Main points of investment

Our view is different from that of the market:

After years of losses, superimposed by the current industry downturn, the stock price is already at the bottom-small risk companies have basically lost money since 2005, the cash flow of operating activities is also a net outflow, and the company's market evaluation has been declining; since last year, the wine industry has been in the doldrums, resulting in the company's stock price has been at the bottom for many years, the profit has been exhausted, and the investment risk is extremely low.

Management change, strengthen management, performance inflection point still appears-- opportunity to

With the change of the board of directors in April 2012, the new management paid close attention to the company's sales shortcomings and strengthened the construction of sales channels, and the sales of finished wine still achieved high growth in the recession of the industry; the net loss after deduction and the net cash outflow from operating activities decreased significantly, and the net profit after deduction is expected to turn into profit this year. In 2012, the company's three expense rates also decreased by 16 percentage points compared with the same period last year, indicating that the effect of management improvement is obvious.

There is no competition in the industry with natural advantages.

The company's grape base, located in Tianshan, is one of the three largest golden wine grape producing areas in the world, where the climate is dry, the light is sufficient, the temperature difference between day and night is large, the ultraviolet is strong, the grape is high in sugar content, excellent color, rich flavor, and few diseases and insect pests. Ten thousand years of snow-capped mountain meltwater irrigation, no pollution, natural green.

The company's core grape base is more than 15 years old, alone in the sea.

The company has a large number of wine grape production bases in Xinjiang (including 30,000 mu), and the trees have reached the age of producing high-quality wine-more than 15 years, some even up to 27 years. No domestic manufacturer has such a large-scale aged vineyard.

Key hypothesis points:

In 2013, the sales revenue of finished wine increased by about 40%; the financial expenses were alleviated; and a breakthrough was made in channel construction.

Investment rating and valuation:

Increase the company's 2013-2015 operating income to 7.1,9.3 and 1.17 billion yuan, mainly due to increased sales of finished wine; increase EPS to 0.10,0.17,0.24 yuan (originally predicted to be 0.02,0.05,0.07 yuan), and upgrade the company's rating to "buy".

Catalyst for stock price performance:

The company's high financial expenses have been solved, and breakthroughs have been made in the construction of sales channels.

Core hypothetical risk:

Financial risk, natural disaster risk, food safety risk, channel construction is not up to expectations.