Analysis and judgment
The company is the national leader in the purchase, sale and processing of agricultural products.
Oriental Group, founded in 1978, the first year of China's reform and opening up, is a large investment-controlled enterprise group, the full name of which is Oriental Group Co., Ltd. At present, the company's main business includes rice processing and sales, oil processing and sales, other agricultural products sales, land and real estate development and so on. From 2016 to 2019, the company's operating income increased from 6.343 billion yuan to 13.179 billion yuan, while the net profit of CAGR+27.60%; fell slightly from 762 million yuan to 584 million yuan, CAGR-8.52%. In the first three quarters of 2020, the company achieved operating income of 11.137 billion yuan, yoy+18.95%; achieved a net profit of 478 million yuan, yoy+0.81%. The sales of agricultural products and oil processing and sales are the company's main sources of income and profits. In terms of the proportion of income, in 2019, the company's other agricultural products sales and oil processing and sales respectively achieved income of 7.467 billion yuan, accounting for 56.66%, 27.13%, respectively, which is the company's main source of income. In terms of gross profit ratio, in 2019, the company's other agricultural products sales and oil processing and sales respectively achieved a gross profit of 119 million yuan, accounting for 40.58% and 51.57% respectively, which is the company's main source of profit.
The price of corn is strong, and the purchase and sale of agricultural products is expected to have a high growth.
In 2016, after China's corn temporary storage and acquisition system was abolished, China's corn inventory began to enter the stage of elimination. In 2020, with the rapid recovery of pig production capacity, the market is bullish on corn prices, the enthusiasm of temporary storage and auction has greatly increased, and China's corn inventory has bottomed out. With the rapid transmission of downstream pig production capacity to pig storage, the demand for corn continues to grow. We believe that the intensification of the contradiction between supply and demand of corn will support the upward price of corn, which is expected to lead to the rapid growth of the company's purchasing and sales business. Meanwhile, in July 2019, Oriental Granary Trading Co., Ltd., a wholly-owned subsidiary of Oriental Granary, completed the acquisition of an 80% stake in Mai.com supply chain (Dalian) Co., Ltd., taking control of China Mai.com, the largest information integration platform in the corn field. the move is expected to accelerate the company's upgrading from a traditional agricultural trader to a bulk trading platform service provider.
The processing advantages of agricultural products are gradually emerging, artificial meat opens the imagination space for rice, the company expands from the original single northeast rice to many types of rice, and in channel expansion, the company makes efforts both online and offline. Offline channels into Wumart, Carrefour, Yonghui supermarket chains, rapidly enhance brand recognition; online actively join hands with JD.com, Tmall, SUNING and other mainstream e-commerce platforms. In terms of bean products, the Yinxiang bean products curd roll project, a subsidiary of Oriental Superior products, was smoothly and steadily put into production and achieved full-load production, the pulping system was comprehensively upgraded, and the production capacity of the 100-page production line was doubled, providing a basic guarantee for the expansion of the market of frozen bean products. From 2017 to 2019, the net profit of Yinxiang bean products increased at a compound annual rate of 41.3%. In terms of artificial meat, the company's subsidiary Dongfang Granary Co., Ltd. signed a joint R & D agreement with two universities, Shenyang normal University and Shenyang Agricultural University, to reach a cooperative intention on the research and development of high moisture plant-based artificial meat-related products. and agreed to accept the Shenyang normal University held by extrusion / ultrasound combined with the preparation of glycosylated Zein method, product and application, etc. 3 patents. We believe that artificial meat has broad room for growth, and the company is actively exploring R & D cooperation related to artificial meat, which is expected to give full play to the advantages of the whole industry chain of processing and sales of agricultural products and become an important supporting force for the steady release of future profits.
Investment suggestion
We estimate that from 2020 to 2022, the company's operating income will be 159.46 million yuan, 191.57 million yuan, respectively, and the net profit will be 5.84 million yuan, 681 million yuan, and 0.18 hundred million yuan, respectively. EPS will be 0.18 yuan 0.22 yuan, respectively. With reference to the comparable company's 2022 20XPE, considering the strong certainty of the company's performance growth, the company will be given 23XPE in 2022, corresponding to the target price of 5.06 yuan, covering for the first time, and given the "overweight" rating.
Risk hint
The risk of price fluctuation of agricultural products, the risk of policy disturbance, and the channel hypothesis is lower than the expected risk.