's intangible resources related to fertilizer production and sales. 4) Focus on the fine chemical stage (2017-present): In 2017, the company divested Huaertai Chemical, and the production capacity of basic chemicals contracted significantly, marking that the company entered a new stage of focusing on fine chemicals. On the one hand, the company continues to expand the production capacity of its advantageous products sucralose and maltol, on the other hand, it lays out the Dingyuan Industrial Park project, develops new products such as furfural and sulfoxide chloride, and opens up upstream and downstream.
There are two important time points in the fourth stage: one is the divestiture of Huaertai in 2017; the other is that Yang Le was elected chairman in 2019, officially completing the handover of the old and new from his father Yang Yingchun.
Merger of Jinyuan Chemical and divestiture of Huaertai: Jinyuan Chemical is mainly engaged in the production and export of neopentyl glycol, sodium formate and other products. In 2016, the company acquired a 49% stake in Jinyuan Chemical, making it a wholly-owned subsidiary. In September 2019, the company announced the merger of its wholly-owned subsidiary, Jinyuan Chemical. Huaertai Chemical is mainly engaged in the production and sales of nitric acid, sodium nitrate, sodium nitrite, ammonium bicarbonate, liquid ammonia, carbon dioxide, sulfuric acid, melamine and other related products. In 2017, the company announced the sale of all its equity interests in Huaertai Chemical (55%), with a total equity transfer of 340 million yuan. The purpose of this transfer is to further optimize the company's industrial structure, reduce the proportion of basic chemical business, and accelerate the company's strategic transformation and upgrading.
The management is smoothly handed over and the equity structure is stable: the company's largest shareholder is Anhui Jinrui Investment Group Co., Ltd., which holds 44.66% of the company's shares, the actual controllers of the company are Yang Yingchun, Yang Le's father and son, Yang's father and son hold a total of 47.49% of Jinrui investment shares, and the two directly hold 21.97% of the company's circulating shares.
In April 2019, at the fifth meeting of the company's board of directors, Yang Le was elected chairman of the board of directors, officially completing the handover of the old and new from his father Yang Yingchun, six years after he entered the company in 2013 as the assistant general manager.
Throughout the process, the company's growth path is clear: within its own capabilities to find market space + returns
Different from the general way of "first raw materials after products, first products after customers", the company's development process shows the reverse integrated development mode of "first customers after products, first products after raw materials". The company's initial products in the field of food additives are maltol, acesulfame potassium and maltol belong to the same food additives, there is a highly similar sales market and customer base, the company decided to produce acesulfame potassium The opportunity is inspired by maltol customers. At the same time, the company's sucralose is the next generation of acesulfame potassium sweetener products, and it also has a highly similar customer base. After the scale of maltol, acesulfame potassium and sucralose products, the company then plans the production capacity of raw materials such as furfural, divinylketone, sulfoxide chloride and so on, and reduces production costs and improves competitiveness by opening up upstream and downstream methods.
The development mode of reverse integration reflects the two characteristics of the company: (1) the deep binding of the company and the customer: the company can develop products according to customer needs, and the sales objects of each product are highly overlapping, reflecting the deep binding with the customer; (2) the direction is clear and the efficiency is improved: The advantage of reverse integration is that due to the ability to determine the scale and strategy of the product first, and then plan the raw material and downstream product chain, the company's development direction is more clear in the strategic perspective, and the company's planning has high efficiency.
The company's revenue is stable, and the proportion of fine chemical business has increased:
From 2012 to 2020, the company's revenue increased from 2.78 billion yuan to 3.67 billion yuan, a compound growth rate of 3.5%; the net profit attributable to the mother increased from 140 million yuan to 720 million yuan, a compound growth rate of 22.7%. The company's profit growth rate is significantly higher than the revenue growth rate, benefiting from the optimization of business structure and the progress of production technology.
