Event Overview
The company issued a forecast for 2020 results, during the reporting period, the company is expected to achieve operating income of 147.01-16.25 billion yuan, yoy+11.55%-23.30%; is expected to achieve a net profit of 2.3-260 million yuan, a year-on-year decline of 55.45% 60.59%.
Analysis and judgment:
The operation of all sectors is good, and the investment income is reduced by about 650 million compared with the previous year. In 2020, the company expects to achieve operating income of 147.01-16.25 billion yuan, and yoy+11.55%-23.30%; expects to achieve a net profit of 2.30-260 million yuan, down 55.45% and 60.59% compared with the same period last year. The net profit of non-return is 4600-58 million yuan, down 68.09% and 74.69% from the same period last year. During the reporting period, the main reason for the sharp decline in the company's parent net profit was that Minsheng Bank realized a decline in the net profit attributed to shareholders during the reporting period, and the company's investment income decreased by about 650 million yuan compared with the previous year. In addition, the business operation of the company is improving, and the main business, modern agriculture and health food industry, continues to improve. The business scale and profitability of oil, bean products and brand rice have increased significantly. At the same time, the company actively speeds up the divestiture of project assets, strictly controls the cost and expenditure, and reduces the financial expenses.
Corn prices are on the rise, and the prosperity of the purchase and sale of agricultural products is expected to continue to improve.
We judge that corn prices will continue to rise in 2021. From the supply side, in 2016, under the pressure of high inventory, China's corn temporary storage and acquisition system was cancelled, and the corn inventory was eliminated rapidly. after 4 years of digestion, China's temporary corn inventory has bottomed out. On the demand side, the demand for forage corn accounts for more than 60% of the total corn demand. under the dual stimulation of high profit from breeding and policy support, the production capacity of pigs downstream is recovering rapidly. according to data from the Ministry of Agriculture and villages, from January to February 2021, the stock of fertile sows increased by 1.1% and 1.0% respectively, up 35.0% and 34.1% respectively from the same period last year. The national stock of fertile sows is equivalent to 95.0% of that at the end of 2017, and the national stock of live pigs is maintained at more than 400 million. We believe that with the rapid recovery of downstream pig production capacity, corn demand continues to be booming, corn prices are still expected to maintain an upward trend, supporting the company's agricultural products purchase and sales business to maintain a high demeanor.
The product structure is constantly enriched, which is expected to increase the company's profit margin.
In terms of rice, the company has expanded from a single northeast rice to many types of rice. in channel development, the company has made efforts both online and offline, and offline channels have entered Wumart, Carrefour and Yonghui supermarket chains to rapidly enhance brand recognition; online actively join hands with mainstream e-commerce platforms such as JD.com, Tmall and SUNING. 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 compound annual growth rate of net profit of Yinxiang bean products reached 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 maintain the forecast of the company's 2020-2022 income of 159.46 yuan 191.57 / 23.189 billion yuan respectively. At the same time, considering that the company's investment income in 2020 is about 650 million yuan less than that of the previous year, we reduce the company's 2020 net profit to 249 million yuan, and maintain the company's 2021-2022 net profit forecast of 681 million yuan. 825 million yuan. To sum up, we estimate that from 2020 to 2022, the company's EPS will be 0.07max 0.18max 0.22 yuan respectively, and the current share price will be 55max 20max 17X, respectively, maintaining the "overweight" rating.
Risk hint
The risk of price fluctuation of agricultural products, the risk of policy disturbance, and the lower-than-expected risk of channel construction.