Event: on August 25, the company released a semi-annual report, with total operating income of 210 million yuan during the reporting period, an increase of 316.86% over the same period last year; net profit of common shareholders belonging to listed companies was-29.928 million yuan, down 195.39% from the same period last year; non-net profits of common shareholders belonging to listed companies were deducted from-32.793 million yuan, down 212.83% from a year earlier, down 195.39% from a year earlier.
Among them, the operating income in the second quarter was 77 million yuan, an increase of 135.9% over the same period last year, and the net profit was-20.73 million yuan.
The gross profit of breeder sales reduces the drag on performance, and the strategy of big beef cattle continues to advance. 1) breeding business:
During the reporting period, as the company actively promoted the beef cattle strategy and expanded the breeding livestock sales market, the breeder business sales increased by 5073.41% year-on-year, and the revenue increased by 140 million yuan. However, due to the long cycle of breeding livestock sales business, many links and high shipping costs, and breeding livestock sales business accounted for 70% of the main income, the company's overall gross profit margin fell by 36%. 2) the ordinary frozen semen business is affected by the delay in national supplementary bidding, resulting in a 71.47% drop in sales revenue compared with the same period last year. 3) the current product sales is in the cultivation stage, while the company is expanding its beef cattle business. During the period, the expenses increased by 54.52% over the same period last year, and the financial expenses increased by 256.91% compared with the same period last year, resulting in a substantial loss of the company.
Layout of Xinjiang, Inner Mongolia, Ningxia three major breeding bases to provide resources for beef cattle breeding.
According to the company announcement, in Xinjiang, the company issued shares to purchase 68512 mu of agricultural development land use rights and 15644 mu grassland use rights held by Tianshan agriculture and animal husbandry. In Ningxia region, the company announced that it intends to acquire 51% of Ningxia American and Canadian agricultural shares by way of capital increase. American and Canadian farmers are well-known dairy cattle breeding demonstration and pasture main facilities and equipment agent sales company in Ningxia. The acquisition of American and Canadian farmers can create a large-scale Angus beef cattle breeding core group in Ningxia and promote the promotion of beef industry strategy in Ningxia. American and Canadian farmers are expected to promote 15000 Angus cattle in 2016. At the same time, the Inner Mongolia region he Mu Sunshine acquisition project is expected to land.
The company's whole industry chain layout Angus beef cattle breeding, product positioning in high-end catering, gradually entering the harvest period. The company introduces purebred Angus cows from Australia and raises them in accordance with American grain-fed beef standards, positioning the western and foreign food consumption market of China's high-end beef to fill the gap between supply and demand of China's high-end beef. According to expert estimates, the size of the domestic beef market is about 400 billion, and the scale of the high-end western beef market has increased by 100 times in 9 years, reaching 60-70 billion. The rise of the middle class and the fact that the post-90s generation became the main force of consumption under the influence of Western culture is the main driving force for sustained demand growth. The original excellent germplasm and grassland advantages have established a certain barrier for the company's big beef cattle whole industry chain strategy, and the differentiation competitive advantage is significant. We estimate that in 16-18, the output of purebred Angus will reach 2500 picks, 7000 picks, and the average gross profit per head can reach more than 40%. Profits are about to enter a period of reversal and high growth.
Investment suggestion: the net profit of the company in 2016-18 is expected to be 0.39 billion yuan, and the corresponding EPS is 1.66 yuan. Maintain the Buy-An investment rating and give the target price of 25 times PE,6 in 2017 to 26.3 yuan.
Risk tips: policy risk; food safety risk
