GARDEN BIO-CHEM(SZ:300401) SINOLINK SECURITIES·2024-06-27 02:00Investment Rating - The report assigns a "Buy" rating for the company with a target price of RMB 17.37, based on a current market price of RMB 14.49 [2][3]. Core Insights - The company has a significant competitive advantage in the Vitamin D3 industry due to its integrated production capabilities and strategic partnerships with global leaders like BASF and DSM [2][16]. - The company is expanding its product line to include high-value products such as 25-hydroxy Vitamin D3, which has a faster absorption rate and is expected to drive future growth [2][93]. - The report predicts a recovery in Vitamin D3 prices due to industry consolidation and increasing downstream demand, with prices expected to rise from RMB 50-60 per kilogram to RMB 74 per kilogram by mid-2024 [11][83]. Summary by Sections Company Overview - The company has been involved in the Vitamin D3 industry for over 20 years, focusing on the research, production, and sales of Vitamin D3 and its derivatives [49][50]. - It has established a comprehensive Vitamin D3 supply chain, making it one of the leading manufacturers in China [50][81]. Financial Performance - The company reported a revenue of RMB 1.1 billion in 2023, a decrease of 22.8% year-on-year, primarily due to oversupply in the Vitamin D3 market [3][62]. - The forecasted revenues for 2024, 2025, and 2026 are RMB 1.48 billion, RMB 1.96 billion, and RMB 2.56 billion, respectively, with corresponding net profits of RMB 325 million, RMB 438 million, and RMB 575 million [3][6]. Market Position and Strategy - The company is positioned as a leader in the Vitamin D3 market, with a production capacity of 4,140 tons expected to be fully operational by the end of 2023 [11][81]. - The strategic "one vertical and one horizontal" approach aims to expand both upstream and downstream in the Vitamin D3 value chain, including the development of new Vitamin A, B6, E, and biotin products [50][60]. Product Development - The company is actively developing high-value products such as 25-hydroxy Vitamin D3, which has a higher bioavailability compared to regular Vitamin D3 [93][97]. - The production of 25-hydroxy Vitamin D3 is characterized by a higher profit margin and a stable supply price, making it a key focus for future growth [93][95]. Competitive Landscape - The Vitamin D3 market is characterized by a few major players, with the company and DSM being the primary suppliers of 25-hydroxy Vitamin D3 globally [2][97]. - The company benefits from a unique production process that enhances efficiency and reduces costs compared to competitors [85][97].