Key points of investment:
Company profile: The operation of its own business is under pressure, and transformation and development is yet to be initiated
The company mainly produces and sells beer, with negative revenue growth for several years in a row. In this context, the company has always sought transformation and development. In June of this year, the company tried to enter the new energy business. Although it has not been successful, the path of transformation and development will not end. Currently, the company's market capitalization is only 4.7 billion yuan, and the total share capital is 264 million shares. The top three shareholders hold less than 28% of the shares, and the business structure is relatively simple. We judge that the company may use existing shareholders to continue to develop outward in the future. This year, the new shareholders of the company, Tianyi Longxing (the company's largest shareholder, holding 10.65% of the shares) and Huabao Fragrance (Shanghai) Co., Ltd. (holding 0.91% of the shares) all have a lot of resources, which is expected to accelerate the transformation and development of Tibet.
Tianyi Longxing, the majority shareholder of the company, and Huabao Fragrance, a shareholder, have many resources and are also seeking listing
The controlling shareholder of Tianyi Longxing is China Union Assets, and the latter's controlling shareholder is China Union Investment. Among them, China Federation of China Investment invested 150 million yuan in 2015, with a net profit of 11.4 million yuan. It currently invests in nearly 20 enterprises. Its business covers financial and quasi-financial fields such as microfinance, internet finance, farmers' credit cooperative incubation, pawnbrokers, funds and investments. Based on the concept of “focusing on small and micro enterprises and serving the three farmers”, the total loan amount of the more than 10 participating microfinance companies has exceeded 3 billion yuan.
Huabao Food Flavors & Fragrances (Shanghai) Co., Ltd. is a wholly-owned subsidiary of the Hong Kong stock Huabao International. At present, Huabao International has made it clear that it will split its edible and daily fragrance business into an A-share listing. The annual revenue scale of this business is as high as HK$2.8 billion, and the net profit is expected to be close to HK$1.5 billion.
Investment analysis: On the path of transformation, target price is 20 yuan, increase in holdings rating
The company is a small market capitalization transformation company. The company currently has nearly 925 million yuan in cash and 140 million yuan in short-term liabilities, and beer revenue of 390 million yuan last year. Judging from the average market sales rate (4.7 times) of small beer companies such as Huiquan and Huanghe in Lanzhou, the replacement value of the company's beer is 1.83 billion yuan, so the company has a certain margin of safety. Referring to similar small-capitalization transformation companies, the company was given 6.7 times PB, corresponding to the target price of 20 yuan, leaving 11% room. However, if the company successfully transforms in the future, the stock price space will definitely not be limited to this.
Risk warning
Policy risk; transformation falls short of expectations.