Events:

The company announced that the company signed the "share subscription and shareholder Agreement" with Royale Marine IMP-EX Private Limi ted (hereinafter referred to as the underlying company) and its 11 shareholders, intending to use its own funds of US $4 million to subscribe for the newly issued shares of the underlying company. After the completion of this investment, the company or its wholly-owned subsidiary will hold 25.30% of the shares of the underlying company and become the second largest shareholder of the underlying company.

Enter the shrimp industry chain to deepen the layout of the global supply chain.

The target company, founded in 2011, is located in the main producing area of Penaeus chinensis, and its main business covers mariculture, fishing, breeding, harvest, smoking, refrigeration and so on. The target company has a strong standardized processing capacity and quality management system, its customers cover the United States, China and Europe and other countries and regions, has a more mature business foundation.

India, where the target company of this foreign investment is located, is one of the emerging major producing countries in the shrimp industry. It has comparative advantages in raw material prices and labor costs, as well as development potential in industrial space and processing level. Through this overseas investment, the company is expected to make full use of the advantages and potential of the Indian shrimp industry, rely on the business foundation of the target company, give full play to the company's advantages in market, technology and capital, and achieve coordinated business development; by optimizing the overall management of the Indian supply chain, increase supply support to wholly-owned subsidiaries in the United States.

Industrial opportunities: the rise of downstream catering, e-commerce and new retail to promote the supply of high-quality aquatic products!

At present, two major changes have taken place in the downstream demand of aquatic products: one is the accelerated growth of large catering enterprises, and the rapid growth of leisure food and beverage consumption demand; the other is the accelerated rise of new retail with e-commerce platform and offline boutiques as the core. Large catering enterprises and new retail enterprises have higher requirements for the product quality, supply stability, reaction speed and product development ability of upstream suppliers, so that the advantages of aquatic processing leading enterprises can be reflected. Aquatic processing leading enterprises will usher in a good period of development opportunities.

Strategic transformation starts, occupying both ends of the smile curve: building a global aquatic product supply chain system!

In 2016, the company's strategic transformation began, based on both domestic and foreign markets, to integrate high-quality aquatic product resources upstream, to achieve the expansion of the company's categories, and to sink downstream. Open up B-end channels such as catering, e-commerce and new retail with China and the United States as the core markets, and optimize the company's channel structure and customer structure. Product optimization, R & D and innovation for downstream B-end customers to provide high value-added products. At the same time, the company strengthens the management and control of the entire supply chain to create a global aquatic products supply chain system to provide quality aquatic products for downstream customers. We believe that this shift meets the supply chain needs of high-quality customers such as large catering enterprises and new retail enterprises, and will greatly enhance the company's competitiveness and promote sustained high revenue and performance growth.

Give a "buy" rating:

Taking into account the impact of the trade war and the increase in costs caused by the company's short-term expansion of the domestic market, the company's income from 2019 to 2020 was reduced from 56.85 million to 64.36 million, and the profit was reduced from 2.61 to 1.92 billion, with the same increase of-56.02% 88.24% and 46.16%, corresponding to 0.11, 0.21 and 0.31 yuan, respectively. The "buy" rating is maintained at 39 times, 21 times and 14 times the closing price of PE on July 30.

Risk tips: raw material price fluctuations; channel expansion is not as expected; food safety risks; Sino-US trade friction.