Event: 1) on August 29, 2018, the company received notice from the controlling shareholder Haodangjia Group Co., Ltd. that the shareholder had increased part of its shares in the company through the secondary market. 2) the company released major operating data for the second quarter of 2018.
Comments:
The increase of major shareholders shows the confidence in the development of the company. The company's controlling shareholder Haodang Group increased its holdings of 3.1 million shares of the company through the secondary market, accounting for 0.21% of the total share capital of the company. Before this increase, Haodangjia Group held 594 million shares of the company, accounting for 40.69% of the company's total share capital, of which 594 million shares were sold under unlimited conditions. After this increase, Haodangjia Group holds 597 million shares of the company, accounting for 40.9% of the total share capital of the company. At the same time, the controlling shareholder Haodang Group plans to increase its holdings of the company's shares through the secondary market within six months from the date of disclosure of the announcement, with a cumulative increase of no more than 60 million yuan. This plan shows the confidence of the company's controlling shareholders in the company's future development prospects and the recognition of the company's market value.
The company released operating data for the second quarter of 2018:
1) Frozen prepared food (revenue of 421 million yuan in 2017, accounting for 34.88%, gross profit 2.99%): 2018H1 production of 10600 tons, same increase of 0.92%, sales of 10500 tons, same increase of 3.59%, inventory of 1268.55 tons, same decrease of 15.27%. The output of 2018Q2 was 6252.05 tons, same as-8.68%, and sales volume was 5892.88 tons, same as 3.82%. The company's frozen food business declined slightly in the second quarter but grew slightly in the first half of the year as a whole.
2) fishing products (revenue of 184 million yuan in 2017, accounting for 15.25%, gross profit 25.94%): 2018H1 production of 34100 tons, with a decrease of 13.13%, sales of 40500 tons, a decrease of 12.65%, and a stock of 24200 tons, an increase of 3.06%. The output of 2018Q2 was 16300 tons, down 28.23%, and the sales volume was 20300 tons, with a decrease of 34.71%. The company's fishing business was affected by the transformation of fishing vessels in the second quarter, and its performance declined in the first half of the year.
3) processed sea cucumber products (revenue of 141 million yuan in 2017, accounting for 11.67%, gross profit of 17.93%): 2018H1 output of 147.2 tons, same increase of 13.73%, sales of 98.56%, same decrease of 40.26%, inventory of 201.74 tons, same increase of 52.06%. The output of 2018Q1 was 121.95 tons, up 21.09%, and the sales volume was 41.53 tons, down 57.19%. In the spring cucumber fishing season in the second quarter, the company's catch of fresh sea cucumbers and sea cucumbers for processing declined compared with the same period last year, while the output of processed sea cucumbers continued to increase because the company adhered to the strategy of industrial upgrading and brand building and increased the production proportion of deep processed products with high added value. In addition, the decline in sales of sea cucumber products in the first half of the year was caused by market fluctuations.
4) fresh sea cucumbers (2017 revenue 319 million yuan, accounting for 26.41%, gross profit 48%): 2018H1 production and sales volume of 1954.55 tons, with a decrease of 20.54%, of which foreign sales of 1038 tons, an increase of 7.75%, and domestic sales of 916.55 tons, a decrease of 38.76%, and an increase in the proportion of external sales. The production and sales volume of 2018Q2 was 1953.72 tons, down 11.93%. The decline in the output of fresh sea cucumbers in the first half of the year is mainly due to the company's compliance with market demand, fishing and external sales of large-size sea cucumbers. In addition, the decline in fresh sea cucumber production in the first half of last year was larger than that in the second quarter, mainly due to the company's attempt to sell autumn cucumbers in winter in the first quarter of last year, resulting in production and sales of 241.53 tons of fresh sea cucumbers in the first quarter of last year. We expect that as the price of sea cucumbers continues to pick up, the proportion of fresh sea cucumbers in external sales may increase.
Earnings forecast and rating: we expect diluted earnings per share for 18-20 years to be 0.04 yuan, 0.06 yuan and 0.09 yuan respectively. Maintain the "overweight" rating of the company.
Risk factors: uncertain risks in the implementation of the holding increase plan, extreme weather risk, product price fluctuation risk, scale expansion less than expected, channel expansion less than expected, policy change risk and so on.
