Main points of investment
Events:
Recently, New Dazhou An issued an announcement: 1) resume trading on August 14, 2017; 2) continue to promote the acquisition of shares in Argentine companies.
The company was suspended from trading on May 15, 2017 due to major issues related to the merger and acquisition of shares in overseas cattle companies.
The Company had planned to acquire two beef cattle slaughtering and processing assets in Uruguay and Argentina. As part of the divestiture of Argentine assets has not yet been completed, the company is unable to disclose the restructuring plan within the above-mentioned period. In accordance with the company's commitment to the stock suspension period, the company reduced the target of this acquisition, the underlying assets will not include Argentine assets, and approved the acquisition of Lirt ix S.A. And Rondatel S.A. The motion on company equity and related party transactions and the bill on the signing of the Agreement on payment for Cash purchase of assets and performance compensation Agreement between Qiqihar Hengyang Food processing Co., Ltd. and Pacific Ocean Cattle Holdings Limited.
Listed companies plan to pass Hengyang Food processing and its overseas affiliated enterprises Foresun (Latin-America) Investment and Holding, S.L. Acquire Lirtix S.A. By paying cash. And RondatelS.A. 100%, trading at $82.3 million. After the completion of this transaction, the listed company will hold 100% of the underlying company. Lirtix S.A. The company was established in Uruguay in 1993, the main business is refrigeration, evisceration, packaging, freezing and other processing business. Rondatel S.A. The company was established in Uruguay in 1983, the main business is cattle, sheep slaughtering, fresh meat, frozen meat, frozen meat, chilled meat sales. Lirtix S.A. And Rondatel S.A. The company promised no less than US $470.2, US $815.3 and US $10.47 million in net profit after deduction for the year 2017-2019. Only the acquisition of Uruguayan assets does not constitute a major asset restructuring, after the resumption of trading, the company will continue to promote the acquisition of shares in Argentine companies.
Comments:
Invest in beef assets to boost the development of beef business
In order to develop the beef business, the company intends to put shares in the domestic Hengyang cattle industry, acquire overseas cattle source assets, and enhance the control of listed companies over the source resources of the industry. Hengyang cattle is China's leading supplier of integrated high-quality beef products, mainly engaged in trade and deep processing, with high profit margins. Hengyang cattle has more than 1000 products, 16 domestic processing bases, and a sales network covering 32 provinces and cities across the country. The company acquires the advantage of lower breeding cost through the acquisition of South American cattle sources such as Uruguay and Argentina. Combined with the management channel of Hengyang cattle industry for more than a decade, the demand of the domestic beef industry is growing, and the growth rate of the company's beef business in the future will be much higher than that of the industry. Starting from the second half of 2017, the company's beef trading business will increase significantly. It is expected that the profit contributed by the beef food industry will not be lower than that contributed by the motorcycle industry to the listed companies in 2016. In the future, the beef food industry is expected to become the main contributor to the company's profits.
Clear management strategy and comprehensive transfer of beef industry chain
In the future, the company's business strategy will highlight the double-round development of coal and beef. By reducing other areas of business, the company will concentrate resources on the development of retained industries and new industries. When the conditions are ripe, the company will promote the divestiture of other businesses through internal decisions, including electric cars, yachts, aviation and so on. The company's logistics business is mainly transportation and warehousing, with related bases in Tianjin and Shanghai. At present, the logistics business is developing steadily. From the perspective of industrial relevance, there are still opportunities for the development of the logistics industry.
Since 2017, the company has continued to divest motorcycles and other assets, and its main business has focused on beef. In addition to holding coal assets, the company's strategy is to comprehensively transfer the beef industry chain. In addition to acquiring Hengyang cattle, the company has acquired overseas high-quality cattle through the acquisition of Uruguayan and Argentine beef companies. In the future, the company will gradually divest other assets and look for the coordinated development of beef business and existing business. We firmly value the strategic layout of the company's focus.
The price of coal has warmed up, and the company's coal business has turned from deficit to profit.
The company's main business is beef and coal business. The coal business is managed by the company's holding subsidiary, Wujiu Group, mainly in coal mining and sales. The recent rise in coal prices has led to an improvement in the company's business situation, showing a boom in production and marketing. The benefits of the main mines and newly put into production mines are prominent, and the 59 Group received more than 100 million yuan in advance. At the end of July 2017, the gross profit margin of coal reached 59%, and the situation in the coal industry improved. The company produced and sold 1.48 million tons of coal from January to July, with an income of nearly 300 million yuan. We expect that the 59 Group will be able to achieve its planned production and sales for the whole year and achieve the goal of turning losses into profits.
Profit forecast and valuation
At present, the domestic beef industry is in the early stage of development, with low concentration and large market space. In the future, the company will benefit from the increased concentration of the industry and greater performance flexibility. It is estimated that the EPS from 2017 to 2019 is 0.09,0.23 and 0.45 yuan respectively. With reference to the valuation level of meat-related companies PE15-25 times and the growth rate of the industry, we refer to giving 2019 25 times PE, the target price is 11.25 yuan, "overweight" rating.
Risk hint
The progress of restructuring was not as expected, and coal prices fell sharply.