Dong E-Jiao gelatin prices rise again or support shares skyrocketing

In recent days, the demon stocks in the capital market have been rampant. Dong'e Ejiao seems to have been somewhat neglected. However, in fact, its skyrocketing momentum is no less than these demons.

From the beginning of this year to the present, the cumulative decline of the Shanghai Composite Index has exceeded 15%, but all this seems to have nothing to do with the donkey-hide gelatin. In the first half of the year, the stock rose from 26 yuan to 40 yuan, an increase of more than 50%. Since the end of October 2007, the stock has risen without a break, rising from a minimum of 12.58 yuan to a maximum of 40.68 yuan, an increase of 223.37%.

According to statistics of Wind, as of September 3, the dynamic price-earnings ratio of the pharmaceutical sector was 38.11 times, of which Dong Dong donkey-hide gelatin had a dynamic price-earnings ratio of 51.42 times.

Compared to the demon-bubbled stocks, Dong-E E-Jiao seems to be more stable and long-term. What are the reasons behind the promotion of Dong'e E-Jiao's stock price in the past few years?

Ejiao products prices skyrocketing caused stock prices skyrocketing?

It is understood that Ejiao products on January 16 this year, a price increase of 10%, a price increase of 20% on January 28, after which on May 23 again increased the ex-factory price of 5%.

Dong'e E-Jiao Co., Ltd. announced that due to the declining stocks of domestic donkeys, the resources of donkey hides became increasingly tense, resulting in rising raw material purchase prices. With the approval of the relevant departments, the company raised the price of Ejiao block products by 20%.

Manager Li of Ning’an large pharmacy in Hebei Province told the “Securities Daily” reporter that from the beginning of this year, the price of Dong'e E-Jiao series products began to rise, and the 250-g-loaded donkey-hide gelatin increased from 90 yuan to 130 yuan, an increase of more than 30%.

The increase in the price of donkey-hide gelatin products has directly boosted the performance of Dong-E E-Jiao.

According to the company's semi-annual report for 2010, the operating income for the reporting period was 1.244 billion yuan, an increase of 36.50% over the same period of last year. The operating profit was 365 million yuan, an increase of 90.99% over the same period of the previous year; and the net profit was 311 million yuan, compared with the same period of last year. Increased by 91.01%.

Some analysts said that the Ejiao business is the biggest driving force for the growth of Dong-E E-Jiao. In the first half of 2009, the revenue of donkey-hide gelatin and ejiao series products was 854 million yuan, accounting for 68.84% of the company's operating income, up 60.8% year-on-year. The gross profit rate of products was 69.76%, an increase of 11.67 percentage points over the same period of last year, becoming the largest boost in the company's earnings growth. force.

Yu Fangsheng, an analyst at China Investment Securities, said in an interview with the "Securities Daily" reporter that the increase in Dong'e's stock price was mainly due to its market performance. In the first half of the year, the price of donkey-hide gelatin products was relatively high and sales volume was relatively good. In addition, the company's health food has developed rapidly and has gradually formed a scale with a relatively large space for development.

He also pointed out that since May, the company has already controlled shipments. Sales are too good, demand is too strong, and price increases are big trends.

Analyst Yi Jingming of Guotai Junan stated that although the company’s Ejiao block will not change much from the whole year, it will be about 1,700 tons, but this year’s average price is about 48% higher than last year, and the price increase will significantly increase the net profit. From the historical point of view, the Ejiao block price increase from April 2006 to April 2009 was 126%. Based on the current 48% price difference between the retail price and the ex-factory price, the ex-factory price of the Ejiao block will continue to double within the next three years.

Monopoly promotion?

The fake Ejiao incident had a positive effect on Dong Ejiao and consolidated its monopoly on the market.

At the beginning of June, CCTV's "Weekly Quality Report" exposed the turmoil of the Lijiao market. The program, on the one hand, reveals the counterfeiting of some Ejiao companies. On the other hand, it declares the authenticity of Dong Ejiao in the world.

According to statistics of Wind data, as of June 30 this year, a total of 62 main institutions (62 funds) held Dong'e E-Jiao, with a total holding of 229 million shares, accounting for 34.97% of its circulating A shares.

Some analysts believe that the company's pursuit of the fund is only the apparent reason for the rise in the stock price. Dong Ejiao's monopoly on Ejiao and its reputation in the health care market of Chinese medicine are the real reason for the rise in its stock price. Looking at the A-share market, few listed companies have the same status as Dong-e-Ejiao in the Chinese medicine health care products market.

In addition, Dong Elepha has the privilege of bargaining power and pricing power. Ejiao has a unique market. In particular, its medicinal value determines that Ejiao belongs to a rigid demand, and Dong Ega does have a certain monopoly position.

Insiders pointed out that if the price of Dong-E Ejiao products doubles, consumers can only passively accept them because they do not have alternative products.

Guo Ping Securities analyst He Pingge believes that since Ejiao's pricing power is in the hands of Dong'e E-Jiao, as long as the company's marketing channels and consumer focus are booming, there is no upper limit on prices.

The scarcity of raw materials makes Ejiao "higher prices."

In recent years, with the strengthening of people's concept of health, Ejiao products are gradually being favored by consumers. Due to the scarcity of donkey hides, Dong E Ejiao has strengthened the control of the donkey skin market. The company can control about 90% of raw materials for donkey hides, but the market share of its products is only 75%. Therefore, it seems that the increase in price of donkey-hide gelatin is just a trend.

National agricultural statistics show that from 1991 to 2008, the total number of donkeys in the country was reduced from more than 11 million to more than 7 million. It is estimated that by 2030, the number of donkeys in China will be less than 2 million.

It is understood that the demand for donkey-hide gelatin grows at an annual rate of 30%, but the donation of the national donkey is declining at a rate of 3.5% per year. The price per ton of whole donkey skin has soared to more than 30,000 yuan.

From 2007 to now, Dong-E E-Jiao has ceased production due to the lack of donkey skin almost every year. In desperation, Dong E-Jiao had to personally engage in aquaculture in order to ensure the supply of raw materials. The company has invested 200 million yuan to establish 13 donkey bases, and has formulated a plan to raise donkeys in 2010.

However, a young donkey takes 3 years to slaughter, and the long breeding period makes Dong'e Ejiao still unable to get rid of the bottleneck of short supply of raw materials.

The scarcity of raw materials caused its price to rise year after year, and the price increase of Ejiao products seems to have become commonplace.

Faced with repeatedly rising prices, Li Shizhong, a spokesperson for Dong'e E-Jiao, said that only the supply of raw materials is sufficient and the cost has dropped. The price of donkey-hide gelatin is likely to fall.