Through the issuance of a comprehensive animal protein supplier, Dakang Animal Husbandry will become the only supplier of a full range of animal protein in the stock market covering pork, beef, mutton and dairy products. 5 billion yuan of cash raised will be invested in the above-mentioned business, as the stock column continues to decline, the high prosperity of domestic beef and mutton will be maintained, and the dairy business is also competitive in the domestic market by virtue of the resource advantage of major shareholders (owning New Zealand farms). However, due to the long construction period, the contribution to the company's profits is relatively limited in the short term. Although there is no advantage in PE valuation, there is still room for the company's share price from an PB point of view.
After the additional offering, the actual controller of Dakang Animal Husbandry is Mr. Jiang Zhaobai, chairman of Shanghai Pengxin Group. After the completion of this non-public offering, Pengxin Group will directly hold 18.09% of the shares of the company, and indirectly control a total of 37.19% of the shares of the company through Houkang Industrial, Hechen Chemical and Hutchison Industries, and directly hold and indirectly control a total of 55.29% of the shares of the company. Become the controlling shareholder of the company. Mr. Jiang Zhaobai is the actual controller of Pengxin Group and will become the new actual controller of the company.
Major changes will take place in the business structure after the additional issuance. After the completion of the additional offering, the company's main business will undergo major changes, which will help to maintain the stability of performance. At present, the company's main business is pig breeding, feed and meat products, with an annual income of about 1 billion yuan. Due to the single business structure, low gross profit margin and strong periodicity of the pig breeding industry, the company's performance fluctuates greatly. After the completion of the additional issuance project, the company will have a richer product structure, including pig, beef and dairy products, in which the income from mutton, beef and dairy products will reach 24 yuan, 20 yuan and 2.5 billion yuan respectively, which are far larger than the current scale of pig business. future performance growth will be more stable.
The profit prospect of the fund-raising project is bright, but the construction period of the project is long. The funds raised shall not exceed 5 billion yuan, it will be used for: 1 million mutton sheep breeding in Woyang, Anhui, 200000 mutton sheep breeding in Huaihua, Hunan, joint venture Qingdao Pengxin Xuelong Animal Husbandry Co., Ltd. to implement imported beef, Nushilan (Shanghai) Dairy Co., Ltd. to implement imported baby milk powder and liquid milk projects and supplement liquidity. With the increase of income and the change of consumption concept, the intake structure of domestic meat products will still be adjusted, the proportion of pork intake will decrease, and the proportion of beef and mutton intake will increase. At present, the proportion of mutton and beef in the consumption structure of meat products in China is only 5.2% and 8.5% respectively. However, a few years ago, because the breeding profits were not high, the stock of beef cattle continued to decline, and the stock of mutton sheep barely increased, and now it is in a state that supply exceeds demand. Due to the breeding cycle, it will take at least three years to fill the supply gap. It is expected that the high prosperity of beef and mutton can still be maintained.
Pengxin Group has a number of overseas agricultural assets. 1) Krafa Ranch, New Zealand. Krafa Ranch has a total of 8000 hectares of 16 large dairy farms with 16000 cows. 2) New Wright Ranch. Synlait Farms currently operates 13 dairy farms with a total of 13000 cows. 3) Bolivian farms. It covers an area of 12488 hectares (187300 mu), with an annual output of about 45000 tons of major crops (soybeans, corn, sorghum and other crops).
Profit forecast and valuation: the company's EPS from 2013 to 2015 is expected to be 0.004 yuan, 0.22 yuan and 0.22 yuan respectively, giving the company an investment rating of "overholding", with a target price of 22.65 yuan, corresponding to a valuation of 3.5 times PB in 2014.
Risk hint: pig prices have fallen sharply, and major changes have taken place in fund-raising projects.