Fresh construction industry barriers, leading industries to benefit from increased concentration: China's agricultural production shows small-scale, decentralized and other characteristics (similar to Japan), super docking is difficult, agricultural market accounts for more than 80% of the circulation of agricultural products. At present, the loss rate of fresh circulation in China is 25%, 30%, the operating cost of fresh e-commerce is high, and fresh products are the strongest barrier in the agricultural market, which is difficult to replace in the short term. With reference to the experience of Japan, the agricultural batch market will still play a core role in the circulation of agricultural products for a long time. There are 1708 agricultural batch markets in China, the industry concentration is low, and there is a large space for integration. The company occupies 7% of the national market share, ranking first in the field of agricultural product circulation, and as an industry leader is expected to benefit from industry integration.
Equity competition is expected to escalate, Life Life may become a major shareholder: Anbang brand Eurasian business has become a phenomenal event, which will greatly trigger market attention to the retail industry, forming a cognitive inflection point. Insurance funds are all-inclusive, and the sleeping value of high-quality retail companies is expected to awaken. Shenzhen SASAC is the controlling shareholder of the company, holding a total of 32% of the company's shares. Life Life currently holds 29.97% of the shares, only 2.03% less than the major shareholders. We expect that probably within this year, Life Life will complete its signage and actual control.
The omni-channel layout of online and offline agricultural products has been continuously improved, and the profit model has been diversified: the company's offline agricultural batch market has matured and has created a high-end brand in Haiji Star agricultural batch market in line with international standards. formed a "transaction commission + store warehousing commission + supporting real estate development + logistics distribution" income model. The company's online overall layout in agricultural products B2B/B2C/ exchanges and other areas, the initial formation of a multi-channel e-commerce system, strong customer stickiness. The company gathers 50, 000 wholesalers online and offline, and 150 billion transaction volume precipitates a lot of data. The company connects the upstream and downstream of the industrial chain, develops supply chain finance, and provides financing guarantee, micro-loan, P2P finance and other services. In the future, with the continuous expansion of the physical market and the promotion of electronic transactions, supply chain finance will become a new profit flashpoint.
High revaluation of assets and marginal safety of stock prices: after the company put forward the network development strategy in 2008, it accelerated the expansion of the physical network, with an average of 3-5 new reserve projects per year. At present, the company has 29 agricultural markets, with a total construction area of 1576 million square meters and a positive equity area of 9.39 million square meters. The agricultural batch markets cooperate with each other and communicate with each other to form a huge network value. Physical markets are all located in logistics node cities, with scarce land resources and high revaluation value. However, at present, the market capitalization of the company is only 30.4 billion, corresponding to the market capitalization of only 3237 yuan per square meter, which is far lower than the revaluation value of land, and the margin of stock price safety is sufficient.
Profit Forecast: the EPS for 2015-2017 is estimated to be 0.06, 0.08 and 0.09 yuan, respectively, and the corresponding PE for 2016 is 211.26X. However, there are still 11 agricultural markets in the company are still under construction, while e-commerce, supply chain finance and other businesses are still in the development stage, the contribution of performance is small, PE valuation can not reflect the value of the company. If the company's offline equity land is revalued at 5000 yuan per square meter corresponding to NAV392.5 billion, and the online transaction volume is valued at 5.4 billion yuan based on 0.5xPGMV, the total equity value of the two is 44.65 billion, corresponding to the target price of 26.31 million.
Risk hints: equity contention and state-owned enterprise reform are not as expected; the long development period of new markets is a drag on performance