Core Viewpoint - The resignation of Dai Sijue, the youngest chairman in A-share history, comes at a time when the company, Baolingbao, is experiencing a strong performance rebound, raising questions about underlying pressures within the company's control structure [1][2][3] Company Performance - Baolingbao reported a net profit of 111 million yuan for 2024, a year-on-year increase of 105.97%, and a significant increase in non-recurring net profit by 254.56% [3] - For the first three quarters of 2025, Baolingbao achieved a revenue of 2.126 billion yuan, up 15.98% year-on-year, and a net profit of 134 million yuan, reflecting a 32.58% increase [3] Industry Context - The erythritol industry faced severe supply-demand imbalances and price wars in 2023 due to an influx of new players, followed by an anti-dumping investigation by the European Union [3] - The company has shown resilience in navigating the industry's cyclical challenges, focusing on high-value products and optimizing supply chain management [3] Control Structure Changes - The actual control of Baolingbao shifted from Dai Sijue alone to a joint control with his brother, Dai Sicong, in August 2024 [5] - A promised share buyback plan by the new controlling entity has faced delays, with the initial commitment to increase holdings by 5% not being fulfilled as of the latest reports [6] Financial Pressures - Dai Sijue's controlling entity, Yongyu Investment, has faced significant financial pressures, being listed as an executor in multiple court cases with total amounts exceeding 280 million yuan [1][6] - As of the resignation announcement, Dai Sijue held 7.75% of Baolingbao's shares through Yongyu Investment, indicating ongoing involvement despite his resignation [6]

Core Viewpoint - The resignation of Dai Sijue, the youngest chairman in A-share history, comes amid a strong performance rebound for Baolingbao, raising questions about underlying financial pressures within the company's controlling entities [1][2][3] Group 1: Resignation Details - Dai Sijue submitted his resignation as chairman and board member of Baolingbao on November 17, 2023, citing personal reasons [2] - He will continue to hold positions in Baolingbao's subsidiaries, indicating a partial retention of influence [2] - Dai Sijue became chairman in March 2021 at the age of 26, during a peak period for the sugar-free beverage market [2][3] Group 2: Company Performance - Baolingbao reported a net profit of 111 million yuan for 2024, a year-on-year increase of 105.97%, and a significant rise in non-recurring net profit by 254.56% [3] - For the first three quarters of 2025, the company achieved a revenue of 2.126 billion yuan, up 15.98%, and a net profit of 134 million yuan, reflecting a 32.58% increase [3] - The growth is attributed to increased sales of core products such as sugar-reduced sweeteners and dietary fibers, alongside improved gross margins [3] Group 3: Control and Financial Pressures - The actual control of Baolingbao shifted from Dai Sijue alone to a joint control with his brother, Dai Sicong, in August 2024 [4] - A planned share buyback by Dai Sicong's investment firm has faced delays due to "funding arrangements," with the initial commitment to acquire 5% of shares not met [4][5] - Dai Sijue's investment firm, Yongyu Investment, has been listed as a defendant in multiple court cases, with total amounts exceeding 280 million yuan, indicating financial strain [1][5]

Core Viewpoint - The report from Huaxi Securities indicates that Baolingbao's Q3 2025 revenue, net profit attributable to shareholders, and net profit excluding non-recurring items were 727 million, 41 million, and 34 million yuan respectively, showing year-on-year growth of 12.23%, 30.21%, and 11.72% [1] Group 1: Financial Performance - Baolingbao's significant revenue growth is attributed to the substantial increase in sales of core products such as sugar-reducing sweeteners, prebiotics, and dietary fibers [1] - The improvement in gross margin is due to cost reduction and efficiency enhancement, alongside the increasing revenue share from core products [1] Group 2: Market Position and Product Strategy - As a leading enterprise in the domestic functional sugar industry, Baolingbao holds a significant market share in sugar-reducing sweeteners, prebiotics, and dietary fibers, supported by its comprehensive product layout and technological advantages [1] Group 3: Future Outlook - Short-term: With the new corn harvest in major production areas, corn prices are expected to remain low in Q4, which, combined with production cost reductions, may further enhance the gross margin of core products [1] - Mid-term: The accelerated approval process for allulose in China is expected to open up the domestic market, with Baolingbao's 20,000-ton expansion project already initiated, aiming for an annual capacity of approximately 30,000 tons by the end of 2026 [1] - Long-term: The launch of new high-value-added products such as HMOs (human milk oligosaccharides), algal oil DHA, and sugar-free resistant dextrin will further optimize the company's profit structure [1]

Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The company's revenue, net profit attributable to shareholders, and net profit after deducting non-recurring gains and losses for Q3 2025 were CNY 727 million, CNY 41 million, and CNY 34 million, respectively, representing year-on-year growth of 12.23%, 30.21%, and 11.72% [2] - The significant growth in performance is attributed to the substantial increase in sales of core products such as sugar-reduced sweeteners, prebiotics, and dietary fibers, along with improved gross margins due to cost reduction and efficiency enhancement [2][3] - The company's three core products accounted for 61.5% of revenue, with a gross margin contribution of 68.6%, and their sales revenue grew by 25.8% year-on-year [3] - The approval of HMO (Human Milk Oligosaccharides) for infant formula has been finalized, allowing for the expansion of product offerings in this category [4] - The gross margin for Q3 2025 was 13.54%, an increase of 1.76 percentage points year-on-year, while the gross margin for core products improved by 5.3 percentage points [5] Summary by Sections Financial Performance - For the first three quarters of 2025, the company reported revenue of CNY 2.126 billion, net profit attributable to shareholders of CNY 134 million, and operating cash flow of CNY 158 million, reflecting year-on-year growth of 15.98%, 32.58%, and 62.38% respectively [2] - The company’s inventory decreased by 8.06% year-on-year, with inventory turnover days reduced to 39 days [6] Investment Recommendations - The company is positioned as a leader in the functional sugar industry, with a strong market share in sugar-reduced sweeteners, prebiotics, and dietary fibers [7] - Short-term outlook suggests further improvement in gross margins due to declining corn prices and production efficiency [7] - Mid-term prospects include accelerated approval for allulose, which is expected to open up the domestic market [7] - Long-term growth is anticipated from the launch of high-value products such as HMOs, DHA, and sugar-free resistant dextrin [7] Financial Projections - Revenue projections for 2025, 2026, and 2027 are CNY 2.718 billion, CNY 2.966 billion, and CNY 3.211 billion, respectively, with corresponding net profits of CNY 179 million, CNY 222 million, and CNY 269 million [9][11]

Core Insights - The rise of new consumer brands in Jinan is driven by technological advancements and a focus on meeting consumer needs, showcasing the potential of local industries to innovate and adapt [2][3][4][5][6][7] Group 1: Technological Innovation - Tanghe Tang Biotechnology, a subsidiary of Shengquan Group, has transformed from a traditional industrial player to a high-end food ingredient provider, increasing its revenue from 10 million to over 400 million yuan through the development of a fully automated xylitol production line [3] - Huaxi Biological has shifted from B2B to B2C, investing 3 billion yuan to build the world's largest pilot platform, enabling rapid transformation of research into consumer products and achieving a 44% global market share in hyaluronic acid [4] - The technological breakthroughs in these companies have restructured the supply chain and allowed Jinan's manufacturing sector to penetrate the functional sugar market, with Tanghe Tang aiming for an annual output value of 1 billion yuan in the next 3-5 years [3][4] Group 2: Market Demand and Consumer Focus - Tangpai Group has been addressing the silver economy since 2010, creating a comprehensive supply chain for elderly products, with over 3,000 items integrated into its brand, and establishing the first silver economy center in Shandong [6] - The company has introduced a new consumption model that includes a silver economy center, elderly care display center, and community service stations, ensuring accessibility and affordability of products for the elderly [6] - Weirkan Group has transformed from a traditional meat processing factory to a cold chain service provider, expanding its cold storage capacity from 10,000 tons to 360,000 tons and increasing its distributor network from 200 to over 1,800 [7]

Group 1 - The stock of Baolingbao fell by 5.02% on October 21, closing at 9.28 CNY per share, with a trading volume of 77.45 million CNY and a turnover rate of 2.23%, resulting in a total market capitalization of 3.532 billion CNY [1] - Baolingbao Biotech Co., Ltd. is located in Dezhou, Shandong Province, and was established on October 16, 1997, with its listing date on August 28, 2009. The company's main business involves the research, production, and sales of functional sugars [1] - The revenue composition of Baolingbao includes: starch sugars and others 29.89%, sugar-reduced sweeteners 26.55%, feed and by-products 22.40%, probiotics 13.48%, dietary fiber 7.39%, and others (supplements) 0.29% [1] Group 2 - From the perspective of the top ten holdings of funds, one fund under Western Li De has a significant position in Baolingbao. The Western Li De New Fortune Mixed A Fund (673120) held 14,400 shares in the second quarter, accounting for 4.17% of the fund's net value, ranking as the seventh largest holding [2] - The Western Li De New Fortune Mixed A Fund (673120) was established on June 16, 2017, with a latest scale of 1.8184 million. Year-to-date, it has lost 5.36%, ranking 8106 out of 8162 in its category; over the past year, it has lost 7.13%, ranking 7959 out of 8024; since inception, it has achieved a return of 27.84% [2] Group 3 - The fund manager of Western Li De New Fortune Mixed A (673120) is Zhang Changping, who has been in the position for 4 years and 352 days. The total asset scale of the fund is 1.568 billion CNY, with the best fund return during his tenure being 111.93% and the worst being 0.88% [3]

