Huaxi Biological (688363) in-depth analysis: technical advantages consolidate the price barrier downstream extension to achieve high growth

Huaxi Biological (688363) in-depth analysis: technical advantages consolidate the price barrier downstream extension to achieve high growth

Huaxi Bio-Global Hyaluronic Acid Leading Company: Huaxi Biological is a leading company of hyaluronic acid (hyaluronic acid).

Advanced fermentation and cross-linking of two major technology platforms, Huaxi Biological has achieved four major technological breakthroughs, has applied for 109 patents, obtained multiple national, provincial and ministerial reforms, and gradually extended product types from hyaluronic acid raw materialsIt covers all types of bioactive substances, biomedical materials and functional skin care products, covering the complete industrial chain from hyaluronic acid raw materials to related end products.

In terms of sales volume, in 2018, Huaxi Bio has accounted for about 36% of the global hyaluronic acid market and is a global leader in hyaluronic acid.

Hyaluronic acid raw materials are the company’s core business, and each business has grown steadily: from 2016 to 2018, the company’s annual compound annual growth rate of revenue was about 31%.

The compound annual growth rate of net profit attributable to mothers is about 25%.

In the first half of 2019, the company realized a 44% increase in revenue and a 40% increase in net profit attributable to its parent. The company expects that the net profit in the first three quarters will increase by 30% to 40%.

In terms of business, in 2018, raw materials products, medical terminal products, and functional skin care products accounted for about 52%, 25%, and 23% of revenue. The business compounded annual growth rate of each business in the past three years was about 19% and 28%., 113%.

The highest concentration of technical advantages, the rapid expansion of the raw material business benefit industry: Huaxi Biotech’s R & D expenditure as a percentage of operating income is at a high level in comparable companies. R & D drives technological breakthroughs, and the company’s hyaluronic acid fermentation metabolism reaches 10?
13g / L, higher than the industry level of 6 in the literature?
7g / L.

Beyond the higher growth rate of the industry, the company builds the value advantage of hyaluronic acid products. The sales unit price of Huaxi Bio-injection grade raw material products is 28% and 20% lower than the 南京桑拿网 purchase price of similar products of Haohaishengke and Aimeike.

Based on the cost advantage of technical advantages, Huaxi Bio has approximately 36% of the global sales volume of hyaluronic acid raw materials, ranking first in the world, and approximately 80% of the domestic pharmaceutical-grade hyaluronic acid market.

Leading advantages and industry growth have promoted the rapid expansion of Huaxi’s biological raw materials business. The annual growth rate of raw materials business from 2016 to 2018 was about 19.

3%, the income of each raw material product continued to grow steadily.

The skin medical beauty industry has expanded, and orthopedic injection has been successfully developed: medical terminal products can be divided into skin injection, orthopedic injection, and ophthalmic products.

It is said that the big data of new oxygen, the domestic injection medical beauty market is still dominated by hyaluronic acid, the injection medical beauty hyaluronic acid market growth rate of about 53%.

At present, Huaxi’s skin hyaluronic acid filling market has a market share of about 12%. In the future, the hyaluronic acid injection medical beauty market is expected to benefit from the increase in medical aesthetic penetration and continue to achieve rapid growth.

  Huaxi Bio-dermal Hyaluronic Acid product line goes low-end to high-end, which is expected to continue to drive performance growth.

The orthopedic injection market has been successfully developed, and its market share has gradually increased to 9.

1%, direct sales development pushed up the average factory price, and scale expansion increased gross profit margin.

Ophthalmic hyaluronic acid products are still being cultivated and currently account for a small proportion.

Benefiting from online and offline trends, skin care brands are expected to enter a period of rapid development: the first three quarters of the distribution of cosmetics above double growth, cosmetics high-end trend continues, in 2017, 2018, the high-end cosmetics market achieved over 25% growth rate.

The final expected ingredients of cosmetics are mainly chemical raw materials, and the growth rate of fermented raw materials-related products is significantly faster than that of natural raw materials.

High-end cosmetics and emphasis on ingredients are good for hyaluronic acid-related products.

  Consumer goods industry, revenue scale up to 1?
The $ 300 million brand is expected to achieve a break-even and a scale of more than 3?
After 500 million years, strive to achieve rapid growth, the company’s cosmetics revenue in 2018 has reached 2.

9 ‰, an annual increase of more than 2 times, the brand is expected to enter a rapid growth channel.

The company’s production capacity is close to increasing, and the investment projects are expanding. The company’s business scale is expanding rapidly, and the production capacity is close to change.
The company’s fund-raising project was invested in the upgrading of the research and development center, the Tianjin sodium hyaluronate project, and the life and health industrial park project, occupying a total of about 31.

54 million, investment projects to expand production capacity and lay a solid foundation for future growth.

The capacity expansion plan of a typical company integrated in the hyaluronic acid industry chain, the production capacity of Haohaishengke’s fund-raising project is about the original two, and the existing fund-raising project planned by Aimeike is nearly 4 times.Build capacity.

Typical companies value the good development trend of the industry in the future, and the expansion of industry capacity in the future may intensify internal competition in the industry.

Investment suggestion: Huaxi Bio is a global leader in hyaluronic acid, technical advantages consolidate price barriers, consolidate leading hyaluronic acid raw materials, expand the industry of skin medical beauty, orthopedic injection has been successfully cultivated, cosmetic brands have been successfully promoted, and fundraising projects have consolidated the foundation for future growth.
We predict that the company’s annual revenue from 2019 to 2021 will be 1.

21, 1.

55 and 1.

97 yuan.
Return on net assets were 21 respectively.

7%, 22.

7% and 23.

At present, the company’s science and technology innovation board is listed, and the market has a high degree of attention. The company’s PE (2019E) is about 78 times and PEG (2019E) is about 2.

5 times, 2 times higher than the average PEG (2019E) of comparable companies.

0 times.

Covered for the first time, given the “overweight-A” proposal, and recommended active attention.

Risk Warning: 1.

Technology upgrades or challenges to the company’s R & D capabilities; 2.

The production capacity of some products is close to the highest; 3.

The rapid expansion of production capacity of typical companies or intensified market competition; 4.

4. Botulinum toxin competes with hyaluronic acid in the medical beauty injection market; 5.

The increase in traffic costs and changes in the traffic structure of typical platforms make it difficult to cultivate new brands.