Engaged in economic work, has always been more concerned about the enterprises around, Linyi can develop, relying on the help of private enterprises, when it comes to Linyi's private enterprises, Jinluo Group, Tianyuan Construction, Aode Group, Lunan Pharmaceutical, Luoxin Pharmaceutical, Stanley, Yizhou Cement (of course, there is also the accident of Jin Zhengda... In the mind one by one, but this low-key enterprise, with the same cattle in the list below, or even more cattle, but we often can't count it, one is the industry leading to his products we can't touch, MSG itself is not a necessity of life, and ham, houses, drugs, fertilizers, etc. are still common or essential items in life; second, their family really does not love publicity, even the last market has run to Hong Kong, the stock price is now like a fairy stock, there is no wave, if there is no North City No Fufeng Dacheng County, Kangqiao County, Everyone may not know that Fufeng is Linyi; third, the main battlefield of Fufeng is indeed not in the local area, and the factories in Xinjiang and Inner Mongolia are much larger than the production capacity of Junan headquarters, and they are all production bases that will focus on new products in the future.
Although low-key, as a native of Junan, Shandong, the most successful enterprise is Fufeng. Investors who have followed Hong Kong stocks should also be familiar with this name, stock code 00546, listed in Hong Kong in February 2007. Today, from the perspective of an ordinary investor, based entirely on public information, I will briefly talk about the rough directional view of this company from the current market value of about 7 billion yuan through four aspects: corporate profile, financial analysis, industry pattern and future outlook.
Exterior view of Fufeng Headquarters
First, the enterprise profile
(1) Basic information
Fufeng Group has been deeply engaged in the biological fermentation industry for more than 20 years, with the ability of 6 million tons of corn per year, and is currently the world's leading biological fermentation enterprise, china's top 500 private enterprises, the main products are monosodium glutamate, xanthan gum, edible glucose, crystalline fructose, fertilizer, corn oil, chicken essence, a series of compound seasonings, glutamic acid, threonine, valine, isoleucine and cordyceps capsules, Ganoderma lucidum powder, etc. In order to give everyone a more intuitive impression, draw a key point: the world's largest manufacturer of monosodium glutamate, xanthan gum, amino acid heavyweight production manufacturer.
At present, Fufeng Group has seven major production and manufacturing bases: Shandong Fufeng Fermentation Co., Ltd., Baoji Fufeng Biotechnology Co., Ltd., Inner Mongolia Fufeng Biotechnology Co., Ltd., Hulunbuir Northeast Fufeng Biotechnology Co., Ltd., Xinjiang Fufeng Biotechnology Co., Ltd., Qiqihar Longjiang Fufeng Biotechnology Co., Ltd., Jiangsu Shenhua Pharmaceutical Co., Ltd. Of course, from the perspective of production capacity now, the Shandong base is the weakest, basically a decoration.
(2) Main products and production processes
Fufeng's production process (from the annual report)
MSG: MSG, yes, it is the one who thinks we eat unhealthy seasonings, but there is a misunderstanding here. Sodium glutamate, also known as awagandin (Japanese name), is a commonly used umami agent. The supply of MONOS glutamate is highly concentrated, and the downstream demand industries for MSG are food processing industry, catering industry and household consumption, and the ratio of the three is about 5:3:2. In 2020, Fufeng Group's MSG sales volume was 1.1681 million tons (1.1156 million tons in 2019), but due to the impact of sluggish demand, the price of MONOSG was 6190 yuan per ton (6940 yuan per ton in 2019). MsG sales are expected to be stable and rising in 2021.
Xanthan gum: xanthan gum is a kind of biosynthetic gum, which is a common thickener, suspension agent, emulsifier, stabilizer, the main use of edible grade is thickener and stabilizer, and industrial grade xanthan gum is used as a mining liquid in shale gas mining. At present, the global xanthan gum production capacity is mainly concentrated in China, of which Fufeng has a production capacity of 90,000 tons, Zhongxuan biochemical production capacity of 48,000 tons, plum blossoms 30,000 tons, three leading enterprises occupy nearly 80% of the country's production capacity, and other small enterprises have a production capacity of less than 10,000 tons. Due to the fierce market competition in the past few years and the overall price of the oil industry is weak, the price of xanthan gum continues to decline, the overall loss of the industry is serious, the operating rate is obviously insufficient, Fufeng in early 2016 it has in Xinjiang part of the production capacity to produce high-grade amino acid products and other products that are developing at a high speed, under the oligopolistic pattern is optimistic about xanthan gum production capacity further cleared, the boom is expected to gradually rebound from the bottom. Entering 2021, with the rise in oil and gas prices, there is no doubt that the continuous improvement of the industry operating rate will drive the market rise of xanthan gum.
