The current situation of the company
On February 18, the general meeting of Kim Jong-il's major shareholders deliberated and passed the share buyback bill.
Comment
A large amount of repurchase of the company's shares shows confidence in development. Based on the confidence in the future development of the company and the recognition of the value of the company, to enhance investor confidence, and combined with the company's operation, financial situation and future profitability, the company intends to use its own funds of 81.5 billion yuan to buy back the company's shares in the form of centralized bidding transaction, the repurchase price shall not exceed 9.88 yuan per share, and the repurchase period shall be within 12 months from the approval of the buyback plan by the general meeting of shareholders. The repurchased shares will be used to write off and reduce the company's registered capital. If calculated according to the repurchase price and the upper limit of the repurchase amount, the repurchase shares account for 4.6% of the total share capital of the company.
Be optimistic about the development of the company's "pro-earth No. 1" and Jinfeng Commune. The company's "pro-soil No. 1" products are mainly for cash crops, with a high gross profit margin. At present, soil-friendly products stand out in the greenhouse planting area market. In order to accelerate the market and brand promotion of "pro-soil No. 1" products, the company has invested a large amount of expenses. In the future, "pro-soil No. 1" sales are expected to grow rapidly and will become an important profit growth point of the company. Jinfeng Commune provides farmers with all-round agricultural services through the gathering of planting industry chain resources. at present, the company has built 170 county-level Jinfeng communes, and the development of Jinfeng commune is expected to promote the growth of compound fertilizer sales of the company.
With the approach of the peak season for fertilizer use, the demand for compound fertilizer is expected to improve. Recently, the prices of urea, monoammonium phosphate and other raw materials have declined, and the ex-factory price of chlorine-based / sulfur-based compound fertilizer is still maintained at 2690amp 3,190 yuan per ton, up 12% and 14% over the same period last year. Affected by the depressed prices of agricultural products and grass-roots agricultural demand, the overall shipment of compound fertilizer is still poor, and the inventory of enterprises is relatively high. according to Zhuangchuang information data, the inventory of sample enterprises of compound fertilizer is 1.26 million tons, which is basically the same as that of the same period last year, but continues to rise month-on-month. As the peak season for fertilizer use is gradually approaching, we expect that the downstream agricultural demand is expected to improve gradually.
Valuation proposal
The company's annual earnings forecast for 2018-19-20 remains unchanged, and the company's current share price corresponds to a 20-year price-to-earnings ratio of 24x19x. Optimistic about the development prospects of the company's pro-soil fertilizer, Jinfeng commune, etc., raise the target price by 16.7% to 8.4 yuan, which is 15% higher than the current stock price, and maintain the recommended rating corresponding to the 2019 20 27max 22x Pmax E.
Risk
The demand of fertilizer for spring ploughing was lower than expected, and the popularization of soil-friendly fertilizer was lower than expected.