NJKS Chemical Technology Group was established in 2000 and introduced strategic investment in 2011 to form a main business centered on chemical sunscreens and synthetic fragrances. The company's sunscreen products have covered the main chemical sunscreen categories currently on the market, and UVA , All bands of UVB. In recent years, the company's revenue and net profit have developed rapidly, with revenue and net profit CAGR of 24% and 64% in 2015-2019, respectively. The global market share of the company's sunscreen sales in 2019 was 28%, an increase of 7.23 percentage points from 2017.
As a product with strong functionality and obvious effects in the cosmetics category, sunscreen products are expected to have a market size of 7.5 billion yuan in China in 2020, which is expected to exceed the overall growth of the cosmetics market by about 8% in the future. In 2019, the company's sunscreen-centric cosmetics active ingredient revenue was 810 million yuan, an increase of 18.1% year-on-year, and sales increased by 8.9% year-on-year to 14,000 tons, which was higher than the global sunscreen sales growth rate of 4%. Among them, the company is the world's top three large-scale supply of new sunscreen P-S. P-S revenue has increased rapidly from 25.85 million yuan in 2017 to 88.59 million yuan in 2019, and it is expected to continue to grow rapidly in the future.
There are many flavors and fragrance products and the market is broad. The company has achieved breakthroughs in performance by relying on product expansion. Flavors and fragrances are mainly used in food, daily necessities, cosmetics and other industries as additives, and the products are abundant and the market is broad. In 2017, the global flavors and fragrances market scale was 26.3 billion U.S. dollars, a year-on-year increase of 7%. According to Euromonitor's forecast, the global flavors and fragrances market will grow by about 3% in the future. The scale of flavors and fragrances in the Chinese market has been relatively stable in recent years, around 60 billion yuan.
From the perspective of sales, NJKS's flavor and fragrance business is mainly concentrated in Europe, the United States and Japan, monopolizing the high-end market, and 80% of its sales are concentrated in the top five companies in the world, namely Givaudan, Firmenich, IFF, Dezhixin, Man's, among which Givaudan, Firmenich, and Dezhixin are the company's top ten customers. As its upstream raw material supply end, the company relies on product expansion to achieve performance breakthroughs. In 2019, the company's synthetic fragrance revenue was 240 million yuan, a year-on-year increase of 3.6%. Among them, lilyal was the world's top three suppliers. In addition, the company has expanded its new synthetic raw materials such as coumarin and benzyl salicylate in its fundraising projects. Drive the sustainable development of the synthetic fragrance business.
The company has deep research and development background, and high-quality and stable domestic and foreign customer resources. The company has focused on the research and development and production of sunscreens for more than 10 years, forming a deep research and development background. The chairman and general manager of the company are both chemical professionals and rich in experience. As of the end of 2019, the company has more than 110 patents. The company has solid international mainstream customer resources. DSM is the company's largest customer. It started cooperation in 2015 and accounted for 40% of its revenue in 2019. The two companies cooperated in the research and development of a new sunscreen P-S, and DSM signed an exclusive purchase agreement for deep binding. In addition, the company is the largest supplier of sunscreens to multinational cosmetics groups such as Beiersdorf, Johnson & Johnson, and L'Oreal, and has more than 4 years of cooperation experience and a solid relationship.
The expansion of existing superior products and the expansion of new products and categories will help the company's long-term growth. The company plans to expand the production of avobenzone by 2,000 tons, and it is expected that it will bring about 150 million yuan in revenue and a gross profit of more than 52 million yuan. Synthetic spices expand new products, including coumarin, benzyl salicylate, n-hexyl salicylate, etc., with a total production capacity of about 5,000 tons, and it is expected to bring about 180 million yuan in revenue when all are reached. The company plans to develop whitening, moisturizing, and cleaning products, expand to a variety of personal care raw materials, and enter the personal care raw materials market.
The company is one of the world's leading suppliers of sunscreen agents. It is optimistic about the company's new products and new production capacity in the short and medium term, and is optimistic about the company's expansion of whitening, cleaning and moisturizing materials in the personal care field in the long term. The company's net profit attributable to its parent in 2020-2022 is expected to be 170 million yuan, 200 million yuan and 240 million yuan. Through comparable company valuations, the company will be given a 44 times PE valuation in 2021, and the first coverage will be given an "overweight" rating.
南京科思化学股份有限公司