Recently, we conducted a field survey of Jinjian Rice (600127) and exchanged views with relevant company leaders on the company's development strategy, the possibility of asset injection by major shareholders, the sales of major products, and the overall development of the industry. We believe that the company's main investment highlights are:

Attention 1: in order to avoid inter-industry competition, market-oriented grain and oil high-quality assets will be gradually injected into the company by Hunan Grain Group Co., Ltd. in March 2013, Hunan Grain Group Co., Ltd. will become the new controlling shareholder of the company. it has brought huge advantages in policy, capital, logistics and resource integration to the company. Hunan Grain Group made a commitment in March and August 2013 to avoid competition with the company: within three years after the completion of the company's non-public offering of shares in 2013, Hunan Grain Group and its holding subsidiaries will be its assets or equity related to the market-oriented grain and oil business where the main business of Jinjian Rice Industry competes with the same industry. Inject into the company through transfer, asset subscription shares and other means approved by the CSRC and / or the company's shareholders' general meeting. The injection of high-quality assets will be conducive to the expansion of the company's production and marketing scale and the improvement of profitability. We believe that with the injection of high-quality assets, the company's investment value will be greatly improved.

Focus 2: the company continues to optimize the industrial product structure, focusing on the development of grain, oil and food industry 2013 the company has successfully stripped off Jinheng real estate, further concentrated funds and resources, and focused on the development of grain, oil and food industry. The company has a green, organic, high-quality rice core base of 500000 mu, grain and oil storage capacity of 200000 tons, oil tank storage capacity of 30,000 tons, annual rice processing capacity of 250000 tons, oil and oil annual processing capacity of 200000 tons, annual processing capacity of flour products of 150000 tons, annual processing capacity of rice noodles, milk and brown rice beverage 50,000 tons. The company has cleaned up and integrated the existing product lines, especially the products of rice and noodle industries have been greatly slimmed down and the product structure has been optimized. It has adjusted the management thinking of high-grade rice, characteristic oil and other products, regarded the research and development and industrialization of new food as the key direction to rapidly improve the company's business efficiency, and launched noodle products, medium barrel oil, tea seed oil, dairy and other projects in an all-round way. it has laid a solid foundation for the expansion of the company's main industry and improvement of business efficiency in the future.

Focus 3: the company continues to integrate marketing resources and actively promote market expansion

The company continues to increase marketing efforts, taking a number of measures to promote market expansion. Further optimize and improve the relevant operation mode and work flow after the separation of production and marketing in the company's grain and oil industry, effectively integrate various marketing resources, and improve the company's comprehensive marketing ability. Strengthen the network construction of marketing channels, on the basis of further consolidating the traditional marketing channels, make full use of the advantages of the logistics platform of Hunan Grain Group Co., Ltd., and actively expand marketing channels such as trade operation, grain and oil community commercial chain Huimin stores, and so on. The company established an agricultural products trading company and acquired the trading business of Hunan Jinshan Grain, Oil and Food Co., Ltd. In order to ensure the healthy operation after the transformation of the marketing mode and management mode of the company's grain and oil products, support the healthy, rapid and sustainable development of the marketing company, and achieve the company's business objectives, the capital of Hunan Jinjian Rice Marketing Co., Ltd., a wholly-owned subsidiary, was increased, and the registered capital was increased from 10 million yuan to 60 million yuan. At present, the company's products have a high market popularity and reputation, has established a national marketing network for small packaging grain and oil products, and has entered more than 2800 large-scale KA store systems across the country, with more than 300 dealers and nearly 100000 terminal outlets. The product coverage rate of provincial capital cities is 100%, and that of prefecture-level cities is 65%.

Focus 4: the competent departments at all levels continue to increase their support to the company and work together to build

Ten billion leading enterprises

After Hunan Grain Group took over, governments at all levels and their functional departments have been increasing their support to the company, and the external development environment of the company has been significantly improved. Hunan Province strongly supports the company as the key support object of "Xiangmi Revitalization Project", grain "hundreds of billions of industries, 10 billion logistics projects"; Changde City lists the company as one of the 15 key enterprises of the "1115 Project". To help the company build a 10 billion industry will greatly promote the company's technological transformation, industrial upgrading and research and development of intensive processing projects, and promote the smooth realization of the company's five-year plan. The company has received strong support from superior authorities and local governments, and will enjoy preferential policies, which is conducive to the realization of the company's development goals: the company strives to produce and sell 1 million tons of grain and oil in 2018, with sales income of 10 billion yuan and profits and taxes of 500 million yuan.

Conclusion:

The company is the first listed company in China's grain system, the first batch of national key leading enterprises in agricultural industrialization, and the national rice project high-quality rice demonstration base, focusing on the in-depth development of high-quality grain and oil and the development of new health food. The company's leading products are "Jinjian" brand series of milled rice, special flour, noodles, edible oil, dairy products and "small back basket" fresh wet rice noodles, known as "China's first grain stock" and "China's first brand of rice". We expect the company's operating income in 2014 and 2015 to be 1937.00 million yuan and 2246.00 million yuan respectively, the net profit attributable to the shareholders of the listed company is 12.00 million yuan and 16.00 million yuan respectively, and the earnings per share are 0.019 yuan and 0.025 yuan respectively, and the corresponding PE is 236.53 times and 180.26 times respectively. Pay attention to giving a "recommended" rating for the first time.

Risk Tips:

1. The risk of national industrial policy regulation and control

2. The risk of price change of agricultural products

3. The risk of implementing the commitment of asset injection by major shareholders.