Bailong Chuangyuan(605016) 中银证券·2024-12-11 06:56Investment Rating - The report assigns a "Buy" rating to the company, with a market price of RMB 16.64 and a sector rating of outperforming the market [1][2]. Core Insights - The company, Baolong Chuangyuan, is a leading enterprise in the functional sugar sector, focusing on health-oriented sugar products. It has a strong customer base and is continuously optimizing its product layout and capacity [2][4]. - The company has maintained high revenue growth over the past five years, with a CAGR of 19.83% in revenue and 23.49% in net profit from 2019 to 2023. In the first three quarters of 2024, revenue increased by 25.48% year-on-year [2][62]. - The dietary supplement market is expected to expand, benefiting from the increasing awareness of health among consumers. The company is well-positioned to capitalize on this growth due to its diverse product offerings [2][4]. - The new sugar substitute, allulose, presents significant opportunities, with a projected CAGR of 14.60% from 2023 to 2032 in the global market. The company has a technological edge in producing allulose [2][4]. - The company is set to release new production capacity, with projects coming online in May 2024, which will enhance its growth trajectory [2][4]. Summary by Sections 1. Company Overview - Baolong Chuangyuan focuses on health-oriented sugar products, continuously expanding its product and customer matrix. It has developed a wide range of functional food ingredients, producing over 90 different specifications [51][62]. - The company has a concentrated ownership structure, with the actual controllers holding 49.76% of the shares, ensuring stable management [57][60]. 2. Market Potential - The dietary supplement market is expected to grow significantly, driven by increased consumer health awareness and dietary upgrades. The global and Chinese prebiotic markets are projected to reach RMB 18.548 billion and RMB 3.814 billion by 2026, respectively [2][4]. - The new sugar substitute, allulose, is gaining traction, with the global market expected to grow from USD 128 million in 2023 to USD 440 million by 2032 [2][4]. 3. Production Capacity and Growth - The company is set to launch new production projects in May 2024, including a 30,000-ton soluble dietary fiber project and a 15,000-ton crystalline sugar project, which will alleviate capacity constraints [2][4]. - The company is also expanding its international footprint with a production base in Thailand, which will help reduce costs and enhance its global market presence [2][4]. 4. Financial Performance - The company has shown steady revenue growth, with revenues increasing from RMB 421 million in 2019 to RMB 868 million in 2023, and a projected net profit of RMB 250 million in 2024 [2][62]. - The gross margin improved to 32.73% in 2023, driven by product structure optimization and stable raw material prices [70][72].