1. Oriental Group: at the time of the reversal of the predicament, another Xinfan re-Yuanghang Company is a national key leading enterprise in agricultural industrialization, the actual controller of the listed company is stable, and the company structure is clear. Since 2021, the company has continued to tap high value-added opportunities in the upstream and downstream of modern agriculture and health food industry chain. The company's current overall performance is greatly affected by the real estate business, with the company accelerating the divestiture of the real estate business and the release of new business capacity, the company's performance is expected to meet the historic inflection point.
2. China Minsheng Banking Corp and Jinzhou Port hold shares to lay a profit foundation.
The company's net profit is mainly contributed by the associated enterprises China Minsheng Banking Corp and Jinzhou Port. As of 2021, the company owns 2.92% of China Minsheng Banking Corp's (600016.SH) shares and 15.39% of Jinzhou Port (600190.SH) shares, and the company's share ratio corresponds to its market capitalization of about 6 billion yuan.
3. Modern agriculture and health food business are the main revenue force.
1) Agricultural products supply chain business. The company has long been committed to building a complete supply chain system of agricultural products nationwide, with an operating volume of nearly 4 million tons in 2021, with a revenue of 9.762 billion yuan, and is expected to continue to grow steadily in 2022. 2) processing and sales of agricultural products. Initial processing: it has formed a brand of characteristic agricultural products with rice, noodles and oil as the core, as well as "Yinxiang" brand bean products, with revenue of 5.274 billion yuan in 2021. The company has a rice processing capacity of 420,000 tons / year and bean products of 36,000 tons / year, and will continue to optimize its oil processing capacity of 450,000 tons / year in 2022; deep processing business: the company's rice bran technology can enhance the taste of high-moisture plant protein meat, the company's annual production line of 5000 tons of high-moisture plant protein meat has been completed and put into production in August 2021, with domestic leading technology.
4. the divestiture of the real estate business is accelerated, and the cash flow is expected to improve.
The company's real estate business is concentrated in Beijing area. In 2022, the subsidiary of Guokai Oriental will actively speed up cost recovery and cash return, and further reduce the scale of debt. We believe that when the company invigorates the existing assets and speeds up the realization of real estate business assets, it is expected to effectively improve the company's cash flow.
5. Potassium extraction from seawater: a pilot plant has been built, and the production capacity of 200000 tons is expected to reach production in 23 years. China's potash fertilizer mainly depends on imports, and the development of seawater chemical resources is a strategic way to solve the shortage of land mineral resources in China. In March 2022, Xiamen Oriental Yinxiang Oil, a subsidiary of the company, signed a "Technical Development contract" for the project of extracting potassium chloride from seawater of 200,000 tons per year with Hebei University of Technology and Professor Yuan Junsheng. This project will adopt the "efficient and energy-saving technology of extracting potash fertilizer from zeolite ion seawater", and the cost is much lower than the price of imported products. At present, the company has built a pilot plant for extracting potassium from seawater. The first phase of the project is scheduled to start construction in the second half of 2022 and is expected to reach production by mid-2023. In addition, the company plans to actively promote industrialization research on the technology of extracting lithium and bromine from seawater on the basis of the project of extracting potassium from seawater.
Profit forecast & investment advice: we expect the company to achieve revenue of 151.92 / 161.69 / 17.888 billion yuan from 2022 to 2024, an increase of 0.03%, 6.43%, 10.63%, and a net profit of 1.03 million yuan, or 106.02%, an increase of 686.10%, 25.29%, corresponding to EPS 0.03, 0.22 and 0.28 per share. We are optimistic about the progress of the reversal of the predicament of the company's main business, as well as the future development prospects of the company from the extraction of potassium from seawater to the field of seawater resources, and give the company 20 times PE in 2023, with a target price of 4.40 yuan and a "buy" rating.
Risk hints: agricultural product price risk, artificial meat technology research and development progress is not up to expectations, agricultural supply chain financial policy change risk, real estate divestiture progress is not as expected, seawater potassium extraction project progress is not as expected.