Main points of investment

The company released its 2013 report that the annual operating income was 911 million yuan and the net profit attributable to shareholders of listed companies was 135 million yuan, down 27.7% and 14.3% respectively over the same period last year. Net profit after deduction was 108 million yuan, an increase of 130.6% over the same period last year; net cash flow from operating activities was 241 million yuan, an increase of 39.6% over the same period last year; and basic earnings per share was 0.30 yuan. Dividend plan: it is proposed to pay a cash dividend of 1 yuan (including tax) for every 10 shares.

Comment

Although the net profit has declined, the operating effect is outstanding:

Although the net profit belonging to the shareholders of the listed company decreased by 14.3% compared with the same period last year, the net profit attributed to the shareholders of the listed company increased by 130.6% compared with the same period last year, indicating that the actual operating effect of the company has greatly improved.

The sharp increase in net profit after deduction is due to the increase in liquor gross profit margin:

Examining the income of the company's main products and gross profit margin, real estate accounted for 54%. Gross profit margin decreased by about 11 percentage points to 49.6%, while alcohol income accounted for 39.6%, and gross profit margin reached 49.7%, up 9 percentage points from the same period last year. The substantial increase in liquor gross profit margin is due to the company's integration of alcohol production and sales, the company has adjusted the organizational structure of production and sales, improved cost accounting and control system, and carried out dynamic monitoring.

The company's overall gross profit margin has increased significantly:

In 2013, the gross profit margin of the main business reached 47.45%, an increase of 10.32 percentage points over the same period last year. In addition to the substantial increase in gross profit margin on alcoholic drinks, it was also due to the suspension of trade and oil production with very low gross profit margin. Although the proportion of these products was not high, because the gross profit margin was almost zero or negative, the suspension of business had a significant impact on the overall gross profit margin of the main business. These businesses are actually a burden on the company, and we expect the company to dispose of these assets and unburden them.

The real estate business will continue to contribute income over the next two years:

Although the gross profit margin of the real estate business has declined, in the next two years, the company's Coconut Island Square, Longhua New Village and Qionghai Dayin real estate projects have all entered the stage of sales and de-inventory, which can continue to contribute income; Chengmai Coconut Island small town positioning pension real estate project, is a new attempt in real estate development and management, and its effect remains to be tested by the market.

The fuel ethanol project was approved:

The company's planned 100000 tons of cassava fuel ethanol project has recently been approved by the National Development and Reform Commission, and the preparation work has been carried out in an orderly manner. as the project is supported by national policies, it is expected to bring stable benefits to the company, but it will take time before it goes into production. It is difficult to see the benefits in the short term, so it will not be considered in the valuation for the time being.

Profit forecast and rating:

It is estimated that the company's net profit from 2014 to 2016 will increase by 33.4%, 15.1% and 7.2%, with EPS of 0.40,0.46 and 0.50 yuan, covering for the first time and without rating for the time being.

Risk Tips:

Food safety risk; real estate policy risk; liquor industry competition aggravating risk.