Main points of the report
Event description
The agricultural development seed industry released its three-quarter report for 2016.
Event comment
The company's operating income in the first three quarters was 2.89 billion yuan, up 5.23% from the same period last year, and the attributable net profit was 15.74 million yuan, up 12.7% from the same period last year. The company's operating income in the third quarter was 645 million yuan, down 61.3% from the same period last year, and the attributable net profit was 7.69 million yuan, a decrease of 37% compared with the same period last year. The net profit was 0.007 yuan.
Henan agrochemical consolidated table is the main reason for the company's performance growth in the first three quarters. At the end of October 2015, the company completed 67% equity acquisition of Henan Agricultural Chemical Industry, and consolidated statements during the reporting period, forming a new profit growth point (13.79 million yuan contributed by Henan Agricultural Chemical Industry in the first half of the year), which led to the improvement of the company's performance in the first three quarters. In addition, the company had less government subsidies during the reporting period, resulting in a decrease of 45.3% to 15.94 million yuan in non-operating income compared with the same period last year; the advance collection at the end of the third quarter increased by 65.5% to 508 million yuan compared with the same period last year, indicating that there may be a better performance in seed products and agrochemical sales in 16amp 17 sales season. In addition, the company's operating income and net profit declined significantly in the third quarter. Since the third quarter is the off-season of seed sales, we judge that this situation may be mainly due to the decline in the international chemical fertilizer trade volume of the subsidiary Huaken in the third quarter. In this context, the company's current sales gross profit margin increased significantly (the gross profit margin was 9.77% in the third quarter, compared with 4.64% in the second quarter. It was 2.84% in the third quarter of last year.
The future of the company is as follows: 1. Under the background of the reform of state-owned enterprises, the integration of group resources is expected to accelerate.
The detailed rules of land reclamation reform have been promulgated to remove obstacles to the integration of land resources in the reclamation area, and the reform of state-owned enterprises has been continuously promoted. Zhongnongfa Group, a major shareholder of the company, owns 4.3 million mu of domestic land (700000 mu of arable land), which does not rule out the possibility of future injection. 2. Build a scientific research platform to enhance the comprehensive competitiveness. The company strives to build a scientific research platform at the level of listed companies, obtain advanced scientific and technological resources through cooperation with external forces (domestic and international), and engraft them into subordinate enterprises at an appropriate time to give full play to their respective advantages and transform them into commercial varieties. 3. The strategic thinking of the company to build the agricultural material integration platform of central enterprises is clear.
The first step is to form a large pattern of seed + pesticide through epitaxial expansion, and the second step is to strengthen it through internal integration, external research cooperation and building a service platform docking mode of "agricultural materials + farm + collection and storage".
Give a "buy" rating. We estimate that the company's EPS in 2016 and 2017 will be 0.14 yuan and 0.17 yuan respectively, giving a "buy" rating.
Risk tips: the company's sales of agricultural products are lower than expected; the construction of the company's service system is not up to expectations; the process of land reclamation reform is not up to expectations; the company's state-owned enterprise reform is not up to expectations.