In the early trading of August 12, the concept stock of sugar substitute rose sharply. According to the data of Tonghuashun, as of the close of 15 sugar substitute concept stocks, 9 rose, of which Jinhe Industry rose and stopped. In addition, the listed company Bowling Pal also rose sharply, rising more than 7% intraday and closing up 2.02%.
On the news side, according to the news of Baichuan Yingfu, the market price of Acesulfax in East China, one of the sugar substitute products, has risen sharply in recent days. On August 11, the market price of acesulfame potassium rose sharply, from the previous 60,000 yuan / ton to 70,000 yuan / ton, an increase of 16.67%. Among them, the latest quotations announced by Jinhe Industry and Shandong Yabang are all 70,000 yuan / ton, up 0.4 million yuan / ton and 12,000 yuan / ton respectively from the previous quotations. At the same time, it is reported that the sugar substitute "boss" Ternary Bio has successfully broken through the ChiNext board.
How big is the sugar substitute market and why is it hot? Which products are safe and cost-effective
The popularity of Yuanqi Forest has made sugar substitutes well known to many consumers.
Sugar can bring people a sense of pleasure, is an important source of human energy, with the improvement of people's living standards, direct and indirect intake of added sugar is increasing, but due to changes in the rhythm of life and way of work, the relative decline in physical labor and exercise, so that the human body can not consume the intake of sugar in time.
When sugar cannot be consumed in time, the body's blood sugar rises rapidly, stimulating the release of excess insulin in the body, opening the channel for sugar to enter the cell, and converting excess sugar into fat stored in the body. This not only leads to obesity, but may also increase the risk of type II diabetes and cardiovascular disease. With the improvement of residents' health awareness, sugar-reducing but not sweetened sugar substitute products are gradually being applied to more and more fields.
According to the announcement of Jinhe Industry, a listed company in the industry, Yuanqi Forest and other brands have led the trend of sugar-free and low-sugar products in the food and beverage industry, and at the same time, there are many "low-sugar, sugar-free" products and consumption guidance in national policies, and many food and beverage companies have done low-sugar and sugar-free new product research and development in 2020, and have launched many new products in 2021.
This also ignited this market. Dongxing Securities said in the research report that the size of China's sugar-free beverage market in 2019 was 9.87 billion yuan, accounting for only 1.25% of the overall soft drinks, and the current stage of development can be compared to the golden decade of the development of sugar-free beverages in Japan from 1985 to 1995. At that time, there was almost no growth in carbonated beverages in Japan, and sales growth was mainly driven by sugar-free tea and coffee, while sugar-free beverages in Japan maintained at least double-digit growth until 2015. From 2014 to 2019, the CAGR of China's sugar-free beverages is 40%+, the growth rate is high and the space is large, and it is expected that China's sugar-free beverages will maintain double-digit growth in the next few years. In recent years, the amount of sucrose used in the global beverage category has gradually declined, but sucrose + fructose syrup still occupies 90% of the global market share of sweeteners and spices, and synthetic sweeteners/other sweeteners account for only 9%/1%, and there is a lot of room for sweeteners to replace sucrose in the future.
Huachuang Securities said in the research report that the concept of market sugar substitute is hot, behind which comes from 3 layers of driving factors: (1) Under the background of consumption upgrading, consumers' health awareness is awakened and they pursue "healthy and high-quality" products. (2) Policies drive the development of the industry, and countries levy sugar taxes. (3) Beverage manufacturers pursue low cost, and the sweetness multiple of synthetic sweeteners is 50-6000 times that of sucrose, and the price-sweetness ratio is 5%-54% of sucrose.
It is reported that erythritol and compound sugar products can be directly used to replace sucrose consumption, can also be added as sweeteners to candy, ice cream, beverages, cosmetics, medicine and other products, in high-grade food, children's food, suitable for obese people food, pharmaceutical icing and flavoring agents, chemicals, cosmetics, diabetic food and drugs and other industries have broad application prospects.