In 2016, the company's performance grew rapidly, mainly due to the release of higher profitable production capacity of products such as hydrogen peroxide and sucralose, and the supply and demand relationship between acesulfame potassium and methylethyl maltol improved significantly. Revenue and net profit declined slightly in 2018, mainly due to the impact of the divested subsidiary Walter. The company's performance declined slightly in 2019, mainly due to the decline in the price of bulk chemicals. In 2020, the company's performance declined slightly, mainly due to the impact of the epidemic. After the structural transformation in recent years, the company's fine chemical business has developed rapidly and has become the pillar of the company's performance. In 2020, the company's fine chemical revenue accounted for 51.8%, an increase of 33.4pct over 2012, while the gross profit margin of fine chemicals also increased from 23.0% in 2012 to 36.3% in 2020.
In terms of ROE, the company's rapid increase in ROE in 2016-2017 was mainly due to the significant increase in net profit margin on sales, which was rooted in the release of sucralose production capacity and the price increase brought about by the supply and demand pattern of acesulfame potassium and methylethyl maltol. The decline from 2018 to 2020 was caused by the decline in net profit from the divestiture of Walter, the decline in the bulk chemical boom and the epidemic. The company's gross profit margin and net profit remained at a high level after a steady increase, indicating that the company's business transformation to fine chemicals is more successful.
The company's three expense ratios are at a low level in the industry, and the sales expense ratio has decreased significantly since 2017, mainly due to the company's streamlining business. The company's management expense ratio has increased significantly from 2018 to 2020, mainly affected by the significant increase in research and development expenses, and the financial expense ratio in the past two years has been negative, mainly affected by interest income and the amount of net foreign exchange income.
Affected by many factors such as the macro-economy and international oil prices, the chemical industry product price index (CCPI) entered a downward channel after breaking through 5700 in Q3 of 2018, fell to a low point due to the impact of the epidemic in 2020, and recorded 5100 in 2021Q2, basically returning to the pre-epidemic level. Considering environmental protection, policies, safety production and other factors, the supply side of bulk chemical industry is good, and it is expected that the company's basic chemical business will build a bottom, and the future price will have limited room for further decline.
3.2. Product Segmentation
3.2.1. The supply pattern of Acesulfame potassium has stabilized, and the company is the absolute leader
Acesulfame potassium, also known as AK sugar, chemical name acesulfonate potassium, was first synthesized by the German Hearst company in 1967, after 15 years of testing and inspection, in 1983 and 1998 the European Union and the United States respectively approved its use, the domestic also recognized it in 1992. Acesulfame potassium is widely used in food, beverage, oral hygiene/cosmetics and pharmaceutical fields. Acesulfame potassium is safe, stable, economical, and easy to use, primarily as an alternative to saccharin and cyclamate.
After the industry experienced a price war, Jinhe Industry stood out and determined its leading position. In 2005, the German Nutrinova acesulfametic patent expired, and domestic enterprises have invested in the construction of acesulfame potassium production capacity, resulting in a rapid increase in acesulfametic production capacity, intensified market competition, and the price of acesulfame potassium products fell from 62,000 yuan / ton in 2008 to 29,000 yuan / ton in 2013. During this period, most small and medium-sized enterprises suffered losses and withdrew from industry competition due to high production costs and weak anti-risk capabilities. In 2016, due to the accidents in Jiangsu Tiancheng and Ningbo Wanglong, the supply of diethylene ketone tightened, and affected by the increase in the price of raw material diethylene ketone, the average price of acesulfame potassium rose from 36,000 yuan / ton in 2015 to an average price of 41,000 yuan / ton in 2016. In 2017, Due to operational problems, Jiangsu Haobo's operating rate was less than 30%, and the output fell sharply, affected by the contraction of the supply side, and the price of acesulfame potassium continued to rise to 46,000 yuan / ton in 17 years. With the contraction of di-vinylone production capacity and the stabilization of the demand side, in 2020, the price of acesulfame potassium has recovered to 60,000 yuan / ton.
At present, Acesulfame potassium has formed a large and small pattern, in addition to the absolute leader Jinhe Industry, the main manufacturers are Germany Nutrinova, Shandong Yabang, Victor Chemical and Jiangbei ocean. Germany's Nutrinova is mainly supplied to the European market, and the products are used in the downstream high-end field; Shandong Yabang plans to have acesulfametic production capacity of 10,000 tons, and the first phase of production is 5,000 tons, the start is not smooth, and the actual production capacity is about 3,000 tons. Acetate shares plan to have a production capacity of 15,000 tons of acesulfame potassium, which is expected to be completed in 2021.