High-grade amino acids: Threonine ranked second in the market in 2020. The market share reached 27.2%, which was basically the same as the industry's first plum blossom biology. At present, threonine CR3 accounts for more than 80% of the world, basically has reached the oligopoly pattern, at the end of 15 years, the company's threonine smooth expansion, rapid increase in production capacity, coupled with the further deepening of cooperation with Ajinomoto, so that threonine revenue and net profit significantly increased year-on-year, becoming a new source of performance growth for the company. In addition, the biggest attraction should be hyaluronic acid, which will be written in the fourth part.
(3) Main raw materials
Corn accounts for more than 60% of the production cost of monosodium glutamate, the price of corn in 2020 is up 30.5% compared with the same period in 2019, the price of monosodium glutamate has risen by 17% since August 2020 to 7850 yuan / ton, and the increase in raw materials is greater than the increase in finished products, resulting in narrowing profits in 2020. Entering the second half of 2021, corn prices continue to adjust, and Fufeng has reduced the impact of high-cost raw materials through cost transfer to the downstream, and the downward corn price is expected to form a larger positive for Fufeng Group at the cost side, which is conducive to the release of profits this year while ensuring sales.
Corn futures prices
(4) Shareholders
Wind shareholder column
Semi-annual report shareholder note
The two main shareholders, Motivator Enterprises Limited and Treetop Asset Management SA, Motivator Enterprises Limited registered in France, show the status of suspension, as an investment company This suspension has little impact; Treetop Asset Management SA shows that the associated person is Li Guangyu, and both companies are controlled by the Li Xuechun family. The entire shareholder structure is relatively simple and clear, and the actual controller is the Li Xuechun family, which is currently very stable.
2. Financial analysis
In 2020, the company's operating income was 16.901 billion yuan, and the overseas sales revenue was 4.790 billion yuan (export sales accounted for 28.34%, close to 1/3, basically meeting the threshold requirements of global enterprises) and net profit of 629 million yuan.
According to the June 2021 interim report, the total assets were 20.188 billion yuan, basically double that of 10.985 billion yuan 10 years ago;
Changes in total assets
Changes in current assets
Current assets reported in mid-2021 at 9.757 billion yuan, double the 4.071 billion yuan ten years ago, basically synchronized with the proportion of total asset expansion;
Non-current assets reported 10.43 billion yuan in 2021, compared with 6.913 billion yuan ten years ago, there is also a significant increase, from the mid-2019 high of 11.435 billion yuan there is a significant decline, for enterprises with production capacity to touch the ceiling, the appropriate decline in fixed assets shows the focus on the main business, clear thinking, no chaotic investment.
Changes in non-current assets
Key Asset Accounts:
Changes in accounts receivable and notes
Accounts receivable and notes in 2021 of 1.404 billion yuan, compared with ten years ago, there is a significant decline, as the revenue increases year by year, the changes in accounts receivable and notes are in line with the mapping of changes in industry status and total assets;
Changes in other receivables
Other receivables in 2021 were $1.39 billion, an increase of $424 million from a decade ago, and this subject is worth exploring. The change in the current period is mainly due to the provision of 0.5 billion bad debts, and the specific details have not been checked.
Changes in inventories
2021 interim inventory of 5.331 billion yuan, an increase of nearly 4 times compared with 1.107 billion yuan ten years ago, compared with last year's mid-report of 3.021 billion yuan nearly doubled the trend, I did not find the specific details, in this or to ask for advice, welcome to leave a message for guidance. According to Fufeng's half-year sales, it should not be a slow selling situation.