Huachuang Securities said in the research report that the future growth of demand for acesulfame and sucralose mainly benefits from two aspects of substitution: the first alternative added sugar, under the substitution rate of 10%, 20% and 30%, the market substitution space of Acesulfame in 2020 is 1.55, 3.09 and 46,400 tons, and is expected to reach 1.58, 3.16 and 47,500 tons in 2023; the market replacement space of sucralose in 2020 is 0.48, 0.95 and 143,300 tons, and it is expected to reach 0.49 in 2023. 0.97 and 1.46 million tons. Second, replace the traditional synthetic sweeteners saccharin, cyclamate and aspartame. At a replacement rate of 10%-90%, acesulfame potassium has 1-10 times incremental space and sucralose has 1-6 times incremental space.
Dongxing Securities said in the research report that sucralose and erythritol have become a new trend of sugar substitute. Combined with the analysis of safety, flavor and taste, technical barriers, industrial policies and sweetness ratio, aspartame will be eliminated due to safety, acesulfame potassium, sucralose, erythritol and steviol glycosides have more investment value, of which the flavor and safety of sucralose and erythritol are better than acesulfame and steviol, and the development space is greater.
According to public information, erythritol is produced by fermentation method and has high safety. In addition, unlike other sugar alcohols, erythritol is extremely low in calories, which is mainly due to the fact that there is no enzyme system that metabolizes erythritol in the human body, and after erythritol enters the human body, it does not participate in the metabolism of sugars, and most of it is excreted with urine, almost without generating heat and causing changes in blood sugar. As a result, erythritol is widely considered a "zero calorie" sweetener.
Behind the frequent price increases? Some manufacturers say that the supply of products is in short supply
Dongxing Securities Research Report said that the leading A-share companies are Sanyuan Biological (to be listed), Bowling Bao, and Jinhe Industry. At present, Ternary Bio and Bowling Bao are the world's major erythritol producers, with market shares of 33% and 18% respectively; Jinhe Industry is an oligopoly producer of acesulfame, and with the launch of new sucralose production capacity, it has also become the world's leading sucralose production enterprise.
The above-mentioned listed company Bowling Bao said that in recent years, affected by the national nutrition and health actions and the strong demand for sugar reduction in the market, sugar substitute products such as erythritol have been favored by the market, and the supply of products has exceeded demand.
Although the industry competition is becoming fierce, the above manufacturers still have a certain ability to pass on the price of raw materials. It is reported that because of the increase in the price of raw materials, some manufacturers have raised prices in April, and then raised them again in August. Behind this is that the above manufacturers occupy a large market share and have certain bargaining power. Second, in the food additives and flavor and fragrance sectors, downstream customers need to adapt and adjust the formula process for a long time, the replacement of products is more difficult, and the promotion and use of sweeteners is not completely cost-effective logic, which is a long-term process.
Jinhe Industry: The performance has declined year-on-year for three consecutive years, the gross profit margin of product structure adjustment has increased, and the net profit margin has been outstanding
It is reported that Jinhe Industry, which rose and fell on August 12, was initially a fertilizer factory, and then expanded its main business to the field of flavors, fragrances and sweeteners. According to Huachuang Securities Research Report, the company has acesulfametic production capacity of 12,000 tons, the domestic market share of 73%; sucralose production capacity of 8,000 tons, the domestic market share of 41%, acesulfame and sucralose have formed a monopolytic pattern.
Acesulfame and sucralose produced by Jinhe Industry belong to the fourth and fifth generation of high-power sweeteners, which have the characteristics of no energy, high sweetness, pure taste and high safety. The main application areas of sweeteners include beverages, table condiments, personal care products (such as toothpaste), baked goods, etc., especially in the beverage field.
The company's revenue and attributable net profit have declined for three consecutive years from 2018 to 2020. However, the company's net profit margin has increased from its original single-digit to about 20%. Some brokers commented that the gross profit margin of its core products is higher than that of the same industry.
This is due to the adjustment of the company's business structure. According to the financial report, the company's food additives, especially the proportion of revenue of sweeteners, has gradually increased, corresponding to the higher gross profit margin of food additive products, which has enhanced the company's profitability.
In 2017, the company sold its subsidiary Huaertai Chemical, focusing its resources on the fine chemical sector, in 2017 the company set up a food application research and development laboratory, with sugar-free, low sugar, sweetener application substitution research and development work, as well as for the taste testing of new sweetener products as the core, for soda, coconut juice, juice, tofu milk, soy milk, condiments and other independent completion of a number of application program tests, some application solutions have been recognized by downstream customers, and have been applied in new products.