The company's victory in the price war of acesulfame potassium is mainly due to its technical advantages and the advantages of industrial chain integration. From 2012 to 2014, the company's manufacturing cost per ton of acesulfame potassium was 18273.9 yuan, 17806.4 yuan and 20168 yuan, respectively, compared with 2008-2010 ushered in a significant decline. According to the data of the annual report of this period, jinhe industry has achieved the improvement of the process flow, based on the cost of acesulfame potassium of Jinhe industry in 2010 of 35650.76 yuan, and the cost of 2014 is about 43.4%.
There are four main synthetic routes of acesulfame potassium: (1) sulfasulfamylfluoro-diethylene ketone method, raw materials are easy to obtain, the process is complex, and the yield is low; (2) acetylacetamide-sulfur trioxide method, low temperature reaction, low yield; (3) acetylacetamide - fluorothionyl fluorine method, raw materials are rare, yield is high, but pollution is serious; (4) divinylone - sulfur trioxide method, the company adopts synthetic route, raw materials are easy to obtain, the process conditions are mild, the total yield can reach up to 81.6%, in the domestic leading level.
The company has gained a competitive advantage by reducing the cost of acesulfame potassium through self-production of raw materials. The production cost of acesulfame potassium is mainly based on raw materials, with divinyl ketone as the most important raw material. Raw materials are the most important cost item in the cost per ton of Acesulfametic. The cost of disethylene ketone and sulfur trioxide in raw materials accounts for the highest proportion, and the price fluctuations of diethylene ketone and sulfur trioxide will have a greater impact on the cost of acesulfame potassium. Domestic di-vinylone production capacity is relatively concentrated, the main manufacturers are Ningbo Wanglong (50,000 tons / year) and Jiangsu Tiancheng Biochemical (39,000 tons / year). In 2016, after Jiangsu Tiancheng and Ningbo Wanglong were forced to stop production due to environmental protection problems, the price of divinylone rose rapidly. The only domestic enterprises supporting divinylone and acesulfame potassium are Suzhou Haobo (which has been discontinued) and the company, and the rest of the enterprises can only rely on outsourcing. The company has its own annual output of 10,000 tons of diethylene ketone production capacity, planning 30,000 tons of diethylene ketone production capacity, is expected to be put into production in 2022. According to the company's 2014 acesulfame potassium production and sales data, the production cost of di-vinyl ketone is around 11,000 yuan, which is nearly 6,000 yuan lower than the market price. It has the advantage of integration when the price of raw materials and the price of acesulfame potassium both rise.
In the acesulfametic industry, the company has a huge competitive advantage: (1) technical barriers: the company's acesulfametic product yield is 75%-80%, and the technical advantage is obvious, far higher than the industry average of 60%. (2) Raw material barriers: The main raw materials of acesulfame potassium are diethylene ketone and sulfur trioxide, which have the characteristics of high danger, high transportation cost and difficult storage, and the company can produce itself.
3.2.2. The concentration of production capacity in the sucralose industry has increased, and the company is a low-cost leader
Sucralose, or sucralose, is a new generation of sweeteners with the appearance of white crystalline powders or granules, and the sweetness is about 600 times that of sucrose. Sucralose is a new type of high-quality, non-nutritive and high-efficiency sweetener with high safety and stable performance. At present, sucralose has been approved for use in more than 120 countries and regions, and is widely used in food, beverages, health care products, daily chemicals, medicine and other fields. In 2003, the British Taylor patent protection for sucralose expired, and Chinese companies tried to invest in the production of sucralose. In 2007, Taylor launched an ITC337 intellectual property lawsuit, and in the end, the Chinese company won the victory to break the monopoly in the international market.
