Key points of investment:
Investment advice: Shenzhen's state-owned enterprise reform is benefiting from the variety. Asset quality and business card capacity are in a leading position. The second half of the year is expected to be favored by the market under the influence of the Shenzhen-Hong Kong Stock Connect. The company's asset value is remarkable, the agricultural approval market business layout is leading. There is huge room for future industrial integration and a high entry threshold. The agricultural wholesale market business is huge, and most of it is a wholesale business, making it a good target for supply chain finance. In recent years, the company's agricultural approval market business growth has been limited, maintaining the 2016-2018 EPS of 0.02/0.03/0.04 yuan unchanged, maintaining the target price of 15.93 yuan and the increase in holdings rating.
Expectations were slightly lower in the interim report, and it is difficult to see an inflection point in short-term operations. 1H agricultural product revenue/net profit increased 12.7%/-26.8% year on year (of which 2Q increased 1.6%/-46% respectively), equivalent to EPS 0.02 yuan; net profit after deduction increased 398.1% year on year, mainly due to sales of Guangxi Xinliu Yongli store and Hefei Zhougudui investment income. The company has operated and managed more than 40 physical agricultural product logistics park projects across the country, promoted the transformation of traditional agricultural markets, and explored the use of the “Chinese cabbage +” e-commerce platform. Both small loan companies and guarantee companies turned losses into profits during the period (small loans increased from 1.43 million to 2.48 million, and guarantee companies increased from -13.18 million to 1.8 million), and the financial sector of the company's supply chain may continue to function in the future. Due to the impact of e-commerce and increased channel competition, it is difficult to see the profit inflection point of the company's agricultural wholesale market business in the short term.
The equity dispute has cooled down for the time being, and the stagflated variety plus Shenzhen-Hong Kong Stock Connect is expected to be favored by the market. The company has an equity land area of nearly 10 million square meters. The revaluation value is significantly easier to get attention from industry or financial assets. Life Life Insurance holds 29.99% of shares, which is only one step away from the offer line. During the period, the majority shareholder Shenzhen's state-owned assets increased by 2% again. The estimated average cost was above 13.5. The increase in state-owned assets holdings provided a certain safe boundary for stock prices. Companies are a strong beneficiary of Shenzhen's state-owned enterprise reform. The Shenzhen-Hong Kong Stock Connect is expected to drive increased attention to regional reforms. It is recommended that attention be paid to the progress of corporate reform.
Catalysts: progress in state-owned enterprise reform; release of macroeconomic policy dividends for agricultural products;
Risk warning: The economy continues to be sluggish; the progress of state-owned enterprise reform is lower than expected.