Investment highlight
Covering Su Ken Nongfa (601952) for the first time, the target price is 14.50yuan. Based on the PE valuation method, it corresponds to 23.6max 20.2 times Pmax E in 2023, the company is the leader of rice and wheat planting industry in China, the whole industry chain is moving forward steadily, and there is a broad space for development. The reasons are as follows:
Industry overview: planting profits continue the boom, planting industry modernization exists development opportunities: the scale growth of China's planting industry chain is relatively stable, but the production structure has room for optimization, and the competition pattern of the industry chain is highly scattered. In terms of price judgment, we expect that rice and wheat prices may be stable in the second half of the year, and planting costs will continue to improve, and the profitability of the planting industry is expected to continue this year. In terms of long-term development, the modernization of planting industry is accelerated during the 14th five-year Plan period, and there are opportunities for the development of head enterprises behind the three major development goals of increasing production and ensuring supply, efficiency improvement and green development.
Core competitiveness: high-quality cultivated land dedicated to ploughing, science and technology, brand development. 1) advantages of cultivated land resources: since the Land Reclamation Group contracted nearly 1 million mu of low-cost, stable cultivated land resources, excellent natural conditions and complete supporting infrastructure, per unit yield and land rent are ahead of the national average; 2) unified management advantages:
The organic combination of the whole industry chain operation and the "five unified" management to further save costs and increase efficiency; 3) the advantages of agricultural science and technology: the company sets up its own R & D system of "one institute, four institutes, one center" and pays attention to the cooperation between science and enterprises, R & D investment and R & D personnel expand steadily. Rich achievements in research and development of seeds, grain and oil; 4) brand advantages:
After years of brand accumulation, a number of sub-brands have high popularity in Jiangsu and even East China.
Growth driving force: the main planting industry moves forward steadily, and the whole industry chain blossoms at many points. The main results are as follows: 1) the main planting industry ploughs deeply and carefully, increasing production and increasing efficiency are in parallel with structural optimization. The company is expected to promote the stable expansion of arable land through land transfer and trusteeship, and at the same time increase the proportion of corn and soybean belt compound planting and high value-added agricultural products, and tap the profitability of the main industry; 2) the industrial chain continues to extend, explore extension business to open up development space. The seed industry is expected to increase seed processing capacity, and with the help of Jiangsu seed industry to integrate resources, the dual development of endogenesis and extension; edible oil is expected to enhance competitiveness through bidding for high-quality assets; malt will continue to extend the high-end malt industry chain; the rice industry will continue to promote high-standard production capacity reconstruction and expansion projects; in terms of social services, the company has a better demonstration effect on surrounding farmers, which is expected to accelerate the penetration of farmers.
What is the biggest difference between us and the market? The market is mainly concerned about the correlation between the company's performance growth and rising food prices. We deeply analyze the advantages of the integration of the company's whole industry chain, and are optimistic about the short-term performance improvement brought about by its cost decline, as well as the medium-and long-term development potential of multiple industries.
Potential catalysts: rising prices of rice and wheat; expansion of arable land; acceleration of downstream customer development.
Profit forecast and valuation
We estimate that the company's EPS in 2023-24 will be 0.62 yuan and 0.72 yuan respectively, and the CAGR will be + 9.4%. The current share price corresponds to 19.3max 16.6 times Pmax E in 2023. It covers Su Ken Nongfa for the first time, giving the industry rating and target price 14.5 yuan, corresponding to 2023 big 24-year 23.6 big 20.2 times Pmax E, corresponding to + 22% space.
Risk
Natural disasters; food price fluctuation; product quality risk; land transfer, government subsidy policy change.