In 2008, sucralose began to enter a period of high prosperity, domestic enterprises have put into production and construction of production lines, the rapid increase in supply led to the price of sucralose began to decline, of which the price fell from 545 yuan / kg in 2011 to 257 yuan / kg in 2015. Affected by the implementation of the new environmental protection law, the price of sucralose has been fluctuating greatly, the market supply is far more than demand, some enterprises are in a state of shutdown or semi-shutdown, and some even stop production. In April 2016, Taylor closed singapore's 2,500 tonne production capacity for relocation. In July 2016, Yancheng Jiekang, the world's second and largest producer of sucralose in China, received a "Rectification Notice" from the environmental protection department, requiring Jiekang to stop production and rectify, resulting in an impact on the supply of sucralose and a rise in prices. In 2016, the average price of sucralose was 355,000 yuan / ton, up 38.1% year-on-year. A number of companies expanded production capacity, and the industry began a second round of capacity expansion. In 2019, the price of sucralose remained at about 210,000 yuan / ton, which has fallen below the cost line of mainstream enterprises 220,000-240,000 yuan / ton, and it is expected that the future price will be limited, but due to the continuous oversupply of the industry, sucralose will still be in a state of price war in the short term.
Sucralose is about to usher in the oligopolistic era. The company currently has a total production capacity of 8,000 tons/year, making it the world's largest sucralose producer. The company's main overseas competitor, The British Taylor, is a sucralose invention institution, which is also the current sucralose invention institution, and the product adopts a differentiation strategy mainly for the high-end market. The company's domestic competitors Changhai Food, Xinqi'an and Yancheng Jiekang have been greatly affected by their production capacity due to environmental protection reasons, and the operating rate is low and they are unable to expand. In the future, the company's competitors are likely to be Xinhecheng, which plans to build a new 6,000 tons/year sucralose production capacity, but the start time is uncertain and needs to be tested by the market. At present, there are still a number of small and medium-sized enterprises with an annual production capacity of 300-500 tons in China, due to the high production technology requirements, while it is difficult to maintain stable production under the pressure of environmental protection, such enterprises will face greater operating pressure in the future when the industry competition is fierce and the product price is at a low level, and will eventually be eliminated.
The company also reduces costs through technical advantages and industrial chain integration advantages in sucralose, has the ability to expand counter-cyclically during the low price period of sucralose, and seizes the market position through continuous volume.
There are two main types of sucralose synthesis process: single gene protection method and whole gene protection method, and the whole gene protection method has no industrial value. The company's process belongs to the single gene protection method, which can be divided into three key steps of esterification, chlorination and deacylation, and the company has selected a process with a high conversion rate in the three-step reaction. The company also optimized the existing reaction process to neutralize the hydrolysis of the product directly after the chlorination step, which increased the yield from 31% to 41% according to the company's patent (CN201410592960.1). Through the optimization of process technology, the company's final yield of sucralose reached about 45%, which is much higher than the domestic average of 30% to 35%.
(1) Esterification: the method is divided into chemical method and enzymatic method, the real large-scale industrial application is the chemical method, the chemical method used by the main domestic production enterprises are solid acid catalysis method, indirect electrooxidation synthesis method, trimethyl orthoacetate catalytic method and dibutyltin oxide catalysis method. The dibutyltin oxide synthesis method used by the company has the most advantages in terms of product yield and purity, production cost, etc., and the highest conversion rate can reach more than 85%. (2) Chlorination: Sucrose-6-ethyl ester chlorination preparation of sucralose-6-ethyl ester process is relatively mature in China, the main production enterprises are using Vilsmeier reagent method, Vilsmeier reagent advantage is easy to prepare and good stability. (3) Deacylation: In organic chemical synthesis, the removal of acetyl is a mature reaction with high yield and low difficulty.
Sulfoxide chloride is an important raw material for sucralose, and the company can achieve self-sufficiency in production raw materials. The production company Dingyuan has put into production 40,000 tons of sulfoxide per year in the first phase, and plans to continue to put into production of 40,000 tons per year in the second phase. According to the "Thionyl chloride market status quo and supply and demand balance forecast analysis" data, in 2020, the global sulfoxide production capacity is expected to reach 1.25 million tons, the demand is expected to reach 850,000 tons, the future production capacity growth rate is expected to remain at the 5% level, the demand growth rate is maintained at the 10% level.
