tianfeng securities co., ltd. yang song and Zhang Xue recently conducted research on huaxi biology and released a research report entitled "the whole industrial chain of biomaterials is connected, four-wheel drive is brave in the tide". this report gives a buy rating to huaxi biology, and the current stock price is 94.0 yuan.

Huaxi Biology (688363)

To build a platform company for the whole industry chain of biotechnology driven by synthetic biological innovation

Huaxi Bio is a world-renowned biotechnology company driven by synthetic biology and a platform company for the entire industry chain of biomaterials. Founded in 2000, as the world's largest hyaluronic acid R & D, production and sales enterprise, a number of hyaluronic acid related technologies and products industry leader. Starting from hyaluronic acid raw materials, the company gradually expanded its business to the 2B end and 2C end, and made efforts to synthesize biology, forming a "four-wheel drive" business layout of bioactive raw materials, medical end products, functional skin care products and functional foods. In 2022, the company achieved operating income of 6.359 billion billion yuan, up 28.53 percent year-on-year, and net profit of 0.971 billion billion yuan, up 24.11 percent year-on-year.

raw materials business: hyaluronic acid leading position is solid, a variety of biological materials prospects

The company's hyaluronic acid business has two major advantages: 1) product quality advantages. The company's domestic first microbial fermentation and biological enzyme cutting method, product purity and precision in the forefront of the industry; 2) production capacity advantages. The company has significantly expanded production since 2019, with a total production capacity of 770 tons, highlighting the scale effect. Based on the cutting-edge synthetic biology international innovation research and development center, in 2022 the company to carry out raw materials and synthetic biological research and development projects 116, to explore collagen, ergothioneine and other new areas, is expected to gradually achieve mass production.

Medical terminal: medical and beauty industry is booming, and the competitiveness of the product portfolio continues to increase

China's hyaluronic acid medical products are expected to maintain a compound growth rate of 25% in 2021-2026, driven by the continuous development of medical beauty injection therapy and the continued enrichment of hyaluronic acid products. We are optimistic that the company's competitive medical and beauty products will promote the overall medical terminal business: 1) there are rich pipelines of medical and beauty terminal products. in 2021, runzhi will be the first brand of medical and beauty. at present, five products of runzhi product series have formed a combination scheme to realize layered anti-aging and meet the diversified needs of medical and beauty consumers. we expect that the product combination will form strong stickiness to users; 2) Water Light Needle is incorporated into Class III medical device management, the company's Class III medical device medical beauty products are rich, is expected to benefit from the industry out of the market opportunities.

Functional skin care products: the four major brands are clearly positioned and profitability is expected to continue to improve

based on the research and development advantages of bioactive raw materials, the company has continuously empowered functional skin care products, forming four major brands with differentiated positioning of Run Baiyan, Quadi, Mibel, BM muscle live, covering a wide range of consumer groups. Companies adhere to the creation of large single products and large single product series, has created an annual income of 0.4 billion (including tax) of the large single muscle live brown rice water, and constantly break through the brand growth ceiling. At present, the company for the four major brands continue to fine operation, online and offline full channel force, brand penetration rate continued to improve, strengthen user experience and re-purchase, the company is expected to achieve cost-effective efficiency, profitability upward improvement.

Earnings Forecast: As a world-renowned biotechnology industry chain platform company, the company has laid out four major businesses from 2B to 2C and empowered each other. The company pays attention to research and development investment, product pipeline continues to enrich, under the fine operation, the company's profitability is expected to gradually improve. We expect the Company's operating income for 2023-2025 to be 74.66/95.17/11.517 billion yuan, respectively, and the net profit attributable to 2023-2025 to be 11.72/15.27/1.943 billion yuan, respectively, maintaining a "buy" rating.

Risk tips: new technology substitution risk, new product registration risk, new product promotion risk, industry competition intensifies risk, industry regulatory risk

the securities star data center calculated according to the research report data released in the past three years that the research team of Lin chiba of CICC has conducted in-depth research on the stock. the average forecast accuracy in the past three years is as high as 95.84. its forecast attributable net profit in 2023 is profit 1.16 billion, and the forecast PE converted according to the current price is 38.74.

The latest profit forecast is as follows:

The stock has been rated by 35 institutions in the last 90 days, with 29 buying ratings and 6 overweight ratings; the average institutional target price in the past 90 days is 139.16. According to the last five years of financial data, Securities Star valuation analysis tools show that Huaxi Bio (688363) industry competitive moat excellent, good profitability, good revenue growth. Financial health. The stock has a good company index of 4.5 stars, a good price index of 3 stars and a comprehensive index of 3.5 stars. (Indicators are for reference only, indicator range: 0~5 stars, up to 5 stars)

The above content is compiled by Securities Star based on publicly available information, generated by an algorithm, and has nothing to do with the position of this site. Securities Star strives for but does not guarantee the accuracy, completeness, validity, timeliness, etc. of all or part of the information (including but not limited to text, video, audio, data and charts). If there is any problem, please contact us. This article is a data compilation, does not constitute any investment advice for you, investment is risky, please be cautious in your decision-making.