Plum Blossom Biology: The Diversified Journey and Growth Code of Amino Acid Leaders
In the fierce market competition, Meihua Biotechnology (stock code: 600873), as a leader in the domestic amino acid industry, is writing a new chapter of steady growth in diversified layout with its profound industry accumulation, diversified business layout, and keen market insight. The latest research report from Hua'an Securities covers for the first time the "buy" rating given to Meihua Biotechnology. It is expected that its net profit attributable to the parent company from 2024 to 2026 will be 3.016 billion yuan, 3.502 billion yuan, and 3.692 billion yuan respectively, corresponding to PE of 9 times, 8 times, and 8 times, respectively. This positive prediction injects confidence into the market.
The amino acid industry has a complex cyclical imprint of agricultural products, and the barriers to entry and expansion are relatively low. But Meihua Biotechnology has emerged in the wave of expansion due to its excellent management capabilities. The company's flagship products such as lysine and threonine have demonstrated strong cash flow and profitability, and small varieties of amino acids have also smoothly transitioned from traditional fermentation to precision oriented fermentation. In terms of capital expenditure, Meihua Biotechnology has made cautious choices and boldly implemented its overseas strategy, thus taking the lead in industry competition.
The success of Meihua Biotechnology is not limited to intensive cultivation in the field of amino acids, but also lies in the construction of a unique platform based business structure. The company focuses on multiple advantageous products such as animal nutrition amino acids, flavorings, pharmaceutical amino acids, and colloidal polysaccharides. Its production capacity of lysine and threonine ranks first in the world, while monosodium glutamate ranks second globally. The leading position of its core products continues to solidify. In addition, the strategic move to acquire the business and assets related to Japan's "Kyowa Fermentation" will help it rapidly expand its overseas market and enrich its high value-added amino acid product matrix.
The geographical advantage is also a major treasure of plum blossom organisms. Its production base is located in major corn and coal producing areas such as Inner Mongolia, Xinjiang, and Jilin. With the construction of large-scale integrated production lines, it realizes the cascading recycling of energy and significantly reduces production costs. Especially in Xinjiang, the cost of coal is only about one-third of the national average, and the cost advantage is extremely significant. As a modern enterprise with a long domestic industrial chain and high comprehensive resource utilization rate, the integrated production lines of resource utilization in each base have further strengthened the competitive barriers.
It is worth mentioning that the platform based layout effectively buffers the revenue and performance fluctuations of Meihua Biotechnology. Since the construction of the Baicheng base in Jilin in 2017, the production of amino acid products and monosodium glutamate has been continuously increasing, and the company's revenue has been soaring. However, in the first three quarters of 2024, revenue and net profit attributable to shareholders slightly declined due to the decrease in sales prices of monosodium glutamate, xanthan gum, and corn by-products. But with the support of the platform based product matrix, the profit growth of the animal nutrition amino acid sector has played a buffering role in the decline of performance. In addition, the cost reduction of raw materials such as corn and the improvement of production indicators have reduced the main business costs, and the performance fluctuations have been effectively controlled.
While consolidating its core product advantages, Meihua Biotechnology actively expands its multi category development. Its animal nutrition amino acids and food taste trait optimization products are the main business segments, providing the company with stable income and profits. From the perspective of market demand, with the increase in per capita income and the optimization of residents' dietary structure, the consumption of meat, poultry, eggs, milk, and meat products continues to rise, and the demand for feed is also increasing. This makes the market for feed amino acids promising. In addition, the implementation of soybean meal reduction and substitution policies has further stimulated the demand for feed amino acids.
From a global market perspective, the amino acid industry is showing a vigorous development trend, and it is expected that the market size will reach 49.42 billion US dollars by 2030. Among them, the compound annual growth rate of feed amino acids during the forecast period from 2023 to 2030 is 5.5%, and the market size is expected to reach 9.3 billion US dollars by 2030. As the world's largest producer of feed amino acids, China's production will account for 70.4% of the global total in 2023, and it is expected that the industrial scale will reach around 4.5 million tons by 2025.
Driven by the dual benefits of policies and the market, the development path of the amino acid industry is becoming increasingly broad. Meihua Biotechnology, with its own advantages in the industry, is expected to further enhance its market share and industry influence, promote high-quality development of the enterprise, and build a solid framework for future growth.
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