Items:

The company's additional issuance plan: the current share capital is 246720000 shares, which is proposed to be 7.96 yuan per share, the additional shares are not more than 628140000 shares, and the total amount of funds raised is not more than 5 billion yuan. for Anhui 1 million head mutton sheep breeding project, Hunan 200000 head mutton sheep breeding project, Qingdao Pengxin Xue long import beef project, increase capital Newshilan Dairy to implement import baby milk powder and liquid milk project, supplement company liquidity five projects.

Brief comments: after the implementation of the additional issuance project, 1, the company has changed from a medium-sized pig breeding and slaughtering enterprise to a large-scale high-end dairy products, beef and mutton products processing enterprise; 2, the company's actual controller and management changes; 3, the awareness of food quality and safety has been enhanced. the market pays close attention to high-end dairy products, meat and related enterprises.

Comments:

Additional issuance plan: 5 billion yuan, turn around and focus on high-end dairy products and meat products

Additional issuance plan: it is proposed to issue no more than 628140000 shares at 7.96 yuan per share, and the total amount of funds raised from ten investors such as Pengxin Group shall not exceed 5 billion yuan, which will be used for the projects listed in the table below. Among them, the mutton sheep breeding projects of Anhui Woyang and Hunan Huaihua have been put on record by the local government Development and Reform Commission, and the required environmental assessment documents are still being processed.

The overall profit level of the related projects is relatively high (note: the relevant data are directly extracted from the company's feasibility study report). The first four post-production theories can contribute 7.02 billion yuan / year:

Dakang animal husbandry used to be mainly engaged in pig breeding, breeding, slaughtering and processing, with an income of 710 million yuan in 2012 and a net profit of-20 million yuan. As a whole, it belongs to medium-sized breeding enterprises. The production, sales and profits of specific products are listed in the following table:

Once this additional issue is implemented, the company will turn gorgeously from the original medium-sized pig farming enterprises to become large-scale breeding and processing enterprises focusing on high-end dairy products and meat products, and the overall scale and profitability of the enterprise will be greatly enhanced.

Changes in share capital and actual controllers

The company has signed with Pengxin Group, Hechen Chemical, Houkang Industrial, Hehui Industrial, Jinghao Information, Lanyue Biology, Jingxin Technology, Mr. Liu Hongbo, Kaiwei Venture Capital and Yizhong Tongda, respectively, the "share subscription contract for the 2013 non-public offering of Hunan Dakang Animal Husbandry Co., Ltd.", the lock-up period is 36 months after the issue.

After the completion of this non-public offering, Pengxin Group will directly hold 18.09% of the shares of the company and indirectly control a total of 37.19% of the shares of the company through Houkang Industrial, Hechen Chemical and Hutchison Industrial. Directly hold and indirectly control a total of 55.29% of the shares of the company, become the controlling shareholder of the company, Mr. Jiang Zhaobai will become the new actual controller of the company, and the control of the company will change.

Before this issue, Mr. Chen Liming held 56597520 shares of the company, which is the actual controller, accounting for 22.94% of the total share capital of the company. After the completion of the issue, the shareholding proportion of Mr. Chen Liming will drop to 6.47%.

A brief analysis of each project: the coexistence of resource advantages and large capital expenditure

1. Mutton sheep breeding and processing project

Anhui Woyang 1 million mutton sheep breeding construction project: a total investment of 1.717 billion yuan, the construction of 33 standardized sheep farms, a slaughtering deep processing plant and a feed processing plant. After the completion of the project, it will form an annual output of 1 million Huang-Huai white goats, Hu sheep and other high-quality meat sheep breeds; annual production and sales of 100000 tons of refined feed and supplementary materials; annual production and sales of 16800 tons of high-quality chilled mutton, annual output of 2000 tons of sheep by-products and 800 tons of deeply processed products.

Hunan Huaihua 200000 mutton sheep breeding construction project: a total investment of 350 million yuan, the construction of seven standardized sheep farms and a feed processing plant. After the completion of the project, it will form an annual output of 200000 Huang-Huai white goats, Hu sheep and other high-quality meat sheep breeds, with an annual production and sales of 100000 tons of refined feed and supplements.

2. Imported beef processing project

The main body of implementation is the newly established holding subsidiary Pengxin Xuelong. Pengxin Xuelong has proposed a registered capital of 100 million yuan, with 85% of the capital contributed by the company and 15% of the investment of Xuelong Black Niu. Pengxin Xuelong will import tetrad beef from overseas farms, rent slaughtering and processing plants in Qingdao and Dalian for segmentation and processing, and then sell it through distributors and wholesale markets. The import division capacity of Pengxin Xuelong will reach 150000 cattle per year, making it the largest imported beef production and processing enterprise in China.

3. Dairy import and processing projects

Newshilan: founded in August 2012, the main business is the import of high-quality baby milk powder and liquid milk from New Zealand. Newshland will make full use of New Zealand's milk resources to create a high-end baby milk powder brand "focused on digestion and absorption". At the same time, Newshland has signed a "supply and marketing agreement" with New Zealand dairy company MIRAKALIMITED, which plans to directly import normal temperature milk from New Zealand (as of the date of this plan announcement, Newshland is in the process of pre-business preparation and staffing).

Pengxin Group related milk resources: there are 16 large dairy farms with a total area of about 8000 hectares in New Zealand, providing high-quality milk sources for large New Zealand milk processing enterprises such as MIRAKALIMITED and Fonterra, and providing a guarantee for Newshland to obtain a large number of pure, safe and secure dairy products in New Zealand.

4. Supplementary liquidity projects

The company will make full use of the existing resources of Pengxin Group in the Yangtze River Delta region, vigorously develop the Yangtze River Delta market by replenishing working capital, and strengthen the brand promotion, channel construction and regional expansion of pork sales.

Profit forecast

Prior to this, our profit forecast for the original business of Dakang Animal Husbandry was that the annual net profit attributable to the parent company in 13-14-15 was 0.22 shock 0.81 / 104 million yuan, and the corresponding EPS of the existing 248 million equity shares was 0.09 pound 0.33 pound 0.42 yuan, which rebounded periodically based on meat prices, and the previous rating given to the company was recommended.

According to the feasibility study report, in the theoretical state after reaching production, the contribution income and net profit of 1 million mutton sheep project is 2.06 billion yuan / year and 210 million yuan / year, and that of 200000 sheep project is 410 million yuan / year and 30 million yuan / year. The contribution income of imported beef project is 2.04 billion yuan / year (lack of net profit forecast) The contribution income of Newshilan dairy project is 2.51 billion yuan / year (lack of net profit forecast), and the total income of the four projects is 7.02 billion yuan / year. As the "SEO Plan" does not publish enough detailed data such as the implementation rhythm of the SEO, the construction progress of the SEO project, the actual production and marketing model, and so on, we do not give the profit forecast of the SEO project for the time being (note: the profit forecast in the financial forecast and valuation schedule is based on the original business and equity of Dakang Animal Husbandry, and does not include the SEO project and new equity).

Through this additional offering, the company will turn into a large-scale high-quality dairy, beef and mutton production enterprise, and with the upgrading of consumption brought about by food safety awareness and income growth, the company faces a large market space. It is suggested that the market should actively pay attention to the company's additional issuance process and related project construction, production progress has been profitable.

Risk hint: the follow-up of this additional issue also needs shareholders' meeting, EIA, CSRC approval, etc.; there is a certain degree of uncertainty in the construction and production of various projects; the food industry is facing greater food safety risks; it is difficult to make detailed profit forecasts based on the current data.