Yeast Protein Is Expected to Become a New Growth Engine for Angel Yeast

Overview

Goldman Sachs believes Angel Yeast's yeast protein business is becoming an important growth source beyond its core yeast business. Rising whey protein demand and prices, together with yeast protein's competitiveness in price, supply chain, nutritional profile, and allergen attributes, provide the company with opportunities for import substitution and global market expansion.

Core views

The report is positive on the company's ability to capture a leading share during the early commercialization phase of yeast protein, supported by its first-mover advantage, fermentation technology, and global supply chain capabilities. Yeast protein has protein content and nutritional metrics close to those of whey protein, but at materially lower cost; meanwhile, normalized overseas shipments and low molasses costs should jointly improve operating performance. Goldman Sachs maintains its 2026 net profit forecast and raises its 2027 and 2028 net profit forecasts by 7% and 16%, respectively.

Analysis framework

A top-down scenario analysis is used, combining whey protein market size, yeast/microbial protein penetration, Angel Yeast market share, capacity utilization, and product pricing to assess yeast protein's contribution to 2028 revenue and profit; valuation uses 20x the average 2026-2027 EPS.

Methodology notes

• Scenario analysisTop-down market penetration scenario analysis

  Estimates yeast/microbial protein penetration based on the whey protein market and sets assumptions for market share, capacity, and pricing.

  The base case assumes 10% yeast/microbial protein penetration in 2028 and a 21% Angel Yeast share; bull and bear cases respectively reflect faster or slower penetration, capacity ramp-up, and pricing performance.

• Valuation methodsPrice-to-earnings valuation method

  Determines the target price by applying a target P/E multiple to forward EPS.

  The target price uses 20x the average 2026-2027 EPS, raising the target price from Rmb41.0 to Rmb46.6.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Angel Yeast（600298.SS）

  Directly benefits from yeast protein replacing whey protein, overseas growth, and lower molasses costs.

  Strengths

  A leader in China's yeast industry, with first-mover advantage, conventional fermentation capabilities, approved novel food ingredients, global supply chain execution capabilities, and a high global yeast market share.

  Weaknesses

  Growth in its core China baking yeast business is more mature; yeast protein remains in the early stages of commercialization and demand validation.

  Comparison

  Yeast protein has protein content of approximately 80%, comparable to whey protein; its cost is approximately 64%, 78%, and 82% lower than domestic 80% WPC, overseas 80% WPC, and overseas WPI, respectively.

  Risks

  Industry competitors accelerating capacity expansion, weaker-than-expected product penetration and customer adoption, price competition, rising molasses costs, and weak domestic baking yeast demand.

Key data

• Rating and target priceBuy; Rmb46.60The share price was Rmb43.50 as of August 14, 2026, implying 7.1% upside.
• Yeast protein capacity15,000 tonnes in 2025; 47,000 tonnes in 2028; potentially 100,000 tonnes in 2030The company plans to add approximately 100,000 tonnes of capacity from 2026 to 2030.
• Base-case market assumptions10% penetration in 2028, 21% Angel Yeast shareThis corresponds to yeast protein sales volume of 47,000 tonnes and an ex-factory price of Rmb30,000/tonne.
• Earnings growth expectations2026-2028 revenue/net profit CAGR of 10%/15%The bull case is 12%/24%, while the bear case is 8%/9%.
• Molasses costsRmb1,128/tonne in 2025; Rmb837/tonne year-to-date in 2026Lower costs are an important support for earnings improvement, though weather and sugar prices may create volatility.
• Whey protein pricesU.S. WPC34 prices exceeded US$4,000/tonne in mid-2026This marks a significant recovery from below US$2,000/tonne in 2023; WPI was approximately EUR25,000/tonne in 1Q 2026.
• Forecast revisions2027 and 2028 net profit forecasts raised by 7% and 16%The 2026 net profit forecast remains unchanged.

Impact & implications

If yeast protein capacity expands as planned and gains customer adoption, its relatively high pricing and growth potential could increase the company's revenue growth and profit margins while reducing reliance on the mature baking yeast business. The current target-price increase mainly reflects improved medium-term earnings forecasts and a rolled-forward valuation base, but share-price upside is relatively limited and subsequent catalysts depend more on commercialization delivery.

Risks

• Yeast protein and microbial protein capacity expansion outpaces demand, resulting in oversupply and lower sales volumes and prices.
• Consumer acceptance, customer formulation adoption, or product technical validation falls short of expectations, causing penetration to be below the base-case assumption.
• Molasses, sugar prices, and El Niño-related weather disruptions raise raw-material costs and compress margins.
• Overseas transportation, exchange-rate fluctuations, or a slower-than-expected recovery in shipments affect overseas business performance.
• Domestic baking yeast demand is weaker than expected.

What to watch

• Construction progress, commissioning progress, and capacity utilization for new yeast protein capacity.
• Yeast protein customer onboarding, product launches, and changes in realized selling prices.
• Whey protein prices, global protein demand, and GLP-1-related consumption trends.
• The impact of molasses supply and demand, sugar prices, and El Niño weather on raw-material costs.
• Recovery in overseas shipments in the second half of 2026, logistics costs, and exchange-rate fluctuations.
• Delivery against the company's 2027-2028 revenue, margin, and net profit forecasts.