At present, the global effective production capacity of sucralose is about 18,000 tons / year, the actual annual output is about 16,000 tons, the demand is 15,500 tons, and the CAGR from 2009 to 2018 is 19.58%, 19.04% and 17.89%, respectively. In 2016-2021, good growth is expected in all regions of the world, with global growth rates reaching 5.7% per annum.
3.2.3. A and ethyl maltol: new players enter, and the tripoly pattern gradually becomes
Methyl maltol belongs to the natural equivalent flavor, with the special taste of caramelized butter, and its diluted solution can release strawberry-like aroma; ethyl maltol is an artificial flavor, and its diluted solution has a fruit-like caramelized sweet aroma. Methyl ethyl maltol is widely used, and almost all flavored flavors are inseparable from maltol.
With the upgrading of residents' consumption structure and the improvement of living standards, while pursuing health, nutrition and hygiene, and gradually seeking fashion and novelty of taste, the market demand for flavors and fragrances will show a rapid growth trend of development. From 2015 to 2019, China's flavor and fragrance sales increased from 33.9 billion yuan to 44.9 billion yuan, and China's flavor and fragrance production reached 1.267 million tons in 2019.
The price of maltol is relatively stable overall, and the price fluctuations are mostly due to unexpected events. Before 2016, only two domestic enterprises, Tianlihai and Jinhe Industry, could produce stably, showing a duopoly pattern. In April 2016, Tianlihai exploded for the first time, and the price of maltol did not rise significantly because the inventories of producers and downstream customers were enough to support demand. The average sales price of A and ethyl maltol of the company was 106,300 yuan / ton and 96,600 yuan / ton, respectively. After the second explosion of Tianlihai in March 2017, the supply of maltol was tight, the market price rose rapidly, and the company's A and ethyl maltol quotations increased to 155,000 yuan / ton and 150,000 yuan / ton respectively, the gross profit margin of the product increased significantly, and the gap in profit prospects and supply also attracted new players to enter. In 2018, with the release of production capacity of new entrants and the resumption of production in Tianlihai, prices have declined. In 2019, due to the downstream Indian customer demand affected by environmental protection policies, most gastric drug companies stopped production, the price of methyl maltol fell to 110,000 yuan / ton, and the same ethyl maltol price fell to 105,000 yuan / ton.
At present, the production capacity of maltol is mainly in China, totaling about 21,000 tons. Other major manufacturers include Tianlihai, Wanxiang International, Tianhan Biology and so on. Tianlihai may withdraw in the future due to environmental protection reasons, the new and new processes are uncertain and have not yet been put into production, and the annual output of Wanxiang International is not smooth. The company currently has a maltol production capacity of 5,000 tons, and at the end of the year, it will release another 5,000 tons of production capacity, and will continue to strengthen the company's leading position after completion. At present, the global demand for maltol is about 13,000 tons, it is expected that the market will still be in a state of oversupply in the next few years, the industry leader will use the advantage of technical scale to compress the product price to the extreme, eliminate small and medium-sized enterprises, the market for methyl ethyl maltol will appear Jinhe Industry, Xinhecheng, Ningxia Wanxiang International three-legged situation, long-term industry pattern will face reshaping.
The gross profit margin of the company's maltol business is higher, mainly due to the following reasons: the company's maltol project construction is earlier, the investment cost is low and the depreciation is basically completed; the optimization of the production accumulation process for many years makes the company's raw material unit consumption low; considering the future upstream raw material matching and scale effect, the company's cost advantage in the maltol industry will be more obvious, and the profitability will continue to increase.
Maltol produces the raw material furfural, and the company can achieve self-sufficiency in raw materials. The company's maltol production using furfural as the main raw material, A, ethyl maltol single consumption of 1.40, 1.26 respectively, the company has a grade A maltol production capacity of 1000 tons / year, ethyl maltol 4000 tons / year, a total of 6440 tons of furfural consumption, the company's Dingyuan project plans to build furfural production capacity of 20,000 tons / year, enough to achieve raw material self-sufficiency, in the competition has an integrated advantage.
