ANGEL YEAST(SH:600298) Huafu Securities·2024-05-28 11:00Investment Rating - The report gives a "Buy" rating for the company, marking the first coverage of the stock [4]. Core Views - The company is expected to maintain double-digit growth in its yeast business, driven by factors such as the expansion of deep-processing products and overseas market growth, aiming for a revenue target of 20 billion [1][2]. - The company has established a strong global presence in the yeast industry, becoming the largest supplier of yeast extract (YE) and the second-largest yeast supplier globally, with a market share exceeding 18% [12][39]. - The report highlights the company's robust financial performance, with projected net profits for 2024-2026 reaching 1.39 billion, 1.66 billion, and 2.01 billion respectively, reflecting growth rates of 9%, 20%, and 21% [2][4]. Summary by Sections Company Overview - The company has been focused on the yeast industry for nearly 40 years, establishing a comprehensive supply chain and a diverse product portfolio, including baking yeast, yeast extract, and brewing yeast [10][11]. - It has become the largest yeast company in Asia and the second-largest globally, with a strong market position and pricing power [2][10]. Industry Landscape - The global yeast industry is expanding steadily, driven by health-conscious consumption and technological innovation, with the market size for yeast powder reaching approximately 5.54 billion USD in 2021 [24][27]. - The Chinese yeast market is maturing, with significant growth expected from baking products and derived products, supported by increasing consumer demand [27][30]. Financial Performance - The company's revenue for 2022 was 12.84 billion CNY, with a projected increase to 18.79 billion CNY by 2026, reflecting a compound annual growth rate (CAGR) of 12% [1][2]. - The net profit for 2022 was 1.32 billion CNY, with expectations of reaching 2.01 billion CNY by 2026, indicating a strong recovery and growth trajectory [1][2]. Growth Drivers - The company is benefiting from trends such as improved downstream demand, health-oriented consumer preferences, and the expansion of its overseas business, which is expected to enhance overall profitability [1][2][30]. - The reduction in raw material costs, particularly molasses, and the improvement in production efficiency are anticipated to contribute positively to the company's profit margins [1][2]. Competitive Position - The yeast industry is characterized by a stable oligopoly, with the company positioned to outperform its competitors due to its strong domestic market presence and ongoing international expansion efforts [33][39]. - The company has a competitive edge in the yeast extract market, with a significant share in both domestic and international markets, and is well-positioned to capitalize on the growing demand for health-oriented food products [30][39].