Core viewpoints
The company is the only agricultural operation listing platform under Gansu Land Reclamation Group, and the non-agricultural business has been basically completely stripped off and continuously injected into the group's high-quality assets, which is the most feasible carrier for China's modern agriculture and land reclamation reform. The company has unique advantages in the development of modern agriculture. at present, its own agricultural land resources are nearly 4.5 million mu, and it has gradually turned to a profit-oriented market-oriented management mode, changing land rental to independent unified management. the advantage of agricultural large-scale planting is obvious.
Under the background of the ternary planting structure of "grain, economy and feed", the profit of forage industry is more flexible.
There is a strong demand for alfalfa in China, and more than half of the high-quality alfalfa is imported from abroad. At present, the company's own farm alfalfa planting area of 80,000 mu, and in Inner Mongolia Chifeng Arukeerqin Banner investment to establish a high-quality alfalfa planting base of 80,000 mu. Under the background of the ternary planting structure of "grain, economy and feed", the profit of the forage industry is more flexible in 2017.
It has its own largest reserve of land resources, and the group continues to inject high-quality assets.
Proprietary land is essentially conducive to the company's business transformation and performance improvement. at present, the company has 4.4293 million mu of land resources, including 673400 mu of arable land and 1.0506 million mu of unused land suitable for agriculture; while 3.7741 million mu of land under the four major farms of Gansu Agricultural Reclamation Group has not yet been injected into the listed company. According to the reform direction of "collectivization of reclamation area", a large number of high-quality land resources of the group are expected to be injected continuously in the future, opening up space for the development of modern agriculture of Yasheng Group.
The unified business model has obvious advantages.
Agricultural production is changing from "natural" traditional agriculture to modern agriculture represented by order agriculture and precision agriculture, in order to meet the requirements of large-scale cultivation of modern agriculture, the company has gradually transformed from land "household contract" to "unified management" mode, realizing mechanized and intensive production. At present, the company has reclaimed 673400 mu of arable land, of which 65% of the arable land with a unified management model has begun to take shape, and 1.0506 million mu of unused land is suitable for agriculture. With the gradual development of arable land suitable for agriculture, the promotion of a unified business model is conducive to reducing unit costs and improving comprehensive planting efficiency, and the company's future income has great potential for growth.
"unified operation, asset injection" endogenous extension dual drive, first coverage, given a "neutral" rating
Considering that the company is affected by domestic and foreign agricultural products prices upside down and natural disasters in 2015-2016, the high-quality forage industry will gradually expand in the future, and we expect the company's performance to pick up in 2017, realizing a net profit of 288 million yuan belonging to the parent company, corresponding to 0.15 yuan of EPS. The company's agricultural land resources are scarce, the future group asset injection is expected, and the national land reclamation reform is approaching, and considering that the performance may decline in 2016 and face the risk that the reform is lower than expected, we give the company a valuation level of 35-40 times PE in 2017, corresponding to the 2017 target price of 5.25-6.00 yuan, covering it for the first time and giving it a "neutral" rating.
Risk hints: agricultural natural disasters lead to reduced production of agricultural products; the promotion of the company's unified business model is slow; the injection time of group assets has been postponed, and the reform of land reclamation is not as expected.