Core Viewpoint - COFCO Technology has received approval from the National Health Commission for its administrative license application to produce D-Allulose through enzymatic methods, establishing a prerequisite for domestic production and sales of the product [1] Group 1 - The administrative license approval is a significant step for COFCO Technology in the production and sales of D-Allulose in China [1] - Currently, the company has not yet commenced production or sales of D-Allulose, which investors should be aware of [1]

Group 1: Approval and Safety Standards - The approved daily intake of allulose by the FDA is 33 grams, while the National Health Commission (NHC) of China has set it at 20 grams, reflecting stricter domestic standards [2][3] - The approval process for allulose took approximately two years for the company, involving safety evaluations by both the Ministry of Agriculture and the NHC [1][2] Group 2: Market Potential and Product Development - The future market potential for allulose is estimated to be between 150,000 to 200,000 tons over the next 3 to 5 years, particularly in beverages, baking, dairy products, and sauces [4] - The company is focusing on optimizing enzyme costs and production processes, as well as conducting extensive research on the application of allulose in various food products [2][3] Group 3: Competitive Advantages - The company holds a first-mover advantage in market access, which is crucial for future development [3] - The core competencies include a strong R&D platform for synthetic biology and a comprehensive industrial layout, particularly in the sugar raw materials sector [3] Group 4: Customer Interaction and Market Readiness - There is significant interest from downstream customers, including tea and dairy companies, indicating a readiness to purchase allulose products once approved for domestic use [2][3] - The company is prepared to offer allulose in both liquid and solid forms based on customer needs and cost assessments [4]

Core Viewpoint - The corn starch industry in China is a crucial pillar of the agricultural product deep processing sector, exhibiting a mature supply-demand system with a balanced state in 2024, where production is projected to reach 37.99 million tons and apparent demand at 37.97 million tons, indicating a tight balance overall [1][13]. Group 1: Industry Overview - The corn starch industry has established a stable supply-demand structure, with production and demand closely aligned, reflecting a trend of "stable total volume and optimized structure" [1][13]. - The industry is transitioning from traditional scale expansion to high-quality development, with an increasing proportion of high-value-added products, demonstrating resilience [1][13]. - The corn starch is derived from corn kernels through various processes and is categorized into three types: regular corn starch, modified starch, and specialty corn starch, widely used in food processing, pharmaceuticals, textiles, and biodegradable materials [2][4]. Group 2: Policy Support - Recent national policies have significantly supported the corn starch industry, emphasizing green manufacturing and high-end product development, with specific encouragement for bio-based products and functional food additives [4]. - Local governments are also promoting the development of the corn starch deep processing industry, aiming for a stable planting area and a substantial industry scale by 2027 [4]. Group 3: Industry Chain - The corn starch industry in China features a complete industrial chain with a "dispersed upstream, concentrated midstream, and diversified downstream" structure [6]. - The midstream processing segment is highly concentrated, with key regions like Shandong and Hebei forming industrial clusters, while downstream applications are diversifying into traditional and emerging sectors [6]. Group 4: Market Dynamics - The corn production in China is vital, with a total output exceeding 294.92 million tons in 2024, accounting for over 40% of the total grain production, supported by increased planting area and yield [9]. - The demand for corn starch is robust across various sectors, with the food industry being the largest consumer, followed by starch sugar, paper, pharmaceuticals, and chemicals [11]. Group 5: Competitive Landscape - The competitive landscape of the corn starch industry is characterized by a concentration of leading firms, with the top five companies holding approximately 45% market share, while smaller firms focus on niche markets [19]. - The industry is evolving towards a "technology-driven, chain collaboration, and scenario-focused" competitive model, with leading companies integrating their operations from corn to starch to bio-based materials [19]. Group 6: Future Trends - The corn starch industry is undergoing a transformation driven by technological innovation, with advancements in smart manufacturing and green production methods [21]. - Market demand is shifting towards high-end and diversified applications, particularly in biodegradable materials and health-oriented products, with significant growth expected in these areas [22][23]. - The industry is also seeing increased integration and globalization, with leading firms expanding their operations and establishing a presence in international markets [24].

Core Viewpoint - The company, COFCO Technology, is actively engaging in futures hedging to mitigate market risks and has established a leading position in the biofuel sector, particularly in the production of D-alloheptulose sugar through a unique enzymatic process approved by health authorities [2][3]. Group 1: Stock Performance - As of July 7, 2025, COFCO Technology's stock closed at 5.85 yuan, down 1.35%, with a turnover rate of 1.33%, a trading volume of 246,400 shares, and a transaction value of 145 million yuan [1]. Group 2: Investor Inquiries and Company Responses - The company plans to continue its futures hedging activities in 2025 to control market risks related to raw materials and product prices [2]. - Alcohol and its by-products account for approximately 45% of the company's total sales revenue, with annual sales of around 1.3 million tons, including about 1 million tons of fuel ethanol, indicating a leading market share in the industry [2]. - The company has received approval from the National Health Commission for its enzymatic production of D-alloheptulose sugar, establishing a unique compliance position and market advantage in China [2].

