Southwest Securities: Give Angel Yeast a buy rating

2021-10-25Southanceral Securities Zhu Huizhen conducted a study on Angel Yeast and released a research report "2021 Third Quarter Report Review: Raw Material Costs Rise Sharply, Long-term Competitive Advantage Continues", this report gives a buy rating to Angel Yeast, and the current stock price is 48.21 yuan.

Angel yeast (600298)

Investment essentials

Event: The company released the third quarter report of 2021, achieving revenue of 7.59 billion yuan (+18.2%) and net profit attributable to the mother of 1.018 billion yuan (+0.5%); of which 21Q3 achieved revenue of 2.36 billion yuan (+13.2%) in the single quarter, and achieved a net profit attributable to the mother of 190 million yuan (-35.2%), and the profit side of Q3 was lower than market expectations.

Yeast products grew steadily and the sales system was perfect. 1. By category, yeast, deep-processed products and sugar products achieved operating income of 5.96 billion yuan (+17.8%) and 480 million yuan (+67.8%) respectively. Benefiting from the strong downstream demand, YE products, animal nutrition, microbial nutrition maintained high growth; yeast products demand is stable, the global market share reached 15%, the domestic market share of more than 55%. 2. From the perspective of sub-channels, offline and online achieved operating income of 4.91 billion yuan (+19.6%) and 2.62 billion yuan (+18.3%), respectively, and opened stores on self-owned e-commerce platforms such as Angel's official mall and Bo Trial Students and third-party mainstream e-commerce platforms to achieve omni-channel sales. 3, sub-regional point of view, domestic and foreign revenue growth rates are 22.7%, 10.8%, the company has built a global sales system, products sold to 155 countries and regions around the world. In terms of dealer development, as of the end of 2021Q3, the company has a total of 19851 dealers, a net increase of 1580.

Price increases superimpose costs, and sharp rises in raw material costs weaken profitability in the short term. 1, the company's overall gross profit margin of 29.6%, down 10.6pp year-on-year, mainly due to: 1) molasses, chemical raw materials, energy and other prices increased significantly; 2) the implementation of the new accounting standards, the original sales expenses of logistics expenses included in the operating costs, driving the sales expense rate down 5.1pp to 6.2%; 2, the expense ratio, management expense ratio, financial expense ratio of 3.7%, 4.4%, basically stable; financial expense ratio of 0.6%, The decrease of 0.8 pp year-on-year was mainly due to lower interest expense and lower exchange losses of offshore companies; the expense ratio remained stable overall. The overall net profit margin was 13.6%, down 2.8pp year-on-year, and profitability weakened in the short term.

Expansion of production capacity + increase of molasses storage capacity, long-term competitive advantage continues. 1, the company's non-public fundraising funds to build 66,500 tons of yeast and yeast extract production capacity, 5,000 tons of enzyme preparation capacity will be landed in 2023, it is expected that the company's 2025 yeast product sales will exceed 500,000 tons, there is still a large capacity gap, and the continuous expansion of yeast and enzyme preparation production capacity will lay the foundation for the company's long-term growth. 2. The acquisition of Shengqi Bio will quickly obtain 15,000 tons of yeast production capacity, transform competitors into collaborators, and consolidate the company's market position; at the same time, shandong corn hydrolyzed sugar resources will be exerted to alleviate the upward pressure on molasses costs. 3. It is planned to invest 31.88 million yuan to build 40,000 tons of molasses storage tanks and storage supporting projects of Chifeng Company, and the storage capacity of Chifeng Company's molasses will reach 120,000 tons after completion, and molasses can be purchased in large quantities during the crushing season, which will further control the purchase price of molasses.

Profit forecasts and investment advice. It is estimated that the net profit attributable to the mother in 2021-2023 will be 1.59 billion yuan, 1.86 billion yuan and 2.15 billion yuan, respectively, and the EPS will be 1.90 yuan, 2.23 yuan and 2.58 yuan, respectively, corresponding to the dynamic PE of 26 times, 22 times and 19 times, respectively, maintaining the "buy" rating.

Risk Warning: Raw material prices may fluctuate significantly; exchange rates may fluctuate significantly.

A total of 11 institutions have given ratings in the last 90 days, with 8 buy ratings and 3 overweight ratings; the average target price of institutions in the past 90 days has been 65.84; the Securities Star Valuation Analysis Tool shows that Angel Yeast (600298) good company rating is 4.5 stars, good price rating is 3 stars, and valuation comprehensive rating is 4 stars.