The company plans to acquire 52.94% equity of Yunnan Huayun Jinxin and lay out the industrial hemp industry chain. Industrial marijuana has a wide range of uses, and the company is expected to make full use of the resources and capacity advantages accumulated by traditional business to seize market opportunities and add driving force for long-term performance growth. Maintain the company's EPS forecast of 0.42, 0.55 and 0.66 yuan in 2018-20, maintain the target price of 10 yuan and "buy" rating.
Plan to hold Yunnan Huayun Jinxin and lay out the industrial hemp industry chain. The company plans to acquire 52.94% of Yunnan Huayun Jinxin's equity by way of equity transfer and capital increase: among them, the 38.46% equity held by Yunnan Chengbang Fuji is proposed to be transferred with 50 million yuan, and an additional 40 million yuan is added to the target company to obtain the diluted 23.53% equity. The capital increase will be used for industrial marijuana projects. At present, the target company has obtained the "Industrial marijuana planting license" and the "Yunnan Industrial Hemp processing license" in Eryuan County, Yunnan Province, and is actively obtaining the "Industrial marijuana planting license" of more than 10,000 mu in Binchuan County, Yunnan Province.
Industrial marijuana has a wide range of uses, and the development of the whole industrial chain promotes income. Industrial hemp has a wide range of uses, such as mosaic, hemp seed, hemp skin, hemp root and other parts can be used in medicine, textile, food, fertilizer and other fields. The company plans to lay out the whole industrial chain of hemp, such as seed selection, planting, post-natal processing and by-product development, to ensure the maximization of planting income. At the same time, the company signed a "Strategic Cooperation Agreement" with the Heilongjiang Academy of Sciences to cooperate in the fields of hemp (industrial marijuana), black garlic and brown rice to ensure technical support for the cultivation and application of industrial marijuana.
Making use of the advantage of traditional business resources, it is expected to seize the market opportunity. The development of industrial hemp industry chain requires comprehensive capabilities such as planting, plant extraction, drug and other product development. The company has been ploughing agricultural services for more than 20 years and has accumulated rich operational experience in the fields of variety selection, planting management, product processing and so on. In the future, the company is expected to make full use of the resources and capacity advantages of traditional business, seize the market opportunity in the development of industrial hemp industry, gain competitive advantage, and add driving force for future performance growth.
Risk factors: the acquisition progress is not as expected; the approved industrial marijuana acreage is not as expected.
Investment suggestion: the prosperity of the company's traditional business industry has improved, and the agricultural service business has developed steadily and gradually merged. This layout of industrial marijuana is expected to add another driving force for performance growth, and we are optimistic about the long-term development of the company. Maintain the 2018-20 EPS forecast of 0.42, 0.55 and 0.66 yuan, maintain the target price of 10 yuan, and maintain the "buy" rating.
