Core viewpoints

2023Q1-Q3, the company realized operating income of 4.052 billion yuan, 41.07% of the same period last year; net profit of 292 million yuan, 127.40% of the same period last year; and non-return net profit of 256 million yuan, 191.50% of the same period last year. 2023Q3, the company realized operating income of 1.375 billion yuan, 38.04% of the same period last year; realized net profit of 100 million yuan, turning losses into profits; and deducting non-return net profit of 86 million yuan, turning losses into profits over the same period last year. Since 2023, the operation of agricultural trade merchants has continued to improve, and the company has stopped rent reduction. At the same time, the business income of the industrial chain and the sales income of shops have increased, and the company's income and profits have achieved high growth.

Event

2023Q1-Q3, the company realized operating income of 4.052 billion yuan, 41.07% of the same period last year; net profit of 292 million yuan, 127.40% of the same period last year; and non-return net profit of 256 million yuan, 191.50% of the same period last year.

2023Q3, the company realized operating income of 1.375 billion yuan, 38.04% of the same period last year; realized net profit of 100 million yuan, turning losses into profits; and deducting non-return net profit of 86 million yuan, turning losses into profits over the same period last year.

Brief comment

The company's performance continues to grow and its cash flow is sound.

In 2022, the company implemented the social responsibility to reduce the rent, and the company's performance declined greatly. Since 2023, the operation of agricultural trade merchants has continued to improve, and the company has stopped rent waiver. At the same time, business income from industrial chains such as Shennong Kitchen, store sales income from Xinliuyong Company in Guangxi, and operating income from wholesale markets such as Shenzhen and Tianjin have increased year-on-year, so the income and performance have increased greatly compared with the same period last year, and profits in the third quarter have been reversed. Revenue scale growth diluted costs, the company's gross profit margin in the third quarter increased by 8.02 pct year-on-year to 30.39%. The company has strengthened its cost control, with the exception of a slight increase in sales costs, the rest of the fees have decreased, while the management rates have dropped by 3.25 pct compared with the same period last year.

The company's cash flow is sound, with a net cash flow of 185 million yuan in operating activities in the third quarter and 532 million yuan in the first three quarters. The company's capital expenditure in the third quarter is lower than that in the second quarter, and the overall expenditure is at an all-time low.

The first batch of four consumer infrastructure REITs projects has been opened and accepted, and the farmers' market project has yet to be opened.

In March this year, the CSRC proposed to study the issue of consumption infrastructure REITs, which supports the enhancement of consumption power, improvement of consumption conditions and innovation of consumption scenarios. On October 20, the CSRC issued the decision on revising Article 50 of the guidelines on Public offering Infrastructure Securities Investment funds (for trial implementation), extending the types of pilot assets of public offering REITs to consumer infrastructure.

On October 26, the first batch of four consumer infrastructure REITs projects were accepted. The underlying assets are shopping malls, brand supermarkets and convenient businesses. The public REITs whose underlying assets are farmers' markets has not yet been accepted. It is expected that the public offering REITs of farmers' markets will be launched in the future, which will help farmers' markets invigorate existing assets, strengthen infrastructure construction, and expand consumption and steady growth.

Investment suggestion: we expect the company's return net profit from 2023 to 2025 to be 3.75,4.47 and 504 million yuan respectively, corresponding to 30,25 and 22 times of PE.

Risk analysis.

1. Industry competition aggravates the risk. Companies such as Xinfadi, Wanbang International and China Agricultural products Trading are also expanding the industrial chain and expanding the market coverage of agricultural batches, and market competition may intensify.

two。 The development of market supporting services is not up to expectations. At present, some of the company's market supporting service-related holding companies are still in a state of loss, and some companies are undergoing business adjustment and upgrading. If the business development does not meet expectations, it may not be able to turn losses into profits, affecting the company's performance.

3. The risk of regional concentration. At present, more than 70% of the company's income comes from Guangdong and Guangxi. If there are major adverse changes in the economic environment and residents' income in South China, or if competition in the regional agricultural market intensifies, it will adversely affect the company's operation.