Interpretation of Bailong Chuangyuan 2024 Annual Report: Functional Ingredients Leader, Dual Advantages Build Core Competitiveness

Interpretation of Bailong Chuangyuan 2024 Annual Report: Functional Ingredients Leader, Dual Advantages Build Core Competitiveness

On the evening of April 29, Bailong Chuangyuan (605016.SH) disclosed its 2024 annual report. The report shows that the company achieved a total operating income of 1.152 billion yuan for the whole year, a year-on-year increase of 32.64%; net profit attributable to the parent was 246 million yuan, a year-on-year increase of 27.26%; non-net profit was 231 million yuan, a year-on-year increase of 31.72%.

Under the resonance of multiple factors such as the release of production capacity and the increase in demand from domestic and foreign customers, Bailong Chuangyuan's performance in 2024 reached a new high, achieving a simultaneous increase in quality, highlighting the company's leading position in the field of functional food ingredients.An in-depth analysis of this annual report shows that Bailong Chuangyuan has the dual advantages of diversified product layout and forward-looking strategic layout.

Diversified product layout:The resonance of the four major businesses opens up growth space.

As a leader in the field of functional food ingredients, Bailong Chuangyuan is mainly engaged in the research and development, production and sales of prebiotics series products, dietary fiber series products, healthy sweetener series products and other starch sugar (alcohol) products.

In 2024, the four major businesses of Bailong Chuangyuan resonated, and the product structure was further optimized, covering more than 100 functional food ingredients products of different specifications and models, which became an important background for performance growth.

From the perspective of product structure, Bailong Chuangyuan's core product matrix represented by prebiotics and dietary fiber accurately fits the market trend of "healthy consumption", and product sales continue to rise. In 2024, Bailong Chuangyuan's two major series of prebiotics and dietary fiber products achieved revenues of 322 million yuan and 624 million yuan, respectively, a year-on-year increase of 25.43% and 40.42%; accounting for 29.14% and 56.35% of total revenue, respectively, and are the focus of business development.

The healthy sweetener series of products has benefited from the rapid growth of demand for allulose products in overseas markets and has become one of the important new sources of profit growth for the company. In 2024, Bailong Chuangyuan's healthy sweetener business achieved revenues of 156 million yuan, a year-on-year increase of 13.85%, accounting for 14.12% of revenue, becoming the "second curve" of the company's performance growth. Other starch sugar (alcohol) products are important supplements to the company's product line and to meet the needs of different customers.

Diversified layout means that the downstream application market of Bailong Chuangyuan's products is extensive, which means broader development prospects. A third-party agency predicts that the global functional food market will exceed US$250 billion in 2025, with an average annual compound growth rate of 7%.

In the face of downstream demand, Bailong Chuangyuan also seized the opportunity to actively expand production. In 2024, the company's "30,000 tons of soluble dietary fiber project per year" and "15,000 tons of crystalline sugar project per year" will be fully put into production. The release of production capacity has driven the continuous growth of sales and revenue, opening up new growth space for the company. With the continuous expansion of production capacity, the company's medium- and long-term high-profit growth rate can be expected.

On the basis of product diversification, Bailong Chuangyuan can also enhance customer stickiness with customized services, and has a high overall bargaining power.

Based on the unique needs of customers, the company follows the requirements of developing a batch, launching a batch, and producing a batch, timely grasps industry information and customer needs, develops 5-6 new specifications and models of products each year, and launches 2-3 new products to meet the needs of different customers. Since downstream customers will basically not change suppliers after the product is formed to ensure the uniformity of product taste and related indicators, Bailong Chuangyuan has a relatively high overall customer stickiness.

Long-term and stable customers have brought excellent cash flow and healthy financial status to Bailong Chuangyuan. In 2024, the company's net cash flow from operating activities reached 301 million yuan, a year-on-year increase of 54.59%, reflecting its strong hematopoietic ability; the sales cash collection ratio reached 98%, showing that the company's cash collection ability was outstanding; the asset-liability ratio at the end of 2024 was 16.6%, which has been stable below 20% for many years, and its financial status is sound.

Strategic globalization: "Innovation + Going Global" highlights the long-term value. 

Behind the successful product layout is Bailong Chuangyuan's forward-looking strategic layout - attaching importance to technological innovation and global opportunities.

As a national high-tech enterprise, Bailong Chuangyuan has always attached importance to the accumulation of technological innovation advantages and has continuously increased its R&D investment in recent years. In 2024, the company's R&D expenses reached 44.4622 million yuan, a significant year-on-year increase of 36%; the R&D expense rate reached 3.86%.

The high R&D investment brings deep technical barriers to the company. As of the end of 2024, the company has been granted 88 authorized invention patents, covering the core production technologies of major products such as resistant dextrin and allulose.

At the same time, the results of technology realization are also particularly significant. The company's gross profit margin has increased for three consecutive years since 2022, reaching 34.35% in 2024, an increase of 1.32 percentage points year-on-year, and a significant increase from the gross profit margin of 27.81% in 2021. Profit resilience is highlighted against the backdrop of intensified industry competition.

Faced with global opportunities, Bailong Chuangyuan also has a forward-looking layout, with locations in Southeast Asia, Europe and the United States.

In September 2024, the company announced that it plans to issue convertible bonds to raise funds for the construction of a smart factory for new food raw materials for great health in Thailand. The project construction period is 36 months. At the same time, it plans to build an international R&D center project for new food raw materials applications in the United States to grasp global market development trends and cutting-edge technologies and improve R&D efficiency.

Under the global layout, in 2024, Bailong Chuangyuan's overseas revenue will reach 698 million yuan, a year-on-year increase of 58.42%; the proportion of main business revenue will reach 63.08%, an increase of 12.33 percentage points year-on-year. At present, the company's products have covered many regions such as Asia, Europe, and North America. With the continued growth of global consumer demand for healthy foods and functional sweeteners, the international market share is expected to expand further.

In the future, with the advancement of the company's R&D center construction project in the United States and the Thailand factory project, Bailong Chuangyuan's export advantages are expected to be further consolidated, and with Thailand's cost and tariff advantages, it will create a growth curve of the "second Bailong Chuangyuan", better grasp the supply and demand trends in overseas markets, strengthen its competitiveness in the international market, and open up a broader growth space.

Overall, with its diversified product layout and forward-looking strategic layout, Bailong Chuangyuan will continue to lead the functional food ingredients track in 2024, proving its strong strength with outstanding performance.

With the deepening of healthy consumption trends and the implementation of globalization strategies, the company is expected to gradually advance from a segment leader to a world-class supplier of healthy raw materials, with a clear long-term growth path. Relying on its strong growth momentum and clear strategic layout, Bailong Chuangyuan is expected to create more value for investors in the future.