That is, from 2017, the company's gross profit margin and net profit margin have increased significantly. In 2017, the company's food additive products achieved sales revenue of 1.626 billion yuan, an increase of 81.30% year-on-year, mainly for the reporting period, spices and sweeteners product prices and sales have a certain increase, and compared with 2016, sweetener - sucralose products production capacity increased, sales growth is larger, contributing to part of the company's performance. In the same period, the company's bulk chemical products achieved sales revenue of 1.951 billion yuan, a year-on-year decrease of 3.65%, mainly for the company's disposal of its holding subsidiary Huaertai during the reporting period, and the production and sales of bulk chemical products decreased year-on-year.
According to the financial report, in 2016, the revenue of its food additives accounted for 23.89%, increased to 36.30% in 2017, increased to 42.42% in 2018, increased to 46.60% in 2019, and increased to 51.86% in 2020. Although the gross profit margin of the corresponding food additive products in 2020 has declined a lot compared with 51.42% in 2017, it is 17.15 percentage points higher than that of the bulk chemicals business.
With the release of production capacity of projects with an annual output of 5,000 tons of sucralose and 1,000 tons of furan ammonium salts, which have been completed and put into operation by the company and its subsidiaries from the end of 2020 to the beginning of 2021, it has played a role in promoting the growth of performance.
In the first half of 2021, Jinhe Industry made a profit of 430 million yuan – 480 million yuan, an increase of 20.53%-34.55% over the same period last year. Due to the impact of the new crown epidemic in the same period of the previous year, the company's production and sales were affected, and with the gradual and effective control of the new crown epidemic, the operation in the half year of 2021 returned to normal compared with the same period of the previous year, and the year-on-year performance increased. And with the release of production capacity of projects such as 5,000 tons of sucralose and 1,000 tons of furan ammonium salt per year, which the company and its subsidiaries have built and put into operation from the end of 2020 to the beginning of 2021, it has played a role in promoting performance growth.
Bowling Treasure: Claiming that products are in short supply, and the comprehensive gross profit margin has been less than 10% last year
Bowling Treasure said on the interactive platform that the company is a leading enterprise in the functional sugar industry and has been focusing on the research and development, production, sales and promotion of functional sugar for more than 20 years. The company is one of the world's five erythritol producers, can provide functional oligosaccharides, functional dietary fiber, functional sugar alcohols all categories of products and services, is Coca-Cola, PepsiCo, Yili, Mengniu and other enterprises strategic partners.
The characteristic of Bowling Treasure is that it is the only domestic manufacturer and service provider of all-category functional sugar products, with the core technology of functional sugar and the advantages of the whole industry chain.
In its annual report, it said that the company's functional sugar alcohol products are mainly erythritol. It is a kind of alcohol, tetracarbohydrol, the molecular formula is C4H10O4, does not participate in human metabolism, has a very low calorie, no blood sugar, good sweetness coordination and other advantages.
In its annual report, it said that erythritol is the only sugar alcohol product on the market that has been prepared by natural transformation and extraction by biological fermentation, and is a 0 energy sugar alcohol product recognized by the National Health and Family Planning Commission. Erythritol is not involved in glucose metabolism and blood sugar changes, and is suitable for diabetic patients. It does not cause fermentation in the colon and can avoid gastrointestinal discomfort. Human mutant streptococcus can not rely on erythritol to grow and reproduce, does not produce organic acids to reduce the pH of the surface of the tooth spots, and does not cause tooth decay. In recent years, under the global trend of sugar reduction and low sugar, erythritol has been widely used in sugar-free drinks, food and other fields with the characteristics of natural, zero calorie, non-participation in blood glucose metabolism, high tolerance and stable acid and heat performance, etc., to replace traditional sugar sources such as sucrose and achieve the purpose of sugar reduction. In addition, it is also widely used in medicine, health care products, chemical raw material intermediates and other fields.
The company entered erythritol earlier, and in 2003, it took the lead in completing the industrialization of erythritol in China, and has significant technical advantages and brand advantages in the industry.
On July 19, the company said on the interactive platform that the company's erythritol and allulose are currently in short supply, and the price is still high.
