Incident: On October 26, the company released its three-quarter report, stating that in the first three quarters of 2017, the company achieved operating income of 2,323 million yuan, an increase of 6.55%; achieved net profit of 776.762 million yuan, an increase of 144.02%; realized net profit of 486.5553 million yuan, an increase of 608.11% over the previous year; the corresponding EPS was 0.109 yuan/share. Among them, in the third quarter, the company achieved operating income of 818 million yuan, a year-on-year decrease of 3.05%; realized net profit of 469.015 million yuan, an increase of 86.53% over the previous year; and achieved net profit of 16.7623 million yuan after deduction, an increase of 11.01% over the previous year. The company expects to achieve net profit of 90-11 million yuan for the full year of 2017, an increase of 13.07%-38.20% over the previous year.
1. The profitability of the main business is gradually increasing. Higher yield and higher prices are the core driving forces of the company's performance growth!
During the reporting period, the company's main business grew rapidly by improving product quality, enhancing sales, and controlling costs. The company's farming yield is expected to increase steadily by divesting risky areas and implementing a “three leisurely, one” method of rotating farming. Last year, there were 600,000 mu of shrimp scallops, with a mu yield of about 37 kilograms. This year, the mu yield is expected to increase by more than 10%. The mu yield will reach 41 kilograms. The price is expected to reach 41 yuan/kg, driving the company's gross profit to increase by nearly 200 million yuan. In the long run, the company's production per mu is expected to rise to 60 kg (at the company's highest point it reached more than 100 kg; Japan currently has more than 100 kg), and the continued increase in farming yield is expected to drive the company's performance to continue to grow.
2. Transform into a food enterprise, extend the value chain, and promote profit growth!
On the product side, it has developed into semi-finished products, condiments, ready-to-eat products, etc.; on the channel side, the company has developed a channel layout with catering, industrial consumption, and KA as the main focus, and snack food has already entered 4,000 stores. In the first half of the year, the company developed 30 new products, and successfully launched 15 new products, including shellfish, clam series, clam series, and teriyaki eel. Judging from the level of gross margin, the gross margin of the trading business is only 6.04%, processing is 16.64% (up 5 percentage points from the same period last year), while the gross margin of deep-processing products sold under the brand is even higher. Therefore, through product innovation and channel expansion, the gross margin of the company's processing business is expected to continue to increase, becoming an important driving force for the company's performance growth!
3. The path of industrial integration has begun, and the company can be expected to develop by leaps and bounds!
The company is an A-share listed company integrating marine ranch management, aquatic product processing, sales and trade, and has strong industrial operation capabilities. The current consumption upgrade has spawned new opportunities for the development of high-quality aquatic products in China. As an industry leader, the company is expected to rely on its management experience, capital advantages, brand and channel advantages to achieve leapfrog development through industrial integration. Previously, the company's participation in setting up an industrial fund to lay out the Yunnan Amur Sturgeon was the beginning of the company's industrial integration.
4. Investment suggestions: In the context of the upgrading of aquaculture consumption, the value of the company's 2.4 million mu of marine ranch resources is prominent. The company's aquaculture improvements and product channel development will effectively enhance the company's profitability, and the company's performance will usher in a period of rapid growth. It is expected that in 2017/18/19, the company's net profit will be 146/2.90/442 million yuan respectively, EPS will be 0.21/0.41/0.62 yuan, and the target price is 12 yuan.
Risk warning: 1. The resumption of aquaculture falls short of expectations; 2. The expansion of the company's products and channels falls short of expectations.
