Author | Yu Qing
Edit | Li Hongmei
Source | The world of Fengyun Capital
I believe that netizens who have watched "The Biography of Zhen Huan" must be impressed by the various spices in the play, in addition to The Huanyi incense of Concubine Hua and the incense in the goose and pear tent of An Lingrong, the most famous is the emperor's special ambergris incense.
It is often reported that someone has picked up a million-dollar ambergris at the beach, worth as much as gold.
Why do you think ambergris is worth a lot? Ambergris is very scarce as a precious spice. It comes from sperm whale intestinal endocrine. Ambergris is initially light black, but under the action of seawater, it gradually turns gray, light gray, and finally white. Historically, people mainly used it as a perfumer.
Recently, the spice producer - Green Biology intends to sprint to the Gem, what are the company's highlights?
On December 22, the listing documents issued by the Growth Enterprise Market of Green Biotechnology Co., Ltd. (hereinafter referred to as "Green Biotechnology") were accepted by the Shenzhen Stock Exchange. The company is mainly engaged in the research and development, production and sales of bio-derived fragrances and fully synthetic flavors.
At present, the company has achieved full coverage of mature markets such as North America and Europe and emerging markets such as Asia, and has successfully entered the global supply chain system of P&G, as well as the global supply chain system of top ten international fragrance and fragrance companies such as Givaudan, Firmenich, International Flavors and Fragrances Company (IFF), and Symrise.
However, the Fengyun Capital community found that more than 80% of Green Bio's revenue comes from overseas, and the gross profit margin of the main products is much lower than that of products with a relatively small proportion of revenue, what are the company's chances of sprinting to the ChiNext board?
Overseas revenue accounted for more than 80%.
Spice is a kind of natural ecology in the original ecology can be smelled out of the aroma or taste of the taste of the substance, is the main raw material for the preparation of flavors, according to the source is mainly divided into natural spices and synthetic spices two categories; fragrance is composed of a variety of spices, solvents or carriers and other excipients of the blend of aromatic mixtures, usually used directly to increase the aroma and fragrance of various types of terminal products.
Founded in late 1999, Green Biologics' main products include methyl cypress ketone, methyl cypress ether, sandalwood 208, sandalwood 210, butterin turkone and other spices, has formed a pattern of common development of three series of products such as asphalt oil, turpentine and full synthesis. The company's products are mainly used as raw materials for the preparation of daily chemical flavors, and are widely used in the field of daily chemicals.
After 20 years of accumulation and precipitation, Green Biology has successfully developed a series of natural equivalent high-grade spices with ambergris, rose fragrance, sandalwood and other aromas, and is one of the well-known enterprises in the international fragrance and flavor industry. However, the ambergris developed by Green Biology does not come from the intestinal secretions of sperm whales, but from the high-grade spices with ambergris aroma synthesized through molecular modification techniques.
At present, the company is the reach global leading registered enterprise of methyl cypress ketone, cypress brain, dihydrocoumarin and other 5 products, and is one of the world's largest suppliers of methyl ketone.
From the perspective of operating income, the prospectus data shows that Green Biology's revenue in 2017 was 421 million yuan, and its revenue in 2018 increased by 22.3% year-on-year to 515 million yuan. In 2019, the company's revenue growth rate slowed down to 567 million yuan, an increase of 10.1% year-on-year.
However, the growth rate of Green Biologics' net profit is different from the growth rate of revenue, the company's net profit in 2017 was 30.5822 million yuan, and in 2018, it only increased by 35.5% to 41.8206 million yuan. Net profit in 2019 increased by 71.4% year-on-year to 71.678 million yuan.
It is worth noting that the company's product sales are mainly overseas, and far exceed their peers. From 2017 to the first half of 2020, the proportion of the company's overseas sales to revenue was 87.49%, 85.99%, 85.84% and 84.74%, respectively, and the average proportion of export sales of comparable listed companies in the same industry was 57.13%, 59.08%, 60.75% and 56.25%, respectively.
The prospectus shows that in addition to the Impact of Sino-US trade frictions since 2018 on the company's profit level, at present, the overseas COVID-19 epidemic has once again seen new mutations, which will also have an immeasurable impact on the company's performance.
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From the perspective of the company's overall gross profit margin, the company's overall gross profit margin in recent years is low. During the reporting period, the gross profit margin of the company's main business was 25.06%, 23.59%, 28.43% and 29.87% respectively, with large fluctuations.
We already know that Green Bio's revenue mainly comes from the cypress oil series, turpentine series and fully synthetic series, and from 2017 to 2019, the revenue of these three series of products accounted for 96.7%, 96.11% and 96.94%.
However, after combing through the prospectus, Fengyun Capital found that the company's highest gross profit margin is not these three series of products, but from other series of products that account for no more than 4% of revenue.
As can be seen from the above chart, from 2017 to 2019, the gross profit margin of other series products is almost several times the company's overall gross profit margin. It also reached a gross profit margin of 81.07% in 2018, although the gross profit margin of other series of Green Bio has decreased since 2019, but it is still more than 60%.
What exactly are the other series here? What makes Green Biologics prefer to spend more time and effort producing products with lower gross margins than products with higher gross margins?
Green Biology explained in the prospectus that other series of products mainly include dihydroethyl ionone, linalool oxide and isovalerate, etc., which are produced using core technology systems such as catalytic hydrogenation, epoxidation and esterification. The catalytic hydrogenation step uses an environmentally friendly catalyst that is not only reusable, but also free of wastewater.
As for why the production capacity is concentrated on products with low gross profit margins rather than products with high gross profit margins, Green Biologics did not explain the specific reasons in the prospectus. In this regard, Fengyun Capital contacted the relevant person in charge of Green Biology through email, but did not get a reply as of press time.
Gross profit margin is lower than that of companies in the same industry
What about comparable companies in the same industry? Is it also similar to the Grimm creature?
Judging from the overall gross profit margin performance of comparable companies in the same industry, the gross profit margin of Green Bio is lower than the average of comparable companies in the same industry.
According to publicly disclosed information, Green Biologics selected Aipu shares (603020.HK) engaged in the production of fragrance flavors and flavors among A-share listed companies and proposed listed companies. SH), Covestro (300856. SZ), Huaye Spice (300886. SZ), Yaxiang shares 4 companies as the same industry comparison objects.
Among them, in the main business, Huaye Spice, Yaxiang Shares and Green Bio are consistent, all of which are the research and development, production and sales of spice products, and some of the businesses of Aipu Shares and Coase Shares are consistent.
Judging from the recently listed Covestro shares, the company is also engaged in the research and development, production and sales of daily chemical raw materials, including cosmetic active ingredients such as sunscreens, synthetic fragrances, etc.
According to the prospectus, the company's products include cosmetic active ingredients and their raw materials, synthetic fragrances and other daily chemical raw materials. Among them, the company's revenue from cosmetic active ingredients and their raw materials and synthetic fragrances has occupied a major position in recent years, reaching more than 90%. The revenue share of other product revenue is similar to that of other series of products of Green Biology, accounting for only about 4%.
However, the gross profit margin performance of each product of Covestro is different from that of Green Biologics, and the gross profit margin of the main product is similar to the gross profit margin of other products.
(Source: Covestro prospectus)
At the same time, Fengyun Capital found that the gross profit margin performance of other enterprises for the main products is almost similar to that of Coase shares, and the gross profit margin of products with a small proportion of revenue has not been found to be much higher than the gross profit margin of the main products.
What do you know about spices? What is your favorite spice? Welcome to leave a message in the comment area.