Main points of investment
Event: the company released three quarterly reports, with a total operating income of 140 million yuan in the first three quarters of 2017, down 58.3% from the same period last year. The net profit belonging to shareholders of listed companies was 3.75 million yuan, up 106.5% from the same period last year. At the same time, it is estimated that the net profit belonging to shareholders of listed companies for the whole of 2017 ranges from 4 million yuan to 5.5 million yuan, ranging from 103% to 104%.
Control the cost and successfully turn losses into profits. During the reporting period, the company continued to optimize the organizational structure and refine the industrial layout. In particular, the Australian subsidiary company cost reduction effect is obvious, the company basically stopped the introduction of all Australian breeding livestock business, greatly improved the company's profitability. In the first half of 2017, the Australian subsidiary successfully reduced its loss by 25.82 million yuan compared with the same period last year, effectively raising the company's net interest rate. At the same time, aiming at the domestic scarce high-grade beef market, the company has steadily carried out the strategic model of "taking two ends with the middle". The company has successfully introduced 24000 Angus population in the past three years, and has formed an excellent Angus gene group scale in China. it is worth looking forward to in the future.
When the reorganization is going on, we will enter the media field. The company intends to purchase 130 million Elephant shares by issuing shares and paying cash, while raising no more than 600 million yuan in matching funds for non-public offerings. At the same time, the net profit after deduction of the target company from 2017 to 2019 should not be less than 140 million yuan, 180 million yuan and 210 million yuan respectively. We believe that the outdoor advertising service industry is a capital-intensive industry, the initial entry into the field of outdoor advertising requires a lot of capital investment. With the help of Tianshan Biology to enter the capital market, Elephant shares will not only raise funds to provide financial support for the company's media resources and the management rights of the media, but will also continue to develop national high-quality outdoor advertising media resources in the future. let the company's development into the fast lane.
The double main business is expected to achieve synergy. We believe that if this acquisition can be successfully landed, on the one hand, Elephant shares has many years of operation experience in the outdoor advertising industry and has cross-regional and cross-media high-quality outdoor advertising media resources. its clear model, mature business, easy to manage and good operating performance, can bring sustained and stable sources of income and profits for Tianshan biology. On the other hand, the company can rely on the publicity channels of Elephant shares to open up the extra-territorial market for its beef products, accelerate the progress of market development, and effectively play a synergy effect.
Profit forecast and investment advice. Considering that the company has basically suspended all of its original main breeder sales business, we have lowered our profit forecast for the company. It is estimated that the EPS from 2017 to 2019 will be 0.03,0.06 and 0.08 yuan respectively. Considering that Elephant shares have made performance commitments, if the acquisition can be successfully landed, it will greatly enhance the company's profitability and enjoy a higher valuation premium, so it is recommended to keep an eye on it. Do not give the target price for the time being, and maintain the "overweight" rating.
Risk tips: beef cattle out of the column or below expectations, beef cattle prices or a sharp drop in profits or below expectations, sales channel construction or falling below expectations, industry policies or changes in beef cattle imports, acquisitions or falling short of expectations, etc.