Event: on March 25, Shanghai Shunhao New material Technology Co., Ltd. signed an Investment Cooperation Agreement with Zhejiang Shouxiangu Pharmaceutical Co., Ltd. to jointly invest in the establishment of a new company, Yunnan Shouxiangu Hanma Health Technology Co., Ltd. (tentative name), to carry out industrial marijuana cultivation and downstream product research and development and market sales business. Among them, Shunhao shares contributed 8 million yuan in cash, accounting for 40% of the equity in the joint venture company, while Shouxiangu contributed 12 million yuan in cash, accounting for 60% of the equity in the joint venture company.
Shouxiangu (603896.SH) is a national high-tech enterprise with a hundred-year heritage of "Chinese time-honored Brand". It specializes in the breeding, cultivation, processing and marketing of valuable Chinese medicinal materials such as Ganoderma lucidum and Dendrobium candidum. Through strategic cooperation, Shouxiangu will give full play to its technical advantages in Chinese herbal medicine cultivation and downstream applied research, and will be responsible for the follow-up actual operation and management of the joint venture company. promote the joint venture company to carry out related business in industrial marijuana planting and downstream product R & D and production in Yunnan. Through many years of technical research, Shouxiangu has broken through the conventional purchasing mode of farmers, and realized the successful layout of a set of mature industrial chain from excellent variety breeding, organic cultivation, active ingredient extraction to clinical application of traditional Chinese medicine. Shouxiangu has released its 2018 performance KuaiBao, which is expected to achieve operating income of 511 million yuan in 2018, an increase of 38.24% over the same period last year, and a net profit of 107 million yuan in the same period, an increase of 20.77% over the same period last year.
In the cooperation agreement, Shou Xiangu promised that the joint venture company, with the assistance of Shunhao shares, would grow industrial marijuana within the scope permitted by the public security anti-drug department, and that the planting proceeds would be provided to the subsidiary designated by Shunhao shares for flower and leaf extraction at a fair market price. after completing the industrial hemp extraction and extraction, the hemp mosaic extract will be provided to the joint venture company.
The joint venture company is a plan made by both companies based on the strategic layout of industrial marijuana development, and the two sides can give full play to their respective resource advantages. promote the joint venture company to carry out the related business of industrial marijuana planting and downstream product R & D and production in Yunnan. This cooperation can achieve effective coordination with Shunhao's existing business and optimize the layout of Shunhao in the industrial hemp industry chain.
Profit forecast: it is estimated that from 2018 to 2020, the company's operating income will be RMB 20.55max 22.68 / 2.519 billion, and its net profit will be RMB 1.06 billion, respectively, with an increase of-5.79%, 11.22% and 18.45% over the same period last year, with a corresponding EPS of RMB 0.14, 0.16 and 0.18 respectively.
Risk hints: there is great uncertainty as to whether the joint venture company can obtain the Industrial marijuana planting license issued by the public security drug control department; the progress of the cooperation project is unpredictable; and industrial marijuana cultivation is affected by natural environment and man-made factors.