HUAKANG(605077) 国信证券·2025-02-10 07:08Investment Rating - The report assigns an "Outperform" rating to Huakang Co., Ltd. (605077.SH) for the first time [4]. Core Views - Huakang Co., Ltd. is a leading enterprise in the functional sugar alcohol industry, with a new project in Zhoushan initiating a second growth curve for the company [1][2]. - The demand for functional sugar alcohols is continuously growing, driven by increasing health awareness and diabetes prevalence globally [2][37]. - The company is expanding its product range and enhancing its supply chain through the Zhoushan project, which focuses on deep processing of corn [3][23]. Company Overview - Huakang Co., Ltd. specializes in the production and sales of various functional sugar alcohols, with main products including xylitol, sorbitol, maltitol, and fructose syrup [1][17]. - The company has established a strong customer base, including well-known brands such as Mars, Coca-Cola, and Pepsi [1][17]. - The current production capacity includes 195,000 tons of crystalline functional sugar alcohols and 100,000 tons of fructose syrup, positioning the company among the top in the industry [1][17]. Market Trends - The global market for functional sugar alcohols was valued at 6.53 billion by 2032, with a CAGR of 6.52% [2]. - In China, the production of functional sugar alcohols exceeded 1.7 million tons in 2023, with a CAGR of 8.9% from 2017 to 2023 [2]. Financial Forecast and Valuation - Revenue projections for Huakang Co., Ltd. are estimated at 2.945 billion, 3.668 billion, and 4.407 billion yuan for 2024, 2025, and 2026, respectively, reflecting growth rates of 5.8%, 24.6%, and 20.2% [4][8]. - The expected net profit for the same years is projected to be 258 million, 396 million, and 494 million yuan, with corresponding EPS of 0.84, 1.30, and 1.62 yuan [4][8]. - The reasonable valuation range for the company is estimated to be between 15.60 and 17.71 yuan, indicating a potential upside of 12% to 27% compared to the current stock price of 14.28 yuan [4].