Main points of investment:
Company profile: self-owned business operation is under pressure, transformation and development is waiting to start.
The company focuses on beer production and sales, with negative income growth for several years in a row. In this context, the company has been seeking transformation and development. In June this year, the company tried to enter the new energy business. Although it has not been successful, the road of transformation and development will not end. At present, the market capitalization of the company is only 4.7 billion yuan, the total share capital is 264 million shares, the shareholding proportion of the top three shareholders is less than 28%, and the business structure is relatively simple. We judge that the company may continue its epitaxial development with the help of existing shareholders in the future. This year, the company's new shareholder Tianyi Longxing (the company's largest shareholder, 10.65%) and Huabao Flavor and Fragrance (Shanghai) Co., Ltd. (0.91%) all hold more resources, which is expected to accelerate the transformation and development of Tibet.
The company's major shareholder Tianyi Longxing and the participating party Huabao flavor and fragrance have more resources and are also seeking to be listed on the stock market.
The controlling shareholder of Tian Yi Longxing is the assets of China Union, and the latter's controlling shareholder is China Union Investment. Among them, China Union Investment has an income of 150 million yuan and a net profit of 11.4 million yuan in 2015. there are nearly 20 funded enterprises, covering financial and quasi-financial fields such as micro-loans, Internet finance, incubation of farmers' credit cooperatives, pawn, funds and investments. With the concept of "focusing on small and micro, serving agriculture, rural areas and farmers", the total amount of loans of more than 10 micro-loan companies has exceeded 3 billion yuan.
Huabao Edible Flavor and Fragrance (Shanghai) Co., Ltd. is a wholly owned subsidiary of Huabao International, a Hong Kong stock. At present, Huabao International has made it clear that his food and daily flavor business will be split into A-share listing, and the annual revenue of this business is as high as 2.8 billion Hong Kong dollars, and the net profit is expected to be close to 1.5 billion Hong Kong dollars.
Investment analysis: walking on the road of transformation, the target price is 20 yuan, increase the rating.
The company is a small market capitalization transformation company, the company currently has nearly 925 million yuan in cash, 140 million yuan in short-term liabilities, beer income last year 390 million yuan, according to Huiquan and Lanzhou Yellow River and other small beer companies' average market-to-sales ratio (4.7 times). The replacement value of the company's beer is 1.83 billion yuan, so the company has a certain margin of safety. Refer to similar small market capitalization transformation companies, give the company 6.7x PB, corresponding to the target price of 20 yuan, there is still 11% space. However, if the company's transformation is successful in the future, the stock price space will not be limited to this.
Risk hint.
Policy risk; the transformation does not live up to expectations.