Fushine(SZ:300497) Soochow Securities·2024-10-16 10:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company is positioned to capitalize on the growing market for microbial protein, which is expected to see significant demand due to global population growth and protein shortages. The domestic alternative protein market is projected to grow at a compound annual growth rate (CAGR) of 17.25%, reaching 50.8 billion yuan by 2032 [2][25][29]. - The company has established itself as a leader in microbial protein production, with a current capacity of 1,200 tons per year and plans to expand to 20,000 tons by the end of 2024, potentially generating over 400 million yuan in revenue [2][3]. - The traditional raw material drug business is showing signs of improvement, with raw material prices stabilizing and the company implementing cost-reduction measures that have already begun to yield results [2][3]. Summary by Sections 1. Business Overview - The company, founded in 2002, has transitioned from a focus on antibiotic raw materials to include microbial protein and lithium battery electrolyte additives, which are expected to drive new growth [14]. 2. Market Potential for Microbial Protein - The global demand for food protein is projected to increase significantly, with a shortfall of 40% expected by 2050. The domestic market for alternative proteins is anticipated to grow from 11.8 billion yuan in 2024 to 50.8 billion yuan by 2032 [2][25][27]. - Microbial protein offers advantages over traditional protein sources, including higher efficiency, health benefits, and lower carbon emissions [2][25][37]. 3. Raw Material Drug Business Improvement - The company is experiencing a marginal improvement in its raw material drug business, with a notable increase in gross margins due to cost control and operational efficiency [2][3][20]. 4. Expansion in Electrolyte Additives - The company is expanding its production capacity for lithium battery electrolyte additives, which is expected to enhance its product matrix and improve profitability [3][20]. 5. Financial Projections - Revenue forecasts for 2024-2026 are 1.51 billion, 2.00 billion, and 2.52 billion yuan, respectively, with net profits projected to turn positive by 2025 [3][20].