Although it claims to have the above advantages and the supply of products exceeds demand, the company's comprehensive gross profit margin is relatively low, below 20%, and last year's comprehensive gross margin fell below 10%. Under the low gross margin, the company's revenue has only maintained moderate growth.
Why is the company's main products in short supply, but the gross profit margin is so low? On August 9, it said on the investor interactive platform that there is no monopoly in the functional sugar industry, and the price of products is determined by supply and demand.
At the same time, the main raw materials of the company's products are corn, corn starch, sucrose, etc., which are greatly affected by the climate and national policies, and the changes in supply and demand and prices may fluctuate significantly; if the price of the main raw materials rises, the cost of the product will increase significantly, and the adjustment of the sales price of the product is relatively lagging behind, which will lead to a decline in the gross profit margin of the product, which will directly affect the company's operating profits.
Since last year, the price of corn has risen sharply. According to reports, the price of corn futures in 2020 soared, soaring from about 1,900 yuan per ton in early January to more than 2,700 yuan at the end of December, with a cumulative increase of more than 40% throughout the year. As a result, its gross margin slipped to single digits last year.
However, the company said that it will continue to take a variety of measures to reduce the impact of raw material price fluctuations on the company, including carrying out futures hedging business and locking in raw material prices; continuously improving technology and improving production processes to reduce raw material consumption; and actively exploring procurement models to achieve the purpose of reducing procurement costs.
Ternary Biology is about to be listed, the gross profit margin is high and concerned, what are the risks
Ternary Biologics, which will soon land on the GEM, is also one of the leaders in the sugar substitute industry, and its main product is erythritol. It said in the prospectus that according to Sullivan research data, the company's erythritol production accounted for 54.90% of the total domestic erythritol production in 2019, accounting for 32.94% of the global total output, making it the largest enterprise in the global erythritol industry.
According to the prospectus, the company has established cooperative relations with well-known customers such as Sharoya, TiH in the United States, ADM in the United States, Yuanqi Forest, Coca-Cola, Pepsi Cola, Nongfu Shanquan, Unity, Immak Lang, Hankou Second Factory, Perfect China, Southern Black Sesame Paste, etc. In addition to being directly applied to the brands under the name of the above enterprises, the company's products are also provided to Many well-known enterprises such as Merisant, Unilever, Danone, HALO TOP, Truvia and so on through distributors.
According to the prospectus data, its performance is relatively beautiful. Its prospectus discloses that in 2018, 2019 and 2020, the company's operating income was 292.2039 million yuan, 476.7596 million yuan and 783.1822 million yuan, respectively, and in 2019 and 2020, it increased by 63.16% and 64.27% respectively over the previous year. In 2018, 2019 and 2020, the company achieved net profit of 68.0885 million yuan, 136.3068 million yuan and 232.5728 million yuan, respectively, and in 2019 and 2020, it increased by 100.19% and 70.62% respectively over the previous year.
From 2018 to 2020, the proportion of erythritol revenue to operating income was 84.65%, 59.87% and 78.80%, respectively, and erythritol gross profit accounted for 84.67%, 57.06% and 78.59% of the comprehensive gross profit, respectively, and erythritol had a significant impact on the company's operating performance.
In 2018, 2019 and 2020, the company's consolidated gross profit margin was 36.85%, 45.77% and 42.27%, respectively.
Ternary Bio is significantly higher than the gross profit margin of peers such as Bowling. Previously, in March, the Listing Committee required Sanyuan Bio to combine the market competition pattern, sales area, customer structure, production process, product quality, etc. of different products, to analyze and disclose in detail the reasons and rationality of the issuer's gross profit margin that is much higher than that of comparable companies in the same industry, and the gross profit margin of erythritol products is much higher than that of Bowling Bao.
In this regard, Sanyuan Bio said that Bowling Bao is one of the earliest enterprises engaged in the production of erythritol in China, but erythritol accounts for a low proportion of its operating income (in 2018, 2019 and January to June 2020, erythritol accounted for 11.37%, 13.54% and 20.54% of operating income, respectively). According to public information, Bowling's main customers are Yuanqi Forest, Perfect, SUNLAND in the United States, Salovia in Japan, etc., which have a high degree of overlap with the company's customers, and there is no big difference in the sales price of erythritol between the company and Bowling, and the difference in gross profit margin between the company and Bowling Bao's erythritol is mainly affected by production (sales) costs. As a specialized production enterprise of erythritol with the largest production capacity, the company benefits from the scale effect of the company's production capacity and the advantages of process technology, and the company's gross profit margin is higher than that of the competitor Bowling Baolingbao with smaller production scale of erythritol in the industry.
