【行业研究报告】金禾实业-A rosy picture ahead on value chain synergies

Inordertokeepupwiththeincreasingdemandforsugarsubstitutesand
risingpenetrationofnewsweeteners,JinheIndustrial,theglobal
sweetenerleader,hasbeenengagedintheself-sufficiencyofraw
materialswithsustainedeffortstorampupthecapacityandexpandthe
productpipelineofsweetenerstocontinuouslysharpenitsmarket
competitiveness.Meanwhile,theCompanyhasalsobeenproactively
expandinghighvalue-addedfinechemicalstobuildapresencein
functionalchemicalandpharmaceuticalintermediates,makingspacefor
revenuegrowthgoingforward.WeexpectJinheIndustrialtoachieve
attributablenetprofit(ANP)ofRmb1.7bn/1.86bn/2.07bnin2022E/23E/24E,
respectively,andassign17.5x2022EPEtoderiveatargetpriceofRmb53.
Weinitiatecoveragewitha“BUY”rating.
▍Aglobalsweetenerleaderwithanextendedpresenceinfinechemicals.
JinheIndustrialismainlyengagedinfood&beverage,bulkchemicals,
JinheIndustrialismainlyengagedinfood&beverage,bulkchemicals,
functionalchemicalsandpharmaceuticalintermediates.Ithasgrownintothe
globalsweetenerleaderwithanannualcapacityof12ktinacesulfame
potassium,8ktinsucralose,and1.5ktinnew-generationnaturalsweetener
allulose.Consideringeconomiesofscaleanddownstreamsynergiesofthe
sweetenersector,weexpecttheCompanytoturnitsedgesincapacityand
productpipelineintostrengthincostsandsaleschannels,reinforcingits
leadingpositionamidsectorcompetition.
▍Benefitingfromrisingdemandforlow-sugarsweeteners.
Withescalatingobesityanddiabetesacrosstheworld,weseeever-increasing
demandforlow-andzero-sugarproducts,whichpointstovastgrowth
headroomforsweetenerdevelopment.TheequivalentyieldCAGRofsucrose
sweetness,suchasacesulfamepotassiumandsucralose,reached9.82%and
18.92%,respectively,over2015-2019,whilethatofthetraditionalsynthetic
sweetenerswasat-14.1%.Withtheadvantagesofsafetyandgoodtaste,
acesulfamepotassiumandsucralosearegraduallyreplacingtraditional
syntheticsweeteners,suchassodiumsaccharinandaspartame.Jinhe
Industrialislikelytofullybenefitfromthesectortailwind,leveragingitscosts
edgesonthebackofeconomiesofscaleandtheintegrationofvaluechains.
▍Buildingintegratedproductioncapabilitiesforfuturegrowth.
JinheIndustrialhasbeencontinuouslyimprovingitsbuildoutintheupstream
linksofthesweetenerandmaltolvaluechainsbyrampingupitscapacityof
thionylchloride,DMF,diketeneandfurfural,anditscostadvantageshave
beenreinforcedbystrengthenedintegrationofthevaluechains.Besides,the
Companyhasalsobeencontinuouslyexpandingthevaluechainsinfine
chemicalsbyproactivelybuildingapresenceinhighvalue-addedsegments,
suchasfunctionalchemicalsandpharmaceuticalintermediates,making
spaceforearningsgrowthgoingforward.