Huaxi Bio (688363): The C king of hyaluronic acid raw materials siege the city step by step

Huaxi Bio (688363): The C king of hyaluronic acid raw materials siege the city step by step

This article starts from the different characteristics of the 2B2C, 2C market and the company’s traditional 2B market, and analyzes in depth how the company uses its own raw material supplier endowment and responds to the challenges of market conversion. We believe that the company, as an enterprise with an integrated industrial chain, has highly integrated technological achievements.

The company uses hyaluronic acid as the main line to extend its upstream and downstream layout, and has huge growth potential under the advantages of technology + cost + industrial integration.

The company is the global market leader in hyaluronic acid raw materials. The actual controller of the company is Ms. Zhao Yan, chairman and general manager, holding 65 shares.

9%.

The company’s business is divided into hyaluronic acid raw materials 南宁桑拿 (accounting for 51.

6%), functional skincare products (23%).

0%) and medical end products (proportion 24.

8%), and led by skin care products and medical terminal products to achieve revenue and net profit for 18 years.

600 million and 4.

200 million, the previous growth rate was 54.

4% and 90%.

7%. In the future, we will continue to maintain the growth momentum driven by the cost advantage + R & D results.

Raw materials business: global market leader, cost, qualification, and three major barriers to channels are solid.

The B-end market is the company’s traditional business area. The B-end market is only a more meaningful value for customers than a brand. It has the characteristics of sticky channels and internal barriers (mainly referring to medical products). The company is a market leader (18-year market share 36%), Give full play to costs, qualifications and channel advantages to stabilize market share.

① Cost advantage: The company took the lead in developing the fermentation method instead of the extraction method to produce hyaluronic acid, and currently it has gradually reached the industry leader of 10-13g / L. The unit cost of hyaluronic acid production is about one-half of the industry average cost.

The unit price of companies in the same grade of raw material products has declined, and certain significant price advantages in the same industry, especially overseas companies.

② Qualification barriers: The product quality is far higher than the European Pharmacopoeia, Japanese Pharmacopoeia and Chinese pharmaceutical quality standards. Pharmaceutical grade raw material products have obtained 7 registration qualifications in China, and have obtained international registration qualifications including the European Union, the United States, and South Korea. 21Items, more comprehensive than peer qualifications.

Countries have strict standards for market access to pharmaceutical-grade raw materials, and foreign competitors want to enter the market where it is difficult.

③Channel barriers: The company has distribution channels in the pharmaceutical, cosmetics, food and other industries in 40 countries and regions around the world. There are more than 1,000 customers worldwide, and the relationship with customers is solid, and it has the first-mover advantage.

Channel B customers have sticky cracks and low channel maintenance costs. Large pharmaceutical and cosmetic companies usually do not randomly change suppliers to establish channel barriers in order to ensure stable product quality.

  Medical terminal products: There is still room for improvement in market share, and low price + technology grabs market share.

The 2B2C market has both B and C-end market characteristics, high barriers to expansion, and stable internal market integration, which can provide customers with more brand and product experiences.

The competition that the company faced entered earlier, the brands merged, and the channels expanded comprehensively, but there was still room for breakthroughs in technology and prices.

Combining its own raw material business and industry development trends, the company uses low-cost + technology to seize consumers’ minds.

① Skin products: The company’s “gradient 3D cross-linking technology” can obtain gels with different properties by using a small amount of cross-linking agents, which is synchronized with the international advanced level. The price under the leading technology is 1,000-2500 yuan per milliliter in the mass price range.The company’s market share is expected to make a breakthrough in the industry’s popularization trend.

② Orthopedic products: The company developed the terminal moist heat sterilization technology to create the only sodium hyaluronate injection that is higher than the national standard. At the same time, it uses its own raw material advantages to cut into the market at a low price. With the promotion of terminal channels, the difference in power has continued to narrow.The market share of sodium hyaluronate has gone from zero.

6% increased to 9.

1%, the future is vast.

