Main points of investment
Events:
The company's share price fluctuated sharply today, falling nearly 14% to close down 4.14%.
Comments:
The fall in share prices today was mainly due to 0073.HK 's announcement that the orange orchard had been closed due to disease, sparking concerns about the safety of Tianyi Orange Orchard: Asian Fruit announced on the 29th that its Xinfeng plantation had developed Huanglong disease since April, with an initial infection rate of about 18%. Since then, the company has taken a series of measures to remove diseased trees, increase insecticides and protect uninfected orange trees, but the disease has not been effectively controlled, with an average infection rate of 60%, and other nearby plantations are seriously affected. Asian Fruit commissioned a third-party research center to conduct a survey, and experts expected the average infection rate to rise to 70%, 80% in the next 2-3 years, so the board decided to close the orange orchard.
Tianyi's main orange orchard is more than 500 kilometers away from the orchard affected by the Asian fruit industry, there is no possibility of infection, and there has never been a Huanglong disease infection disaster. The planting progress is satisfactory this year, and the picking season has begun in mid-December, which is enough to meet the company's 16-year raw material demand. The disaster Orange Orchard of Asian Fruit Industry is located in Xinfeng County, Jiangxi Province, while Tianyi Orange Orchard is located in citrus-rich areas such as Chongqing, Hunan and Fujian provinces, more than 500 kilometers away from the affected orange orchard, and there is no possibility of infection. And the site selection of Tianyi Orange Orchard has been strictly screened and demonstrated, these areas have never occurred Huanglong disease infection disaster. Among them, Chongqing belongs to one of the three dominant citrus areas in China, and is the location of the Citrus Research Institute of the Chinese Academy of Agricultural Sciences, the only national citrus professional institution in China. The institute, founded in 1960, is the only national professional citrus scientific research institution to firmly promote the prevention and control measures of citrus Huanglong disease in Chongqing, starting from the seedling cultivation and detoxification technology, so there is no history of Huanglong disease.
Tianyi Senmei NFC orange juice sold smoothly, entered the convenience store channel in November, monthly sales of nearly 15 million yuan, month-on-month growth, next year is likely to achieve 200 million revenue target: after Tianyi Senmei NFC orange juice launched in March, sales by November has reached 75 million yuan (including factory price, tax), of which November monthly sales of nearly 15 million, a month-on-month increase of 7%. In November, Senmei launched the "whole Family" convenience store, and the number of sales terminals has been expanded to 1503. Products will be stationed in Starbucks Corp early next year, sales will also become a high-end display channel, the future is also expected to enter Costa and other coffee shops. The increase in various festival activities from December to February is expected to become the next peak sales season, and it is more likely to achieve the revenue target of 200 million next year.
Profit forecast and rating: we expect the company to have revenue of 665 million, 888 million and 1.155 billion in 16-18, and EPS of 0.08,0.16,0.25 yuan. The fundamentals of the company do not worry, B2C business is progressing smoothly, the target price is 1.75 yuan, maintaining the "overweight" rating.
Risk hint: market expansion is not as expected.