Core Viewpoint - The corn industry is a strategic pillar for China's food security, with significant growth in planting area, yield, and total production expected in 2024, despite short-term market adjustments due to international price fluctuations and rising costs [1][8][14]. Group 1: Industry Overview - The corn processing industry in China has developed a complete industrial chain, from primary processing to modern biobased material research, becoming a key hub for agricultural production and industrial manufacturing [1][5][14]. - Corn processing can be categorized into primary processing and deep processing, producing various products for food, feed, and industrial applications [2][3][5]. Group 2: Current Development Status - In 2024, China's corn planting area is projected to reach 44.74 million hectares, a year-on-year increase of 1.18%, with a yield of 439.4 kg/mu, contributing to a total production of 294.92 million tons, a 2.1% increase from the previous year [1][8][10]. - The total corn consumption in 2024 is expected to reach 31.78 million tons, with industrial consumption growing by 3.07% to 7.94 million tons, driven by innovations in deep processing [12][14]. Group 3: Market Trends - The corn deep processing market size is expected to adjust to 190 billion yuan in 2024, down 6.4% from its peak in 2022, but the long-term growth trend remains solid [1][14]. - The corn processing industry is transitioning towards green and low-carbon practices, focusing on high-value product development such as polylactic acid and functional sugars [24][25][26]. Group 4: Competitive Landscape - The corn deep processing industry in China has a tiered competitive structure, with leading companies like COFCO Technology and Meihua Biological occupying the top tier, focusing on high-value products [20][22]. - The market for corn starch is highly concentrated, with top companies holding over 44% market share, and there is a trend towards differentiation and expansion into biobased materials and other emerging fields [22][24].

Group 1: Zhong Grain Technology - Zhong Grain Technology has obtained domestic compliance status for the production of allulose, becoming the only company to receive approval for new food ingredients using a specific enzyme method [1] - Allulose has advantages in metabolism, taste, and processing characteristics, with broader future applications expected, particularly in beverages, baking, and dairy products [1] - The company plans to accelerate production line construction, leveraging prior technological accumulation to reduce costs, with a single production capacity planned at 10,000 tons and a construction time of approximately 10 months [1] Group 2: Huadian Technology - Huadian Technology focuses on differentiated operations, emphasizing sustainable long-term benefits and maintaining a balanced customer base while continuously investing in technological innovation [2] - Projected revenues for 2024 are approximately 10.093 billion yuan from the enterprise communications market and about 2.408 billion yuan from the automotive sector [2] - The company is accelerating customer certification and product introduction at its small-scale production base in Thailand while controlling initial costs [2] Group 3: Lansi Heavy Industry - Lansi Heavy Industry holds multiple qualification certificates in the nuclear equipment sector, covering the entire industry chain, and plans to accelerate the development of fourth-generation nuclear power equipment and spent fuel processing markets [3] - Following the acquisition of a superalloy company in 2023, the company has expanded its product range to include various alloy materials, with orders worth 918 million yuan expected in 2024 [3] - The company has established early layouts in the coal chemical industry, with production bases in Xinjiang and Lanzhou, and possesses capabilities in manufacturing various coal chemical equipment and EPC contracting [3]

Summary of Key Points from the Conference Call Industry Overview - The approval of allulose as a new food ingredient expands its application in the food sector, particularly in weight loss and diabetes-related products, and allows for food thermal processing, although production methods have specific strain and donor limitations [1][4][16]. Company Insights COFCO Technology - COFCO Technology has developed allulose production technology using corn starch and has received approval for related enzyme preparations, advancing the construction of a production line with a capacity of 10,000 tons. Expected net profits for 2025-2027 are projected at 100 million, 160 million, and 230 million yuan respectively, with a year-on-year growth rate of approximately 300% this year [1][5]. Bailingbao - Bailingbao is a leading company in functional metabolic products, with a production capacity exceeding 5,000 tons and plans to expand to 30,000 tons by 2026. The company is primarily focused on exports [1][7]. Bailing Chuangyuan - Bailing Chuangyuan is the first company in China to achieve industrial-scale production and revenue from allulose, with a projected revenue of 156 million yuan in 2024 and a gross margin of 19%. The company plans to expand capacity in Thailand, primarily for export [1][6][17]. Jinhui Industrial - Jinhui Industrial is a leader in the sugar substitute industry, with a leading global market share in sucralose and acesulfame. The company is actively developing allulose and offers blended sweetness solutions [3][13]. Jindawei - Jindawei is constructing a 30,000-ton allulose project, benefiting from the approval of allulose as a food additive. The company has also acquired the US brand RX Sugar to expand its portfolio [22]. Market Dynamics - Allulose is viewed as a potential substitute for sucrose, with a sweetness level of 70% compared to sucrose but only 1/10th the calories. It has health benefits such as vascular softening and blood sugar regulation, making it suitable for weight loss and diabetes applications [2][16]. - The global sugar substitute market is still in its early stages, with only about 10% of global food consumption utilizing sugar substitutes. The market for sugar substitutes is expected to grow significantly [9]. Competitive Landscape - Allulose's approval is a significant event for the sugar substitute industry, marking a new phase of development. Companies with technological and production capacity reserves, such as Bailing Chuangyuan, Bailingbao, and COFCO Technology, are expected to have favorable market prospects [8][16]. - The competitive advantage of allulose includes its low caloric content, low glycemic index, and ability to participate in the Maillard reaction, which enhances its application in baked goods [12][16]. Financial Projections - Bailing Chuangyuan's profit growth exceeded expectations at 52% in Q1 2025, with projected annual revenue and profit growth rates of over 35% and 43% respectively [3][19]. - COFCO Technology's stock price is worth monitoring, with a target price of 6.8 yuan, reflecting a projected year-on-year growth of approximately 300% [1][8]. Conclusion - The approval of allulose as a new food ingredient is expected to stimulate capacity release and expand market opportunities for companies with established production capabilities. The overall outlook for the sugar substitute industry remains positive, with significant growth potential in various food applications [1][8][16].

