Key points of investment
Supply chain integration service provider with the largest number of A-shares. Bussan Zhongda Group Co., Ltd. is one of the most influential commodity supply chain integration service providers in China and one of the world's top 500 enterprises. The company completed mixed ownership reform and achieved overall listing in 2015. The actual controller is the Zhejiang State-owned Assets Administration Commission. The company's supply chain business revenue in 2019 ranked first among similar A-share companies, and the business scale of core production materials such as metals, energy, and chemicals all ranked among the top three in the country.
Build a leading platform-based operation system to support the company from growing bigger to stronger. The platform-based operating system is a major characteristic that distinguishes the company from its peers. It can solve the main pain points of operation and management encountered by traditional supply chain service companies, such as complex business, heavy reliance on teams, individuals, and difficult risk control. The company continues to strengthen and expand by strengthening the development of large customers, integrating vertical industries, building a smart logistics service system, and actively exploring the application of new technologies.
A pioneer in the reform of state-owned enterprises, continuing to deepen mixed reforms. As an enterprise selected in the “12 Samples of State-owned Enterprise Reform”, the company has long insisted on management reform and innovation. As early as the late 90s, trade union shareholding was implemented at the level of major subsidiaries. After achieving the overall listing in 2015, the company continued to improve the dual employee shareholding structure of member companies and listed companies through employee shareholding and “secondary mixed reform” to stimulate employee vitality.
The main business is stable, the family is strong, and the returns of shareholders are rich. The company's revenue and profit continued to grow steadily in 2015-2019. As a large state-owned distribution enterprise in Zhejiang Province, it has accumulated a strong base after years of development, and all of its assets went into the listed company when it was listed as a whole. The company's dividend ratio is high, and the average dividend rate (cash dividend/net profit returned to the mother) in 2015-2019 reached 47.3%.
Investment advice. The company's EPS for 2020-2022 is expected to be 0.50, 0.56, and 0.60 yuan; the closing price on May 15, 2020 (4.58 yuan) corresponds to the PE of 2020-2022:9.2, 8.1, 7.6 times, and the corresponding PB in 2020 is 0.9 times. Assuming the dividend rate of 46% in 2019, the corresponding dividend rates are 5.0%, 5.7%, 6.0%. The company is the largest supply chain integration service provider with A-shares. By building a leading platform-based operation system, through continuous deepening of mixed reforms, the company stimulates the vitality of employees and supports the company from growing bigger to stronger; The company's main business is stable, the family is strong, and the shareholder returns are rich. For the first time, it has covered a “prudent increase in holdings” rating.
Risk warning: The economic situation has deteriorated drastically, commodity prices have fluctuated sharply, asset impairment has exceeded expectations, dividend policy changes, etc.