Tianhe shares: South China agricultural material circulation and agricultural technology service leader. With modern agricultural technology service as the forerunner and direct terminal distribution system as the support, the company is mainly engaged in the sales of chemical fertilizers, pesticides and other agricultural products and provides professional agricultural technology services. The company mainly sells nitrogen fertilizer and potash fertilizer to wholesale customers and industrial customers as its basic business. In addition, based on the characteristics of a wide variety of cash crops such as fruits and vegetables and diversified market demand in South China, the company combines a variety of high-quality products, combined with modern agricultural technology, to develop a variety of crop solutions.
In the first three quarters of 2020, the company achieved operating income of 7.269 billion yuan, an increase of 5.07% over the same period last year, and a net profit of 70 million yuan, an increase of 134.30% over the same period last year.
The company's total distribution of compound fertilizer products has a high market influence. According to the different composition of effective nutrients, the company's chemical fertilizer products are divided into nitrogen fertilizer, potash fertilizer, compound fertilizer, mixed fertilizer and special fertilizer (mainly including plant nutrients, water-soluble fertilizer, etc.). Compared with unit fertilizer, the market demand of compound fertilizer is stable. The company mainly sells fruit and vegetable crops in South China, such as Guangdong, Guangxi and Fujian, with high economic value, and there is a strong demand for high-end compound fertilizers such as imported compound fertilizers. The company's total distribution of high-end compound fertilizer, such as Yaran, Sakefu and other brands of high-end compound fertilizer in South China has high product popularity and market influence.
Product sales, agricultural technology service integration. The company breaks through the multi-level traditional mode of "emphasizing products over service" in the agricultural material circulation industry, and constructs an integrated agricultural material circulation and agricultural technology service system before, during and after sale, so as to provide a full range of agricultural technology services for downstream dealers and customers. It mainly includes: the headquarters Agricultural socialization Service Center promotes the construction of demonstration park, Zhongjia Chemical Fertilizer is responsible for soil testing and formula fertilization, the Ministry of Agriculture and Chemical Industry is responsible for unified prevention and control, and the distribution center is responsible for product and technology promotion to meet the dual needs of farmers for quality products and agrotechnical services.
Fund-raising projects to expand the company's sales coverage and market share. The company raised 411 million yuan, which is mainly used for the construction of "distribution network" and "comprehensive platform for agricultural services", which is conducive to expanding the company's sales coverage and market share in major market areas. and then further enhance the company's comprehensive competitiveness, in line with the company's long-term development goals. According to the development strategy of "ploughing South China and going to the whole country", the company will form a distribution network system covering the main agricultural producing areas in South China with advantages in scale and more reasonable layout in the next 3-5 years. After the completion of the distribution network project, it will achieve an additional annual sales income of 1.8 billion yuan. The construction of "comprehensive platform for agricultural services" conforms to the development trend of the industry and the needs of serving "agriculture, rural areas and farmers". After the completion of the project, the company's agricultural technology service capacity will be greatly enhanced, which will help to enhance the company's overall competitive strength, so as to maintain the company's leading position in the agricultural material circulation industry.
Profit forecast. We estimate that the EPS of the company in 2020-22 is 0.36 yuan, 0.43 yuan and 0.5 yuan respectively.
The company's agricultural material circulation and agricultural technology services are in a leading position in the industry and are given a certain valuation premium. We give the company 26-29 times PE in 2021, corresponding to a reasonable value range of 11.18-12.47 yuan, giving a "neutral" rating for the first time.
Risk hint. The risk of product price fluctuation, the progress of raising investment is not as expected, and the macroeconomic growth is not as expected.