Incident: The company announced its 2021 semi-annual report. The company achieved operating income of 6.804 billion yuan, an increase of 1.56% over the previous year; achieved net profit attributable to shareholders of the parent company 252 million yuan, a decrease of 29.38% over the previous year. The main reasons were the year-on-year decline in net profit of the participating company Minsheng Bank and the increase in financial expenses of the subsidiary Guokai Oriental. Among them, in Q2 2021, the company achieved revenue of 3.722 billion yuan, a year-on-year decrease of 6.28%; the net profit of its mother was 66 million yuan, a year-on-year decrease of 48.45%.
The focus of rice processing and sales was adjusted, and processing of oil and soy products developed steadily. At the end of 2020, the company gradually shrunk offline supermarket channels, focusing on transformation and breaking through new retail platforms and emerging business formats. In the first half of 2021, the company's branded rice sales revenue was 368 million yuan, a year-on-year decrease of 31.98%. The main reasons were the overall slump in rice sales in the first half of the year and the company's reduction in supermarket transformation and community group buying. The company plans to continue to expand community group buying and other new retail markets in the second half of the year to optimize the product structure. Yinxiang Soy Products stepped up sales channel restructuring and new customer development efforts, and major customers such as Haidilao, Fuzhou Pupu, and Xiamen Pupu achieved significant year-on-year revenue growth. In 2021 H1, Yinxiang Soy Products achieved revenue of 71.09 million yuan, an increase of 14.64% over the previous year, and Guimu achieved net profit of 7.9706 million yuan, down 10.13% from the previous year. The decline in profit was mainly due to the increase in raw material prices for soy products in the first half of 2021.
In terms of oil processing technology, the company already has mature technical skills for rapeseed peeling processing and mass production, so that the rapeseed peeling rate has reached more than 85%, and the comprehensive processing cost has been reduced; the crude protein content of the processed peeled rapeseed meal products has reached more than 46%, and most of the anti-nutritional factors in rapeseed meal have been removed. At the same time, anthocyanin extraction technology is also being developed. Peeled rapeseed meal products are expected to be used as high-quality feed protein to replace soybean meal. This technology meets the development needs of the feed industry, and the technology has generally reached the international advanced level.
Research and development of agricultural science and technology products continues to be promoted, and the first phase of the high-moisture plant-based meat project was completed and put into operation in the third quarter.
In December 2020, the company signed a cooperation agreement with the People's Government of Fangzheng County of Heilongjiang Province on a high-moisture plant-based meat production project. The first phase of the project was officially completed and put into operation on July 30, 2021.
The first phase of the project has an annual production and processing capacity of 5,000 tons. The product line that has been formed so far includes a variety of products such as vegetable protein meat dumplings, short puff meat, meatballs, and minced meat. In the first half of 2021, the company accelerated the development and production technology of plant-based meat. A total of 12 patents have been obtained and applied for. Currently, it has developed 3 types of high-moisture plant-based plant-based meat products, 12 types of high-moisture plant-based meat terminal products, and launched 5 types in the first phase.
As of August 2021, the company's high-moisture plant-based meat project has been put into operation. The company has accurately grasped the core of the industrial chain and mastered advanced extrusion technology and equipment. Among them, the mature high humidity process is currently in a leading position in the industry, and is expected to lead the development of the domestic artificial meat industry in the future.
Profit forecast: Since the company's semi-annual report was slightly lower than expected and the progress of plant-based meat slightly exceeded expectations, adjusted profit forecasts, the company is expected to achieve revenue of 168.74/186.05/21.169 billion yuan in 2021-2023, up 9.05%/10.26%/13.78% year-on-year, achieving net profit of 2.66/361/487 million yuan, up 10.42%/35.86%/35.03%, EPS at 0.07/0.10/0.13 yuan respectively, maintaining the company's “buy” rating.
Risk warning: macroeconomic downturn risks; policy risks; food safety risks; risks of major diseases and pests, epidemic control falls short of expectations, artificial meat development falls short of expectations, etc.