Changes in accounts receivable and notes receivable
Accounts receivable, bills receivable basically fluctuate within the range of certainty, the overall in the 1 billion - 1.5 billion yuan, with the growth of revenue, this data as a whole is stable, indicating that the leading negotiation low level continues to increase.
Short-term borrowings and long-term borrowings vary partially when due in the current period
Short-term borrowings and long-term borrowing maturity part, 2021 reported 2.9 billion yuan, compared with about 1 billion yuan in recent years, there is a significant increase, check the changes here the main US dollar bonds mature, while Fufeng launched a $400 million syndicated loan, the overall debt change is not large.
Long-term responsibility for changes
Long-term liabilities, from 2 billion + at the end of 2019 to 600 million yuan in June this year, and the rapid increase in short-term borrowings just complement the situation, and the overall debt change is not large.
ROE changes
The ROE indicator is 4.95, which shows that the ROE has continued to decline in the past 5 years, but there are already signs of a bottoming out.
Year-over-year revenue growth rate changes
Year-over-year revenue growth rate. Recently, it reported 21.6 year-on-year growth of 16.55, regaining its upward trend after undervaluing.
Year-over-year profit growth rate changes
Profit growth rate was 54% year-on-year. Signs of recovery can be seen, and revenue increases and profits are increased.
Changes in net cash flow from operating activities
Net cash flow from operating activities has been positive and has grown significantly in the last six months to $810 million, supporting the authenticity of profits.
Third, the industry pattern
The industry pattern of Fufeng Group is basically the industry pattern of the MONOSG industry, because the products of Fufeng Group are all related products of the MSG industry chain.
MSG is generally a large enterprise with a certain scientific and technological strength of large-scale production, and chicken essence due to the simple process, technical facilities are simple, although there are also large-scale manufacturers, but the family workshop type of small production is more, and until now there is no standardized national and industry standards, it is difficult to ensure quality.
China's MONOS glutamate production since the 1980s began to enter a stage of rapid development, and became the world's major producer of MONOS glutamate, in 2010 China's MSG output reached 2.56 million tons, 2002 ~ 2010 average annual compound growth rate of 11.1%. With the continuous increase of MSG production in China, the production technology level of the industry has also been improved. In the early 1990s, there were about 130 MSG production enterprises in China, with an annual output of only 223,000 tons. After the integration from 2007 to 2008, about 30% to 40% of the production capacity of MONOSG enterprises withdrew from the market. In 2009, the state further introduced policies to restrict the development of MONOSG enterprises with a production capacity of less than 100,000 tons, and the total number of MSG production enterprises was reduced to about 35 at present.
At present, the concentration of the monosodium glutamate industry is stable, only in the fourth quarter of 2020, Meihua Bio Jilin Baicheng 250,000 tons of new production capacity of MSG put into production, the current total production capacity of the industry is about 3.01 million tons, of which Fufeng, Meihua, Yipin respectively have 110/95/320,000 tons of production capacity, production capacity CR3 is about 80%, the total output market share of nearly 90%. The overall supply of the industry is slightly oversupplied, the price affected by the epidemic in the first half of the year fell to a low level, while the price of corn rose sharply year-on-year, making the product price difference reach a record in August, further accelerating the clearance of inventory and backward production capacity. In the future, as the industry continues to integrate, the leader has the advantage of cost channels, and the industry synergy is also expected to increase.
MsG accounts for a relatively low cost of downstream condiments. The downstream demand for MONOSG is rigid, and the growth rate is stable at more than 2%. MSG is mainly used in food processing and additives, and is divided into catering consumption and household consumption. Due to the change of consumption concept, the direct consumption of households has decreased, but with the development of catering and food processing industry, the use of MONOS is more diversified, such as chicken essence needs to be added to the proportion of more than 35%, chicken powder needs to be added to the proportion of more than 10%. At the same time, we expect that the export demand for MONOS glutamate is expected to accelerate, and China's MSG export demand accounts for more than 20%, which is the main MSG exporter. In January 2015, the European Union imposed a five-year anti-dumping tax on Chinese MONOS glutamate, with a general tax rate of 39.7%, and the anti-dumping time has passed, and the overseas MSG production capacity has basically completed the transfer. In addition, the cost of MONOS in downstream products is relatively low, and with the weakening of the marginal impact of the epidemic and the steady recovery of internal and external demand, there is a possibility that the price of MSG will rise beyond expectations.
