Incident 1: Quanyin Hi-Tech released its quarterly report for '23. 2023Q1's revenue was about 617 million yuan, an increase of 40.22% over the previous year; Guimu's net profit was about 31.32 million yuan, an increase of 53.4% over the previous year.

Incident 2: Quanyin Hi-Tech plans to acquire 67.90% of Hebei New Era Seed Industry's shares for 224 million yuan. This layout is expected to further increase the company's corn seed market share and promote the continuous development of the company's corn seed business.

1. The company's 23Q1 revenue continued its high growth in 22Q4, and the scale of seed sales expanded rapidly!

The company's revenue in 23Q1 reached 617 million, an increase of 40% over the previous year, mainly due to increased seed sales. The company's 22Q4 revenue has increased rapidly (22Q4 revenue reached 1,955 million, a year-on-year increase of 48%). In Q4 and Q1, which are the most critical in the 2022-23 seed sales season, the company achieved revenue of 2,572 billion yuan, up 46% from the 2021-22 seed sales season (21Q4+22Q1), laying a solid foundation for the new sales season. Q4 in previous years was the core period of the sales season. Q1 was generally low as the final stage, but the continued high growth in Q1 seed sales this year reflects strong downstream demand for company seeds.

2. It is proposed to acquire Hebei New Era Seed Industry Company, and the corn seed layout is accelerating!

1) Transaction consideration: The company plans to use the raised capital of 224 million yuan to acquire 67.90% of the shares of Hebei Xinjiyuan Seed Co., Ltd.

2) Target texture: The seed industry in the new era focuses on the development and promotion of corn seeds, holding a total of 38 varieties of corn (2023.4, data from the China Seed Industry Big Data Platform). The variety regions are mainly distributed in Hebei, Inner Mongolia, Yunnan, etc., involving the most important ecological regions of the Huanghuai Sea, northern spring corn, and southwest corn in China. Among them, the market share in the Beijing-Tianjin-Tang region is about 25%.

3) Target performance: The average sales volume of the New Era Seed Industry in 2019-2021 exceeded 5 million kilograms, revenue in 2021 was 74.43 million yuan, and net profit was 26.86 million yuan.

4) Impact: The acquisition of New Era Seed Industry promised that net profit for 2023/24/25 would not be less than 3,100/33.2 million yuan/35.3 million yuan, and the cumulative net profit for the commitment period (2023-2025) would not be less than 99.5 million yuan. We believe that corn varieties in the seed industry in the new era are innovative. The sales areas previously restricted by sales networks mainly involved the Beijing-Tianjin-Tang region. In the future, empowered by Quanyin's sales network, it is expected that the variety advantages will be further exploited in major corn ecological zones across the country to enhance Quanyin Hi-Tech's corn seed strength.

Profit forecast: It is estimated that in 2023-2025, the company will achieve operating income of 4145/48.02/5.627 billion, an increase of 18.76%/15.85%/17.17%, and a net profit of 271/3.36/451 million, an increase of 16.02%/24.04%/34.41%.

If the acquisition in the new era is successfully completed, the company's profit is expected to increase. The net profit for the exam is expected to be 42.31/48.99/5.875 billion in 2025, an increase of 21.20%/15.81%/19.92%, and the net profit of the mother was 3.04/357/504 million, an increase of 30.24%/17.56%/41.07%. The company is deeply involved in the seed industry, and the corn seed business is expanding rapidly and maintaining a “buy” rating.

Risk warning: industry competition intensifies; production disasters; contract farming promotion falls short of expectations; the proposed acquisition is uncertain; the risk that the profit prediction of the target company to be acquired cannot be realized.