Main points of investment:
It is positive in many ways, with a substantial increase in performance in 2017. In 2017, the company is expected to achieve a net profit of 1.3-170 million yuan, an increase of 696.57%, 941.67% over last year, and 175.10%, 259.75% over the merger of Shanghai Lido exam preparation report. The substantial increase in performance is mainly due to: 1) the company's revenue growth; 2) the reform of the company's supply management mode in the second half of the year, which has reduced the procurement cost to a certain extent; 3) the production process transformation of the production base in Rongxian County, Guangxi has been completed in the fourth quarter. To a certain extent, the production cost has been reduced; 4) the company has finished processing its customized products; 5) Lido has been acquired, and its performance has increased by 25 million.
The cost drives up the price of the product, and the gross profit margin is expected to increase. Due to product upgrading, increased manufacturing costs, rising raw materials and other factors, the company decided that from January 2018, the ex-factory price of bagged black sesame paste series products will be increased by 15%. Six new flavor products launched in 2017Q4 will be carried out at the new price, and other categories of products will not be adjusted for the time being. The price increase is mainly cost-driven, there are more black sesame paste substitutes, the price increase may cause the company's sales to decline to a certain extent, the price increase of Volkswagen is generally greater than the cost increase, the company's gross profit margin is expected to increase.
There are a lot of acquisitions, and the company's performance continues to grow. In December 2017, the company issued shares and paid cash to acquire 100% equity in Shanghai Lido Electronic Commerce Co., Ltd. was examined and approved by the CSRC, and completed the registration of industrial and commercial transfer of equity. The transaction price is 700 million yuan, 162 million in cash, the rest will be paid by share issue, and 7818 million new shares will be listed in January 2018. Lido provides e-commerce distribution services for brands. At present, customers have bright, Mengniu, Ferrero and other domestic and foreign food brands. The company has strong profitability, with a net profit of 33.34 million yuan in 2016. Lido's report in December 2017 is included in the report, and the net profit in December is expected to be 25 million yuan. The promised performance of Lido from 2017 to 2019 is not less than 60000000000000000 yuan respectively. If the performance promise is fulfilled, it will effectively thicken the company's performance.
Plan to participate in the industrial investment M & A fund, looking forward to the improvement of profitability. The company plans to invest 10 million yuan in Nanning Shenghe Investment Fund, and Nanning Shenghe Fund has a scale of 250 million yuan with a term of 5 years. It is mainly invested in the leading advantageous enterprises in the industries with great development potential, core competitive advantages and potential for issuance and listing, such as energy saving and environmental protection, pharmaceutical health, advanced manufacturing and so on. Through the operation of a professional investment management team, the company will help to reduce the risk of investment mergers and acquisitions, expand the company's business areas, and improve the company's profitability.
Profit forecast and investment rating: cover for the first time and give an overweight rating. We predict that the annual EPS of 2017-18-19 is 0.22 and 0.32 respectively, and the corresponding PE of 2017-18-19 is twice as much as that of 23-15-14. The company is a black sesame paste veteran enterprise, benefiting from many positive aspects, the company's performance increased significantly in 2017, the cost pushed up the product price, the gross profit margin is expected to increase, the acquisition of Lido, the company's performance continues to increase, and it is proposed to participate in the industrial investment M & A fund. Look forward to the improvement of profitability. Coverage for the first time, giving the company an "overweight" rating.
Risk tips: food safety issues; fierce competition in the industry; foreign investment is not up to expectations; equity M & A fund progress and results are not as expected; Lido commitment performance is not as expected; rising costs have an uncertain impact on the company's performance.