Events:
The company signed a "share subscription and shareholder Agreement" with India's RoyaleMarine IMP-EX Private Limited Company (referred to as "Royale") and its 11 shareholders, and intends to use its own funds of US $4 million to subscribe for additional shares issued by the underlying company. After the completion of this investment, the company or its wholly-owned subsidiary will hold 25.30% of the shares of the underlying company, which is the second largest shareholder of the underlying company.
The target company: Royale was founded in December 2011, with a registered capital of 214 million rupees (US $3 million), registered in India, mainly engaged in shrimp products processing, refrigeration and sales business, with BAP four-star certification, products are mainly sold to the United States, the European Union, China and other countries and regions. Royale's operating income from April 2017 to March 2018 and from April 2018 to March 2019 was $41.1992 million and $31.3027 million, respectively, and its net profit was $2.4044 million and $1.5727 million, respectively.
Comments:
1. Continue to deepen the layout of the global industrial chain, aquatic bibcock to a higher level. The company has put forward the strategic policy of globalization since the fourth five-year Strategic Development Plan in 2016, focusing on developing markets such as China and non-United States, especially in Southeast Asia and South America, and deepening the layout of the company's sales and procurement. Since 2018, the company has begun to inspect 10 companies in Vietnam, India and other countries. The acquired Royale company is located in India, one of the main shrimp producing countries, with rich fishery resources, low raw material prices and low labor prices, and has become one of the countries with the fastest growth in shrimp production in the world in recent years. India currently has a production capacity of more than 800,000 tons, accounting for about 20% of global shrimp production. We believe that on the one hand, the acquisition of Royale can provide the company with a stable and cost-advantageous source of raw materials, increase the supply of domestic and American SSC companies, and enhance the ability of trade risk prevention and control; on the other hand, Royale company has a more mature business system, which can effectively integrate its existing technology, market and League of Nations, and join forces to achieve rapid business development.
two。 After years of overseas layout, the company's globalization strategy has become clearer. In terms of marketing, the company has set up sales offices in Chinese mainland, the United States, Hong Kong and other countries and regions, with customers covering more than 40 countries and regions; in terms of raw material procurement, the company has set up procurement offices in China, Southeast Asia and South Asia, South America, Saudi Arabia and other countries and regions, and completed the global raw material allocation layout of comprehensive aquatic products mainly shrimp, tilapia and crayfish.
3. The company is the leader of the aquatic products industry. After years of deep ploughing, it has formed a whole industry chain business dominated by the processing and sale of aquatic products, supplemented by seedlings, feed, breeding and auxiliary. At present, the layout of the company's business at home and abroad has been gradually improved, and the competitive advantage is obvious. We estimate that the company's operating income from 2019 to 2021 will be 53.94 billion yuan, 61.64 billion yuan, and the net profit will be 1.75 billion yuan, 2.42 billion yuan, 296 million yuan. The corresponding PE is 19.67x/14.19x/11.60x, which is recommended and rated.
Risk tips: fluctuation of raw material prices, risk of epidemic disease