Fourth, the future outlook: hyaluronic acid as the representative of high-grade amino acids
Hyaluronic acid, also known as hyaluronic acid, is a biochemical drug with high clinical value and is the foundation of the raw materials for the concept of medical beauty that has been hyped this year.
In recent years, the global hyaluronic acid market size has continued to rise, and the global scale has reached 600 tons in 2020, of which food-grade hyaluronic acid accounts for 50% of the market size. Although pharmaceutical grade hyaluronic acid accounts for a relatively small proportion, it can be widely used in the oral cavity, tumor, gastrointestinal, tissue engineering and several major medical fields. The market size of hyaluronic acid raw materials in China has increased from 2.58 billion yuan in 2018 to 5.11 billion yuan in 2020, but due to the impact of the epidemic, the growth rate in 2020 has declined, but it is expected that the growth rate will gradually return to the pre-epidemic level in 2021, and the market size will reach 6.56 billion yuan. China's policy dividend on food-grade hyaluronic acid released in early 2021, the sales volume of food-grade hyaluronic acid raw materials is expected to grow rapidly in the short term, and China is the largest production and sales area of hyaluronic acid. According to the analysis of the Prospective Industry Research Institute, the global hyaluronic acid industry will continue to grow in the future, and is expected to grow to 1335 tons in 2026.
Historical scale of hyaluronic acid in China and forecast value of 2021 (source network)
Prediction of hyaluronic acid scale in China (source network)
China's current hyaluronic acid industry is in a stable stage of development, and the extraction technology is mainly based on fermentation. At present, the fermentation technology level and output and quality of hyaluronic acid in China have reached the international advanced level, and have become one of the world's largest producers of hyaluronic acid raw materials.
At present, there are two methods of extraction of hyaluronic acid in China, one is the direct extraction method that uses animal raw materials to extract hyaluronic acid. The other is the fermentation method, through biological cultivation to obtain, after more than 20 years of development, China's hyaluronic acid fermentation technology level and production and quality have reached the international advanced level, China has become one of the world's largest producers of hyaluronic acid raw materials.
In 2016-2020, China's hyaluronic acid sales maintained rapid growth, in 2019 China's hyaluronic acid raw material market sales of 470 tons, in 2020 affected by the epidemic has declined, down to 380 tons, down 19.15% year-on-year. However, in the case that the epidemic situation has been well controlled in 2021, the sales volume of hyaluronic acid raw materials in China is expected to rebound.
In 2020, the most sold hyaluronic acid company in China is Bloomage Bio (the world's first), with sales of 258 tons in 2020, followed by Focus Bio (corresponding to the development of A-share listed companies Lushang), with sales of 90 tons in 2020, and sales of Fufeng Bio and Anhua Bio in 2020 of 48 tons and 42 tons respectively.
Global hyaluronic acid production enterprise competition pattern
Fufeng Group's main source of profit in the first half of 2021 is high-grade amino acids, high-grade amino acid products include pyrine, leucine, isoleucine and hyaluronic acid, etc. In the first half of 2021, Fufeng high-grade amino acid products sales were 688 million yuan, an increase of 52% year-on-year, and the growth trend was very prominent. Fufeng hyaluronic acid ranked third in the country, this year is still expanding production, now the pattern of the industry's first or second place is relatively clear, if Fufeng can sit firmly in the third, the valuation will also be in line with a substantial increase. For hyaluronic acid, which has not yet touched the ceiling of the industry, it is normal to give the valuation premium to the main target, Fufeng Group now does not say premium, considering the leading position of monosodium glutamate and xanthan gum, the cash flow brought by MONOSG every year, just these two A shares can support twice the market value, a proper value depression.
Conclusion: Fufeng's overall operation is stable, the monosodium glutamate industry brings stable cash flow, which is the basis and lower limit of market value, xanthan gum this year's industry inflection point, is the turning point and amplitude of market value, hyaluronic acid and other high-grade amino acids are the future and upper limit of market value.