Event: the company signed the articles of Association of Yantai Shouzheng Agricultural Development Co., Ltd. on August 30, 2019 with Yantai supply and Marketing Cooperative, Cao Wei, Yu Chuang and Li Jian. The company intends to invest 3 million yuan to jointly establish Yantai Shouzheng Agricultural Development Co., Ltd. The five parties plan to contribute a total of 10 million yuan, including 31% of Yantai supply and marketing cooperatives, 30% of the company, 15% of Cao Wei, 12% of Yu Chuang and 12% of Li Jian.
Create a comprehensive service plan for planting industry and try to create a new business model of digital agriculture!
The company's comprehensive planting service program, which takes soil as the entrance, is mainly aimed at domestic existing or potential new agricultural operators, including soil detection, intelligent fertilizer distribution, value-added fertilizer, precision irrigation, crop yield estimation and other services. According to the company announcement, in the future, the company will continue to establish joint ventures with supply and marketing cooperatives with agricultural material channels and agricultural technology services, agricultural machinery companies, agricultural technology companies or new business entities, so that the participants in the planting industry chain can gain practical benefits while developing sustainable ecology, and achieve mutual benefit and win-win results.
Specific to the profit model of the company's planting industry comprehensive service program, the company will use digital agriculture technology to help the participants in the planting chain to get through the whole planting process and continue to provide services to realize the realization of related products. The company's services will be carried out in three aspects: 1) taking individual products as the target, to open up the whole process of crops from soil testing, farming, irrigation, fertilization, field management, agricultural insurance services, yield prediction to harvest and storage; 2) taking the field as a unit, use cool techs and service terminals such as 3s technology, sensors, service stations and service terminals to provide accurate integrated service solutions for crops. 3) based on data, connect soil data, irrigation data and crop yield estimation data, realize the standardization of planting management scheme and agricultural input, realize data acquisition and quality traceability, and finally realize the standardization and branding of agricultural products. Based on the above services, the company's vertical products and supporting services such as soil CT rapid detection, intelligent fertilizer dispensing machine, value-added fertilizer, soil improver and so on are expected to be realized smoothly.
The establishment of a joint venture company combines the advantageous resources of both sides to take an important step in the comprehensive service plan of landing planting industry. the purpose of this joint venture company is to make full use of the superior resources of shareholders and jointly promote the landing of the comprehensive service plan of planting industry. The joint venture company will mainly provide solutions for modern agricultural production services and new value-added fertilizer services, while the advantages of Yantai supply and marketing cooperatives, a major shareholder, in marketing channels will help Fubon's products and services quickly open the market, including: 1) brand advantages. The "tobacco farmer" brand owned by cooperatives has high brand awareness and farmers' recognition in Shandong and even the domestic agricultural market. 2) Marketing channels and customer resources. Cooperatives have a relatively perfect agricultural materials sales network and mature customer resources; 3) have more mature operation and maintenance experience in the field of special fertilizers and fertilizer distribution stations. For Fubon shares, this foreign investment will help to accelerate the realization capacity of digital agriculture business, improve the layout of the company's digital agriculture industry chain, and have positive economic benefits for the company's long-term development. We believe that the company has never stopped its transformation from chemical fertilizer auxiliaries to digital agriculture since 2016. now it has gradually changed from the "cool techs" development stage of digital agriculture to the commercial and cash stage, and the company's digital agriculture business revenue may grow rapidly in 2019!
Profit forecast and investment advice. We estimate that from 2019 to 2021, the company will achieve revenue of 7.2 million yuan and net profit of 1.23 billion yuan and net profit of 1.01.5 billion yuan. We are optimistic about the expansion of the company's overseas business and the acceleration of the commercialization of digital agriculture to maintain the "buy" rating.
Risk tips: cooperation progress is not as expected, raw material price fluctuation risk, intelligent fertilizer business progress is not as expected, overseas business expansion is not expected, the acquisition of subsidiary goodwill impairment risk.