Main points of investment

On January 30, the company issued an additional offering plan, which intends to issue no more than 449 million shares and raise a total of no more than 1.5 billion yuan, of which 450 million yuan is used to repay bank loans and the rest is used for the construction of the marketing system; the issue price is not less than 3.34 yuan. Guoan investment subscription does not exceed 40% of this offering; all participants subscribe in cash.

Comment

The fundraising project may solve the company's core deficiency-marketing problems:

The company has the highest quality wine grape base in China, and the wine quality is outstanding, but the sales have not been ideal all the time. The key is that the channel construction and brand construction have not kept up. After the new board of directors took office, the company attached great importance to marketing construction and achieved remarkable results, but further development requires a lot of capital investment, and the company is somewhat inadequate. This additional offering provides strong financial support for the construction of the marketing system, and we think it may bring a qualitative leap to the company's marketing construction.

It can improve the financial situation of the company and reduce the financial burden.

In recent years, the company's annual financial expenses have been more than 80 million yuan. For a company with annual sales income of only a few hundred million yuan, the burden is heavy, and the company's financing cost is relatively high. This fund-raising project can reduce the company's 1x3 bank loans, reduce the company's asset-liability ratio from 68% to 38%, effectively reduce the company's financial burden, and reduce the difficulty and cost of financing.

The lower issue price is conducive to market capitalization management.

The company's current stock price is at a five-year low, and the issue price of no less than 3.34 yuan is conducive to market capitalization management in the future; low-price issuance can effectively reduce the investment risk of participants, and timely issuance will help to fundamentally improve the company's performance as soon as possible. The value of the company can be enhanced, which is beneficial to all parties.

Major shareholders' cash participation in SEO shows confidence in the company and industry.

Guoan Investment, a wholly-owned subsidiary of the major shareholders, will subscribe for no more than 40% of the shares in cash, which is basically not diluted compared with the original shareholding ratio of 42.65%. It reflects the major shareholders' confidence in the future development of the company, their confidence in the development of the industry and their support for the development of the company.

The development of China and Portugal is better than maintaining the status quo:

We believe that the IPO reflects the strong desire of the new leadership for the development of the company, and is very likely to enable the company to get out of the predicament of losing money year after year and hesitating to move forward, and return investors to a new China and Portugal.

Investment rating and valuation:

Taking into account the impact of the trough of the entire industry in 2013, as well as the impact of IPOs on financial expenses, and out of careful consideration, do not take into account the impact of IPOs on revenue, adjust the EPS to 0.02,0.05,0.10 yuan from 2013 to 2015 to maintain the company's "buy" rating.

Core hypothetical risks: natural disaster risk, food safety risk, channel construction is not up to expectations.