DEEJ(SZ:000423) Huafu Securities·2024-04-21 02:00Investment Rating - The report gives a "Hold" rating for the company with a target price of 75.56 CNY based on a 35 PE for 2024, resulting in a market capitalization of 486.63 billion CNY [4][9]. Core Views - The company is positioned as a leader in the health supplement industry, focusing on a dual-driven model of "pharmaceuticals + health consumer products" [15][17]. - The company aims to clear product inventory to stabilize supply-demand and price relationships, which had been disrupted by previous price hikes and inventory accumulation [2][36]. - The implementation of stock incentives reflects the company's confidence in its growth trajectory, with net profit growth targets set at no less than 20% from 2022 to 2026 [2][9]. Summary by Sections Company Overview - The company, established in 1952, has evolved into a publicly listed entity and is recognized as a standard setter in the health supplement industry, particularly in the production of Ejiao (donkey-hide gelatin) [15][17]. Product Strategy - The company focuses on enhancing the brand power of its core product, Ejiao, while expanding into health consumer products like "Peach Blossom Princess" Ejiao cake and Ejiao powder, targeting younger demographics [2][7]. - The company is also developing a product matrix for men's health supplements, supported by academic research [2][15]. Financial Performance - Revenue is projected to grow from 55.23 billion CNY in 2024 to 76.09 billion CNY in 2026, with a compound annual growth rate (CAGR) of approximately 17% [9][24]. - Net profit is expected to increase from 13.90 billion CNY in 2024 to 19.68 billion CNY in 2026, with growth rates of 21%, 20%, and 18% respectively [9][24]. Market Position - The company has successfully cleared excess inventory, which has helped restore market confidence and stabilize pricing [2][36]. - The company’s products, particularly Ejiao and its derivatives, dominate the market, with Ejiao alone generating over 51 billion CNY in sales [51][55]. Future Outlook - The company is expected to continue leveraging its brand strength and marketing capabilities to drive growth in both traditional and new product lines, including health supplements [9][8]. - The report highlights the potential for the company to expand its market share in the health supplement sector, which is projected to grow significantly in the coming years [55][56].