However, the company also said in the prospectus that if the company faces unfavorable factors such as intensified market competition, declining sales prices of major products, high raw material prices, and rising labor costs in the future, the comprehensive gross profit margin may decline, adversely affecting the company's profitability, and the company may face the risk that the higher gross profit margin level cannot be maintained.
At the same time, in 2018, 2019 and 2020, the total sales revenue of the company's top five customers accounted for 45.30%, 55.93% and 47.87% of the current operating income, respectively, of which Sharoya sales accounted for 7.15%, 35.04% and 20.28% respectively, and the company has the risk of relative concentration of sales customers.
In addition, the absolute amount of accounts receivable and inventory of Tsnary Bio has been rising year by year. At the end of 2018, the end of 2019 and the end of 2020, the balance of the company's accounts receivable was 27.8763 million yuan, 36.0974 million yuan and 70.9253 million yuan, accounting for 21.76%, 15.11% and 18.73% of the current assets, respectively. In addition, at the end of 2018, the end of 2019 and the end of 2020, the carrying amount of the company's inventory was 19.836 million yuan, 45.9036 million yuan and 68.2058 million yuan, accounting for 15.48%, 19.21% and 18.01% of the current assets, respectively.
The industry boom has improved, and enterprises are busy expanding production and pursuing a scale moat
As of the end of June 2021, the main participants in the domestic erythritol market are relatively stable, still dominated by Ternary Biology, Bowling Treasure and Zhucheng Dongxiao.
At the same time, according to public information, after years of development of erythritol industry, the leading capacity of advantageous enterprises has gradually expanded. In March, Sanyuan Biotech said in response to the review inquiry letter of the listing application documents that since 2018, the company's production capacity has exceeded Thato's. By the end of 2020, the company's annual production capacity will reach 60,000 tons, which is about three times the production capacity of Bowling Bao's erythritol. The company's scale advantages have gradually emerged, the company's direct labor, manufacturing costs and fuel power allocation per unit of output are lower than those of companies in the same industry, and the reduction of various unit consumption brought about by the company's scale advantage has also enabled the company's erythritol cost advantage to continue to be maintained after the decommissioning of the self-owned boiler in November 2019.
However, in the context of the high prosperity of the industry, competition is also becoming fierce. With the improvement of consumer health awareness and the upgrading of consumer demand for sugar substitute products, the prosperity of the erythritol industry continues to improve, which is promoting the expansion of production capacity and attracting new investors to intervene, making competition white-hot.
Therefore, many companies are responding to competition through capacity expansion and technological upgrading. Bowling Treasure has announced that the investment and construction of the 13,000 tons of erythritol expansion project began construction in September 2020, and after 10 months of construction, commissioning and operation, the production capacity basically met the design requirements. The production of the project will further enhance the market share of the company's erythritol products, which is conducive to adjusting the company's product structure and enhancing the company's competitiveness, which will have a positive impact on the company's operating performance.
Behind this is that the incumbent enterprises in this industry often have the advantage of being the first mover, and scale is the moat for establishing and consolidating the advantage.
It is reported that erythritol production is a combination of multi-process and multi-disciplinary skills, and the construction, commissioning and stable operation of new production capacity need to spend more time and cost.
In addition to the construction of production capacity requires a certain period of time, because erythritol is finally directly for consumers to eat, so its product safety is of paramount importance, the industry's new entrants need to gradually obtain various food safety qualification certifications after the completion of production capacity, and also need to pass the audit and inspection procedures required for downstream customer supplier management, which also takes a certain amount of time.
The entry of new competitors has a certain stickiness in the absence of a very obvious difference in price. Therefore, in the short term, the existing manufacturers in the industry will continue to enjoy the dividends of the current rapid development of the erythritol industry by virtue of their product quality advantages, leading edges in production capacity expansion and customer resource advantages.
Beijing News shell financial reporter Yue Caizhou Editor Song Yuting Proofreading Xue Jingning
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