Core Insights - Baolong Chuangyuan (605016) reported a revenue of 969 million yuan for the first three quarters of 2025, representing an 18.10% year-on-year increase, and a net profit of 265 million yuan, up 44.93% year-on-year [1] - The growth in performance is attributed to product structure optimization and the release of production capacity from projects including 30,000 tons of soluble dietary fiber and 15,000 tons of crystalline sugar [1] - The functional sugar industry is experiencing a recovery in profitability, with the approval of allulose as a legal food additive in China marking a new competitive phase in the sector [1] Company Developments - Baolong Chuangyuan is one of the main producers of allulose in China, currently having a production capacity of 15,000 tons and plans to add another 20,000 tons at a health factory in Thailand [1] - Other companies in the A-share market, such as Baolingbao (002286), Sanyuan Biological (301206), and Huakang Co., Ltd. (605077), are also expanding their capacities in the allulose sector [2] - Baolingbao plans to complete a technical transformation project for allulose with an annual capacity exceeding 5,000 tons by 2024, and will start a second-phase expansion project of 20,000 tons in March 2025 [2] Industry Trends - The potential market size for allulose in China is estimated to reach 142 million USD, which is about 15% of the current alternative sweetener market [1] - The entry of allulose into the market is expected to reshape the competitive landscape of the high-end alternative sweetener market in China [1] - Despite the promising outlook for the industry, there are concerns regarding market promotion uncertainties and the risk of price wars due to increasing production capacity from various companies [2]

Core Viewpoint - The launch of D-Tagatose products marks a significant breakthrough in the independent research and industrialization of high-end functional sugars by the company [2]. Product Overview - On September 23, 2025, the company held a product launch event for D-Tagatose in Beijing, targeting food industry clients across various sectors including beverages, dairy products, baking, and ready-to-drink tea and coffee [1]. - The D-Tagatose product is developed using an enzyme production process in collaboration with the COFCO Nutrition and Health Research Institute, featuring a taste profile similar to sucrose but with only 10% of its calories, catering to the trend of low-calorie sugar intake [1]. - The product can also undergo Maillard reaction with proteins, making it suitable for applications in baking and beverages where color and flavor enhancement are desired [1]. Impact on the Company - The introduction of D-Tagatose enriches the company's product portfolio and creates favorable conditions for exploring emerging markets and nurturing new business growth points [3]. - The company has outlined a three-phase capacity planning strategy: immediate production through existing equipment, mid-term capacity expansion via technological upgrades, and long-term establishment of a complete production system with new production lines [2]. Future Development - As a member of the COFCO Group, the company plans to leverage the group's resource advantages and innovation capabilities to promote integration of production and research, enhance core technology upgrades, and expand capacity sustainably [2].

Industry Insights - The launch of D-alloheptulose, the first domestic product of its kind, fills a gap in the high-end functional sugar market in China and signifies a breakthrough in biomanufacturing technology [1] - D-alloheptulose is recognized for its low energy content and non-glycemic properties, making it a potential substitute for traditional food sweeteners, with safety approvals from multiple countries [1] - The global market for D-alloheptulose is projected to reach $147 million by 2024, with an expected compound annual growth rate (CAGR) of 14% from 2025 to 2034 [1] Company Developments - Bailong Chuangyuan is noted as the first company in China to achieve industrial-scale production of D-alloheptulose [3] - Baolingbao is one of the earliest companies to invest in D-alloheptulose projects, currently operating over 5,000 tons of production capacity, with plans to expand to 30,000 tons by 2026 [3] Market Dynamics - Currently, all D-alloheptulose products from China are exported, but domestic applications are expected to accelerate following its official approval [2]

Core Viewpoint - COFCO Technology has launched D-Allulose products aimed at the food industry, marking a significant breakthrough in the high-end functional sugar sector [1] Group 1: Product Launch and Features - COFCO Technology introduced D-Allulose products at a technology exchange and product launch event in Beijing, targeting sectors such as beverages, dairy, baking, and ready-to-drink tea and coffee [1] - The D-Allulose product is developed using an enzyme production process in collaboration with COFCO Nutrition and Health Research Institute, featuring a pure taste without a bitter aftertaste [1] - The sweetness of D-Allulose is approximately 70% that of sucrose, while its caloric content is only 10% of that of sucrose, aligning with the trend for low-calorie sugar alternatives [1] Group 2: Application and Benefits - D-Allulose can undergo the Maillard reaction with proteins, making it suitable for applications in baking and beverages where color and flavor enhancement are desired [1] Group 3: Production Capacity Planning - The company’s production capacity is planned in three phases: immediate establishment of a supply chain with partners using existing equipment, mid-term capacity expansion through equipment upgrades, and long-term plans to build new production lines for a complete production system [1]