3.3. Company Growth Points or Highlights
3.3.1. New projects open up space for the company's growth and fully enjoy the growth dividends of sweeteners
At present, the company's main planning projects are Dingyuan Phase I Phase II Circular Economy Industrial Park Project and 5000t/a Maltol Project. The planned capacity of Dingyuan project includes 80,000t/a chlorinated sulfoxide, 20,000t/a furfural, and the construction of the original 5,000 tons of maltol project "600 tons of furfuran, 4,500 tons of Jiale musk solution, 5,000 tons of 2-methylfuran, 3,000 tons of 2-methyltetrahydrofuran, 1,000 tons of furan ammonium project".
Dingyuan project construction "600 tons of furfuranone, 4500 tons of Jiale musk solution, 5000 tons of 2-methylfuran, 3000 tons of 2-methyltetrahydrofuran, 1000 tons of furan ammonium salt project" is expected to contribute revenue of 1.09 billion yuan, 5000 tons of sucralose project is expected to contribute 1.03 billion yuan, 5000 tons of maltol project is expected to contribute 570 million yuan in revenue, the project under construction will open up the company's growth space and become the company's high-speed growth momentum.
3.3.2. Self-sufficiency of upstream raw materials and development of downstream products
The furfural, sulfoxide chloride and divinylone put into production in the Dingyuan project are the raw materials for the company's products ethyl maltol, sucralose and acesulfame potassium. With the commissioning of Dingyuan Industrial Park, the company will achieve complete self-sufficiency of raw materials for important fine chemical products, which can further reduce production costs and enhance competitive advantages.
In addition to the production of furfural and thionyl chloride, the company plans to invest 360 million yuan to build projects with an annual output of 4,500 tons of Jiale musk solution, 5,000 tons of 2-methylfuran, 3,000 tons of 2-methyltetrahydrofuran, 1,000 tons of furan ammonium salt, etc., which are expected to be put into operation in the first quarter of 2021, and can achieve an average annual sales income of 1.088 billion yuan after reaching production. This project focuses on furfural to open up the downstream industrial chain, exert synergistic effects to reduce the company's comprehensive costs, and enrich the company's product matrix. In the future, the company is also committed to enriching the product line and building five major product clusters of food additives, pharmaceutical intermediates, fine chemicals, electronic chemicals and new materials.
3.3.3. Launch the C-end product Aile Sweet, and officially enter the food and beverage industry
The company feels the great potential of sugar-free food, hopes to be a sugar-free brand directly for C-end users, "Aile Sweet" came into being, the team used xylitol, sucralose and other sugar substitutes instead of white sugar, sucrose, etc., becoming a healthy sweetener in people's lives. The ideal scenario is to drink coffee, breakfast cereal, and cook dishes, and you can replace sugar with sugar substitutes. According to Mr. He Xiangkun, the head of the company's TO B-end business, on the shelves of condiments in Europe and the United States, the ratio of the number of sugar substitute products to the number of sucrose products is 9:1, while in China, this data is only about 1:9. Aile Sweet 2.0 version has undergone more than 200 formula test adjustments by the R&D team, which is different from the ratio of 1:7 between the first generation of Aile Sweet and Sucrose Sweetness, and the second generation of Aile Sweet has achieved a ratio of 1:1 with sucrose sweetness, so that users do not need to change the habit of adding sugar to obtain the same sweetness and improve the convenience of use.
In the increasingly fierce competition environment of the tob end of the sweetener, the company's downstream layout of the TOC end, the establishment of consumer brands, directly face consumers, strengthen the company's direct sense of market demand, is beneficial to future development.
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Capacity investment is lower than expected: According to our above analysis, the company contains a large number of projects in the process of construction and production climbing, and there is a possibility that the capacity investment will be lower than expected due to external factors such as the new crown epidemic and the company's own development plan.
Large fluctuations in raw material prices: The price fluctuations of the company's products are affected by various factors such as raw materials and supply and demand patterns, and there is still a possibility of large fluctuations in future product prices.
Safety and environmental protection and other production issues: In recent years, chemical production enterprises safety and environmental protection problems occur frequently, since the "3.21" incident in 2019, the state has become more and more strict on safety and environmental protection issues, chemical enterprise safety, environmental protection events will have a greater impact on the production and operation of enterprises.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Source of the featured report: [Future Think Tank official website].
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