HUAKANG(605077) 国信证券·2025-02-10 06:45Investment Rating - The report assigns an "Outperform the Market" rating for Huakang Co., Ltd. (605077.SH) [4] Core Viewpoints - Huakang Co., Ltd. is a leading enterprise in the functional sugar alcohol industry, with a significant market presence and a new project in Zhoushan that is expected to initiate a second growth curve for the company [1][2] - The global functional sugar alcohol market is projected to grow from USD 3.83 billion in 2023 to USD 6.53 billion by 2032, with a compound annual growth rate (CAGR) of 6.52% [2] - The company is expanding its production capacity and product range through the Zhoushan "1 million tons corn deep processing" project, which is expected to enhance its supply chain and product offerings [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, which are widely used in food, beverage, and daily chemical industries [1][17] - The company has established a strong customer base, including well-known brands such as Mars, Mondelez, Ferrero, 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 demand for functional sugar alcohols is continuously increasing due to rising health awareness and the growing prevalence of diabetes, leading to a higher penetration rate of sweeteners in the sugar market [2][37] - The company’s main products, including xylitol and crystalline sorbitol, have leading production capacities in China, with xylitol and crystalline sorbitol being the top in the country [2][3] Financial Forecast and Valuation - The company is expected to achieve revenues of CNY 29.45 billion, CNY 36.68 billion, and CNY 44.07 billion for the years 2024, 2025, and 2026, respectively, with year-on-year growth rates of 5.8%, 24.6%, and 20.2% [4][8] - The projected net profit for the same years is CNY 2.58 billion, CNY 3.96 billion, and CNY 4.94 billion, with corresponding year-on-year changes of -30.7%, +53.8%, and +24.8% [4][8] - The estimated reasonable valuation for the company is between CNY 15.60 and CNY 17.71, indicating a potential upside of 12% to 27% compared to the current stock price of CNY 14.28 [4]