In the past month, the rise in vitamin prices has become one of the hot topics in the capital market.
On August 8, the concept of vitamins bucked the trend and strengthened, and many stocks such as Erkang Pharmaceutical, Minsheng Health, Northeast Pharmaceutical, Guangji Pharmaceutical, Shengda Biotechnology, Zhejiang Medicine, and Oukang Pharmaceutical, Garden Biotechnology, Xinhecheng, and Jindawei followed suit.
On the news, on August 7, local time, Germany chemical giant BASF issued an announcement on its official website that due to the impact of the fire at its Ludwigshafen factory on July 29, force majeure was declared on the delivery of some vitamin A, vitamin E, carotenoid products and some fragrance raw material products.
BASF said that the clean-up, inspection and repair of the plant's equipment has already begun, and it will be in close contact with customers to keep them updated on the supply capacity of the affected products.
The industry is on the upswing
On July 29, an organic solvent leak was reported in the southern area of BASF's Ludwigshafen site, causing an explosion and a fire. The plant produces raw materials and precursors for vitamin production.
Affected by this incident, the market prices of vitamin VA and vitamin VE rose sharply. Last week, vitamin VA reached 165,000 yuan/ton, up 82.32% week-on-week; Vitamin VE reached 140,000 yuan/ton, up 51.35% week-on-week.
According to expert analysis, at present, the supply side of the vitamin industry has a high concentration of production capacity, and under the influence of multiple factors such as vitamin production capacity withdrawal, production reduction and maintenance, and sudden events, it will jointly promote the continuous rise of product prices.
Vitamins are trace organic substances that humans and animals must obtain from food or feed in order to maintain normal physiological functions, and have the characteristics of regulation, exogenous, trace and specificity.
At present, more than 60% of vitamins are used in feed additives, especially in the downstream applications of vitamins A and E, with feed accounting for 84% and 67% respectively. Therefore, the feed yield and the proportion of vitamins added to the feed have a great impact on the domestic vitamin demand.
In fact, since 2018, vitamin prices have continued to fall, on the one hand, due to the gradual recovery of production capacity due to the impact of environmental protection, and on the other hand, the impact of capacity expansion of new entrants in the industry. In addition, affected by overseas destocking and weak demand for vitamins, the prices of many varieties of vitamins have continued to be low, and the profitability of many enterprises has declined sharply, and some companies have suffered losses.
Zhejiang Medicine is one of the world's leading VA and VE companies, and its gross profit margin of life nutrition products will drop from 44.05% in 2020 to 31.26% in 2023; Tianxin Pharmaceutical is the world's leading B vitamin, and its gross profit margin will drop from 54.28% in 2020 to 38.27% in 2023.
For the future performance of vitamins, they are generally optimistic about it, believing that under the influence of multiple factors, vitamins are expected to enter a new round of price increase cycle.
From the perspective of the supply side, in view of the high cost of overseas production capacity, overseas factories may suspend production for a long time, and the operating rate of production capacity is no longer what it used to be; From the demand side, the domestic feed demand has recovered growth, and the export bureau is good, which has effectively promoted the digestion of domestic vitamin production capacity.
Historically, domestic feed production has increased in August and remained at a high level in the fourth quarter, so the demand for vitamins in the fourth quarter will also increase relatively if the same amount is added.
In the long run, new technologies represented by synthetic biology will continue to promote the development of the vitamin industry and are expected to reshape the competitive landscape of the industry.
Related concept stocks are strong
Flush data shows that there are currently 45 concept stocks in the A-share vitamin concept, and the increase in the past month is far ahead of the CSI 300 industry index. Among them, Hehua shares, Zhejiang Medicine, and Northeast Pharmaceutical ranked among the top three gainers.
Today, the sector is once again in the red across the board. Among them, Shengda Biotech has increased the limit 14 times in the past year. The company is mainly engaged in the research and development, production and sales of vitamins, biopreservatives, food additives and feed additives, and the products mainly include biotin, folic acid, lactic acid streptococcin and natamycin.
In the field of vitamins, the company has carried out in-depth cooperation with many global multinational enterprise groups and well-known domestic feed and breeding enterprises. At present, the company's products account for about 60% of domestic and 40% of exports, mainly from Europe and United States. Shengda Biotech expects to report a net profit of 18 million yuan to 22 million yuan in 2024, a year-on-year increase of 384.23% to 447.39%.
Guangji Pharmaceutical hit the price limit today. The company is one of the earliest enterprises engaged in vitamin production in China, after more than 50 years of research and development, production and management, has become a leading domestic production scale, outstanding market position of the production enterprises, with obvious scale advantages.
It is reported that the company deepens the R&D cooperation in synthetic biology, and will cooperate with Jiangnan University to develop a human milk oligosaccharide project in 2023, and is carrying out further optimization and transformation of strains, research on fermentation process and extraction and purification process, as well as product registration and declaration; In cooperation with the Academy of Sciences of Huazhong University of Science and Technology, the steviol glycoside project has been developed, the construction of the first generation of strains has been completed, and the optimization and transformation of strains and the development and research of fermentation and extraction processes are underway.
Guangji Pharmaceutical's first quarterly report shows that during the reporting period, the company achieved revenue of 180 million yuan, a year-on-year increase of 56.27%. Among them, the revenue of starch and sodium acid series products was added, the sales of vitamin B2, the leading product, increased, and the revenue of distribution and distribution business increased.
Garden Biotech is the world's leading VD3 production enterprise, with a VD3 production capacity of 3,600 tons. In addition, the company is the only company other than DSM that can produce 25-hydroxyVD3 products on a large scale, and the production process has a great competitive advantage compared with the biological fermentation method of DSM in the Netherlands. In the first quarter of 2024, the company achieved revenue of 330 million yuan, a year-on-year increase of 4.15%, and a net profit attributable to the parent company of 91 million yuan, a year-on-year increase of 76.41%.
On the whole, as a fine chemical product, the synthesis process of vitamins is lengthy and complex, and some raw materials need to be purchased, once there is a shortage of purchased raw materials, it will lead to a rapid rise in product prices, so enterprises with the whole industry chain will obtain excess returns by virtue of raw material advantages.