Functional skin care products: There are four major advantages in entering the raw material supplier status, and the strength of brand marketing is outstanding to resolve challenges.

The product cycle in the C-end market is shorter, and customer demand changes again.

The layout of the C-side of the raw material supplier usually has only technical and cost advantages, but it usually faces challenges in brand operation and marketing.

The company makes full use of its endowments to select high-quality tracks, exert its technological advantages, and continue to exert its strength in terms of brands and channels, and there is room for future development.

Ratings with traditional skin care products manufacturers: 1) The track is better: the company cuts from its own outstanding raw materials to avoid the mass skin care market, and relatively focuses on the high-end products of original liquids replaced by competing products.Enter the minds of consumers with distinctive features.

2) More focused ingredients: purposeful replacement of the company’s products, the formula ingredients are simple and straightforward.

With the rise of skin care ingredients, the formulation of skin care products that are gentle and direct will become more popular.

3) More cutting-edge technology: The company used microbial enzymatic digestion for the first time to produce low-molecular-weight hyaluronic acid and oligomeric hyaluronic acid on a large scale in the world, and was the first to merge the leading industry of hyaluronic acid products, while grafting pharmaceutical-scale production technology to cosmeticsIn production, the production standard is much higher than that of ordinary cosmetics manufacturers in the industry.

4) Industry chain synergy: The brand power and word-of-mouth of upstream raw material business transform the downstream product sales into an axial driving role. The success of downstream products will also promote the promotion of upstream raw material business.

Horizontal similar products also work together.  Expansion of categories + capacity expansion, a wide range of incremental space can be expected: 1) Relying on the R & D platform layout, the product line extends horizontally and vertically: the company ‘s four core technologies that have matured horizontally have derived more new technologies, and the company reserves “genetic engineeringPlatform “,” enzyme synthesis platform “and other new research and development directions; initially relying on the upper-level technology platform to rapidly shape end products, the company will have 4 functional skin care products, 6 injections of sodium hyaluronate gel products, 2 in the next three years.Food grade products, 1 medical sponge project to promote landing.

Many biologically active substances are expected to be further applied in end products.

2) The throughput is close to expected, and the Tianjin + Industrial Park project is expected to boost performance in the future.

The company’s overall main business capacity is close to saturation. The layout of Huaxi Tianjin Sodium Hyaluronate and related projects and the Huaxi Biological Life and Health Industrial Park project will increase the production capacity of hyaluronic acid raw materials by 952 tons / year after the completion of the Tianjin project, which is the original capacity.At 476%, the production capacity of added secondary throwing stock solution is 200 million pieces per year, and the production capacity of hyaluronic acid eyewash solution is 10 million pieces per year.

The industrial park project will mainly add 100 million medical injection products per year, which is 2500% of the original production capacity, and 500 million new products of hyaluronic acid sub-polishing products per year.

According to the prospectus, it is expected that the company’s production capacity will gradually be released in 2020 to boost performance.

  Investment advice: The company ‘s traditional hyaluronic acid raw material business relies on cost, qualification and channel barriers are steadily solid, medical terminal product business breaks through leading technology and reasonable prices to quickly seize market share, and functional skin care business is transformed according to traditional skin care manufacturers and otherThe advantages of raw material suppliers are prominent, and the company’s core technology is continuously expanded to drive the downstream product line to be rich, with great potential for future development.

We expect the company’s revenue growth from 2019 to 2021 to be 28.

5%, 38.

3%, 35.

4%, net profit growth rate was 35.

0%, 39.

3%, 37.

9%, outstanding growth.

The relative estimation law gives the company an estimate of 45-50 times, and the corresponding price range is 53.

1-59.

0 yuan / share, the company’s price range obtained by the absolute estimation method is 52.

8-70.

5 yuan / share, the company’s price range is 53.

1-59.

0 yuan / share.

Risk reminders: new technology replacement risk; dealer management risk; industry supervision risk; raised fund investment project implementation risk, etc.