First, the event: in the third quarter, the price of sucralose, acesulfame potassium and other sugar substitutes continued to rise, and the fourth quarter still has the expectation of price increases.
Sugar substitute is a type of sugar that can produce sweetness, divided into natural sugar substitute and artificial sugar substitute, of which stevia, xylitol, and erythritol, which was burned by the Yuanqi forest last year, are natural sugar substitutes, while artificial sugar substitutes include aspartame, acesulfame potassium, sucralose and so on.
Because sugar substitutes can make the brain perceive sweetness, but do not cause fluctuations in blood sugar levels, sugar substitutes produce almost zero calories, so for people with high blood sugar, who are losing weight, or who are very fond of sweet drinks, sugar substitutes can be used to replace sugar drinks, which also attracts a large number of consumers.
In the third quarter, the price of sucralose, acesulfame potassium and other sugar substitute products continued to rise, specifically:
1) Sucralose is the only functional sweetener with sucrose as raw material, as the fifth generation of high-power sweetener, with no energy, high sweetness, pure sweetness, high safety, is currently one of the most ideal sweeteners. On October 26, the mainstream offer of the sucralose market has risen to 452,000 yuan / ton, an increase of 126% from the average price of 200,000 yuan / ton in the second quarter.
2) Acesulfame potassium is similar in taste to sugarcane, with high sweetness, and is currently the fourth generation of synthetic sweeteners in the world, which is widely used in food, beverage, oral hygiene/cosmetics and pharmaceutical fields. On October 26, Acesulfame offered 95,000 yuan / ton, an increase of 58.33% compared with the average price of 60,000 yuan / ton in the second quarter.
Looking forward to the fourth quarter, sugar substitutes such as sucralose and acesulfame potassium are expected to rise steadily, mainly due to:
1) From the supply side, the implementation of dual control of energy consumption throughout the country, coupled with the shortage of power supply, some upstream raw material suppliers are in a state of low production, the supply of raw materials in the industry is tight and the price is higher, which supports the further price increase of sugar;
2) From the demand side, the "Double Eleven" e-commerce promotion and domestic and foreign holidays are approaching, and the terminal demand is good. Low-sugar and sugar-free foods in Europe and the United States have become more common, and more sucralose export orders have led to short supply in China, and price increases will stimulate downstream customers to hoard goods.
Second, the scale of the sugar generation industry is growing rapidly, and Jinhe Industry has a cost advantage under the continuous expansion of production and the vertical integration extension, which is expected to fully benefit from this round of sugar price increases.
In recent years, due to the rapid development of sugar-free beverages, the demand for sugar substitutes has increased, accounting for more than 50% of the downstream demand for sugar substitutes. Sugar-free beverages refer to beverages that replace traditional white sugar with sugar substitutes, which meet the standard of 0 sugar and can be sugar-free for the human body. The overall market size of China's sugar-free beverage industry increased from 1.66 billion yuan in 2014 to 11.78 billion yuan in 2020, with a compound annual growth rate of 38%. It is estimated that the size of China's sugar-free beverage market will reach 13.79 billion yuan in 2021, an increase of 19% year-on-year. The "Healthy China Beverage food sugar reduction action white paper (2021)" predicts that the size of China's "0 sugar" beverage market will reach 27.66 billion yuan in 2027, and the compound annual growth rate is expected to reach 12%.
The leading company in the acesulfame and sucralose industries is Jinhe Industry, which currently has an annual output of 12,000 tons of acesulfame and 8,000 tons of sucralose production capacity, and the global production capacity of the two accounts for 60% and 50% respectively.
The company continues to be committed to the vertical extension of the industrial chain, and currently realizes the self-production of divinylone, sulfoxide chloride and furfural, an important raw material in the upstream of acesulfame potassium, sucralose and methylethyl maltol, with an annual output of 10,000 tons of diethylene ketone production capacity, an annual output of 40,000 tons of sulfoxide chloride production capacity and an annual output of 10,000 tons of furfural production capacity, and the company plans to start the construction of the second phase of 40,000 tons of sulfoxide after the National Day, which is expected to be put into operation in early 2022.
The company continues to extend around the upstream of the industrial chain, under the integrated layout can achieve the supply guarantee of key raw materials, but also conducive to reducing the cost fluctuations caused by the company's purchase of raw materials, compared with the industry smea to bring obvious cost advantages, is expected to fully benefit from this round of sugar price increases.
In addition, in the fourth quarter, the company still has a deodorant of 1,000 tons of methyl maltol and 4,000 tons of ethyl maltol production capacity is expected to be put into production, adding momentum to the company's performance continued growth.
Third, the company's profit calculation
As of October 26, sucralose was quoted at 452,000 yuan / ton, and the average price in the fourth quarter is expected to be 400,000 yuan / ton. The fourth quarter is the peak season, next year's off-season prices are expected to fall, but the price is still possible to increase year-on-year under the high demand, it is expected that the average price next year will be 300,000 yuan / ton, compared with the average price of 250,000 yuan / ton this year, an increase of 20% year-on-year.
As of October 26, Acesulfame offered 95,000 yuan / ton, the average price is expected to be 90,000 yuan / ton in the fourth quarter, and the average price is expected to be 80,000 yuan / ton next year, compared with 65,000 yuan / ton this year, an increase of 23%.
Assuming that the company's annual operating rate of sugar substitutes is 80% and the profitability of other businesses other than sugar substitutes remains stable, it is expected that the company's net profit in 2021 will be 1.1 billion yuan, an increase of 52% year-on-year, and the net profit in 2022 is expected to be 1.4 billion yuan, an increase of 26% year-on-year. As of the close of trading on October 26, the corresponding company had a PE of 24 in 2021 and a PE of 19 in 2022.
