Foreign slaughterhouses form the core link in the imported beef industry chain
Consumption upgrades are driving high growth in domestic beef consumption, but domestic beef is difficult to meet domestic consumption needs both in terms of gross domestic product and beef quality, which has led to a sharp increase in China's beef imports in recent years. In 2014-2016, China imported 417,000 tons, 663,000 tons and 812,000 tons of beef. The import volume is expected to reach 950,000 tons in 2017, a growth rate of 17%.
In the imported beef industry chain, controlling high-quality beef resources from abroad is a top priority, and controlling slaughterhouses with export qualifications abroad has become an important means of effectively controlling foreign cattle sources. Currently, there are only about 150 slaughterhouses with beef exports to China. Excluding countries with low export volumes, there are only about 100 left. Most of them are controlled by multinational food giants such as Marfrig and Minerva. Currently, there are very few slaughterhouses that domestic companies can choose to buy, and it is estimated that only about 40 slaughterhouses can be purchased.
Transformation: The beef industry supply chain service provider company, which acquired overseas slaughterhouses and built “foreign resources+domestic market”, vigorously promoted the transformation to the beef industry. It successively disposed of a large number of non-cattle assets and returned capital of about 1.1 billion yuan, providing ammunition for the company to transform the beef industry. In 2017, the company completed the acquisition of 50% of Lorsinal's shares in Uruguay. It is expected to complete the acquisition of two processing plants, Rondatel S.A. and Liritix S.A., in Uruguay by the end of the year. After completion, the company will have an overseas slaughter capacity of 1,100 heads per day; in the future, the company will continue to promote the acquisition of the assets of Argentina's Black Bamboo Enterprises S.A. and Chrysan Taw Enterprises S.A. Slaughterhouses in Argentina have a production capacity of 780 heads/day, which can reach 900 heads per day after expanding production (source: November 30 announcement).
Through the acquisition of foreign slaughterhouses, the company will effectively control high-quality beef sources abroad, achieve full traceability through the operation of the entire industry chain such as trade, processing, and sales, and build a high-quality supply chain service provider for the beef industry!
Continue to push forward the divestment of non-beef assets, promote the acquisition of Hengyang Cattle Industry, and expand the beef industry comprehensively!
Currently, the company is planning to dispose of assets such as the yacht industry, electric vehicle industry, aviation industry and Hainan industry. It will continue to promote mergers and acquisitions of overseas beef upstream scarce assets and domestic deep-processing assets in the food industry, complete the integration of China's largest beef processing asset (Hengyang Cow) as quickly as possible, and ensure the company's leading position in the beef food processing industry, with broad industrial space! (Source: December 1 Announcement)
The price of coal is high, and the profit of the coal business will increase dramatically!
Affected by factors such as coal beds and increased costs, the company's coal business was not profitable in the first half of '16 to '17. It is expected that next year, on the one hand, the company's coal sales will increase, and on the other hand, the impact on coal beds and costs will also weaken, and the company's coal profits are expected to increase dramatically.
Give a “buy” rating
It is estimated that in 2017/2018/2019, the company's net profit attributable to the parent company was 1.09/241/373 million yuan, an increase of 231.79%/121.19%/54.57% over the previous year, and the EPS was 0.13/0.30/0.46 yuan. Considering the company's future acquisition of Hengyang Cow Industry and the vast industrial space, it will be valued 30 times that of 18 years, with a target price of 9 yuan.
Risk warning: 1. Product prices fluctuate greatly; 2. Future acquisitions fall short of expectations.