Leading Synthetic Biotechnology Creates Alanine Industry Leader. Relying on the double process of biological enzyme method and fermentation method, the company has realized the transformation of production mode from chemical synthesis to biological manufacturing, and developed a series of products such as L-alanine, DL-alanine, β-alanine, D-calcium pantothenate, L-valine and so on. The company's fist product L-alanine anaerobic fermentation technology is in the international leading level, with an annual production capacity of 43000 tons, accounting for about half of the global market share, becoming the leader of the alanine industry.

The new production line was successfully completed and put into operation, and L-valine became a new growth point for the company. The company's "alternate annual output of 25000 tons of alanine and valine project" and "fermentation alanine 5000 tons/year technological transformation and expansion project" have been completed. The release of the production capacity of the two core products has supported the company's performance to increase significantly. In 2022, the company's operating income increased by 48.69 to 1.419 billion yuan, and the net profit attributable to the parent increased by 90.23 to 0.32 billion yuan. According to data from the China Fermentation Industry Association, the global valine market has maintained a rapid growth trend in recent years, and the compound growth rate from 2016 to 2023 is expected to reach 40.21. With the completion and commissioning of the new production line, the company's L-valine products benefited from the rapid growth of the market size and became a new growth point for the company.

technology iteration + product expansion + quality customers to build the core competitive advantage. Through independent research and development and innovation, the company has formed a core technology group in the aspects of industrial strain creation, intelligent control of fermentation process and efficient post-extraction. The fermentation production process and enzymatic production process have significant leading advantages, and continuously improve product competitiveness through the technology iteration optimization mechanism. With the existing mature technology and accumulated rich experience, the company has carried out multi-dimensional expansion of products, developed more products such as succinic acid, malic acid, small varieties of amino acids, and strengthened the advantages of industrial chain integration. In addition, the company has established stable cooperation with well-known downstream customers at home and abroad, such as BASF, weizhensu and Norion, which provides important support for the company's product development, market expansion and competitive advantage.

fund-raising projects are expected to accelerate the construction of synthetic biological platform, product matrix expansion to open the growth ceiling. The company has raised funds for the construction of a production base with an annual output of 50000 tons of bio-based succinic acid and raw materials for bio-based products, as well as a production and construction project with an annual output of 50000 tons of bio-based malic acid, to realize the expansion of the product matrix from amino acids and their derivatives, vitamins, etc. to bio-based new material monomers, further opening up the company's business growth space and enhancing the company's sustainable profitability.

Earnings Forecast and Valuation. We expect the company's operating income from 2023 to 2025 to be 18.35/29.35/3.81 billion yuan, net profit attributable to the parent company to be 4.30/6.04/0.831 billion yuan, PE to be 41.9/29.8/21.7 times, and EPS to be 2.73/3.84/5.29 yuan. Optimistic about the company's future succinic acid, malic acid and other new product capacity release, the first coverage, give a "buy" rating.

risk tips: the risk of falling product prices, the risk of a sharp rise in raw materials, the risk of intensified competition in the industry, the risk of leakage of core technology, the risk of less than expected construction progress of fund-raising projects, the risk of exchange rate fluctuations, etc.