DEEJ(SZ:000423) HUAXI Securities·2024-08-15 13:03Investment Rating - The report assigns an "Accumulate" rating for Dong'e Ejiao (000423) with a target price of 49.01 CNY, reflecting a positive outlook on the company's performance [2]. Core Insights - Dong'e Ejiao has successfully cleared excess inventory and is focusing on rejuvenating its traditional brand to attract younger consumers, positioning itself as a leader in the gelatin industry [2][20]. - The company has established a dual-driven growth model combining "medicinal products + health consumer goods," which is expected to enhance its market presence and revenue streams [2][30]. - The retail market for blood-nourishing traditional Chinese medicine is expanding, with Dong'e Ejiao's products holding a strong market position [2][22]. Summary by Sections Company Overview - Dong'e Ejiao, established in 1952, is a leading brand in the gelatin-based traditional Chinese medicine sector, with a strong focus on quality and brand reputation [9][12]. - The company is backed by state-owned assets, with a stable shareholding structure, enhancing its operational stability [12][13]. Product Positioning and Market Strategy - The company has a clear product positioning strategy, focusing on high-quality traditional products while expanding into health consumer goods [2][20]. - Dong'e Ejiao's product lineup includes various forms of Ejiao, with significant market shares in key categories such as Ejiao blocks and compound Ejiao syrup [22][28]. Financial Performance and Projections - The company achieved a revenue of 47.2 billion CNY in 2023, with a compound annual growth rate (CAGR) of 12.4% from 2019 to 2023 [21][22]. - Future revenue projections for 2024-2026 are estimated at 55.6 billion CNY, 64.9 billion CNY, and 75.0 billion CNY, respectively, with corresponding net profits of 13.8 billion CNY, 16.6 billion CNY, and 19.7 billion CNY [2][4]. Research and Development - Dong'e Ejiao is investing in R&D to innovate and expand its product offerings, focusing on both traditional and new health products [20][21]. - The company has established a unique R&D platform to address key challenges in the gelatin industry and enhance its competitive edge [20]. Organizational Changes and Efficiency - The company has undergone significant organizational restructuring to improve efficiency, resulting in a 43% increase in labor productivity [29][30]. - Employee optimization efforts have led to a substantial increase in per capita revenue, reflecting improved operational performance [29][30].