Group 1: Approval and Development of Allulose - Allulose has been officially approved as a new food ingredient in China, making the company the first and only one to produce allulose through enzymatic methods [1][3] - The development of allulose began in August 2017, with regulatory submissions starting in 2021, leading to various approvals from the Ministry of Agriculture and the National Health Commission [3][4] - The company has applied for 17 patents related to allulose technology, with 10 already granted, establishing a strong competitive advantage [2] Group 2: Technical Aspects and Production - The enzymatic production process utilizes D-allulose 3-epimerase, derived from the bacterium CAG55, which is registered with the National Microbial Culture Collection [5][6] - The enzymatic method allows for higher substrate concentrations (up to 50%), resulting in a more efficient production process compared to fermentation methods [9] - The company plans to leverage its experience in fructose production to optimize the allulose production line, with a projected capacity of around 10,000 tons [12] Group 3: Market Potential and Applications - Allulose is expected to have a broader application range compared to erythritol, due to its superior metabolic and health benefits, such as lowering postprandial blood glucose levels [7] - The market for allulose is anticipated to grow significantly, driven by increasing consumer demand for low-calorie and natural sweeteners [11] - The company has conducted application experiments in beverages, baking, and dairy products, preparing for future collaborations with large food and beverage enterprises [11] Group 4: Future Outlook and Cost Considerations - The cost of allulose production is expected to decrease as technology and production processes improve, with potential for competitive pricing in various applications [8] - The company is focused on accelerating the construction of production lines following regulatory approval, aiming to capitalize on its technological advancements [10] - The approval of allulose as a food ingredient allows downstream food and beverage companies to use it without additional regulatory hurdles, provided they adhere to recommended usage levels [11]

Investment Rating - The industry investment rating is "Outperform the Market" (maintained rating) [6] Core Viewpoints - The approval of D-Allulose as a new food ingredient in China marks its official application license, indicating significant market potential as a low-calorie sweetener with health benefits [1][2] - The global D-Allulose market is projected to grow at a CAGR of 33.26% from 2019 to 2023, with an expected market size of USD 545 million by 2030 [1] - Companies with relevant production capacity and technology are expected to benefit from the industry boom, with key recommendations including Bailong Chuangyuan, Baolingbao, and COFCO Technology [3] Summary by Sections Section 1: Industry Overview - D-Allulose is a natural low-calorie sweetener found in various plants, with a sweetness level of 70% compared to sucrose and only one-tenth of its calories [1] - The substance has been recognized for its health benefits, including vascular health and blood sugar regulation [1] Section 2: Production and Companies - COFCO Technology is the first and only company in China to produce D-Allulose using enzyme technology, having developed a proprietary enzyme for its production [2] - Bailong Chuangyuan has achieved over RMB 156 million in revenue from D-Allulose, with plans for significant capacity expansion in Thailand [3] - Baolingbao has been involved in D-Allulose research for nearly a decade and is expanding its production capacity to 30,000 tons by 2026 [3] Section 3: Investment Recommendations - The report recommends buying shares of Bailong Chuangyuan, Baolingbao, and COFCO Technology due to their established market positions and expansion plans [3][5]

Core Insights - COFCO Technology has received approval from the National Health Commission for D-Allulose produced through enzyme technology, marking it as the first and only company in China to achieve this milestone [1][2] - The development of D-Allulose involved overcoming significant challenges related to enzyme stability and production processes, demonstrating COFCO's commitment to innovation in the food industry [1][2] Company Development - The project for D-Allulose began in 2017, with a focus on enzyme preparation and regulatory approval, culminating in successful approval in May 2023 after overcoming multiple challenges [2] - COFCO Technology has applied for 17 patents related to D-Allulose technology, with 10 already granted, establishing a strong technological barrier and competitive advantage in the market [2] Strategic Implications - The approval of D-Allulose is a testament to COFCO's strategy of leveraging technological innovation to drive health transformation in the food sector, with plans to further develop applications in health food ingredients [2]