Main points of investment:
Supply chain service strategy to provide more comprehensive flavor and flavor products:
The company provides customers with more varieties of incense raw materials through supply chain services. The implementation of precision manufacturing + supply chain service strategy is an important step for Zhongyi to develop 360-degree panoramic incense raw material industry. Zhongyi's future goal is to provide a series of products covering turpentine and natural essential oils to serve the whole industry chain of spices and flavors.
The second phase of the projects of Gu Lei and Changtai are progressing steadily:
Gu Lei project is the focus of Zhongyi's future development. Last year, it completed the acquisition of 330 mu of land use rights in Gu Lei Chemical Park, has begun construction, and will complete exploration, environmental assessment and safety assessment in the second half of the year. Construction is expected to be completed in mid-2017 and gradually put into production capacity. The company expects the capital expenditure of the Gouri project to reach 145 million yuan in 2015.
Changtai Phase II expansion project is also in progress and will gradually release production capacity, which is expected to take 2-3 years to complete. Changtai project mainly focuses on the production of natural essential oils and edible sauces.
Actively looking for strategic alliances:
Zhongyi focuses on the main business, and its production capacity is expanded basically through its own equipment and technical transformation and construction. The company has not taken the initiative to expand production capacity through external mergers and acquisitions through capital operations. now the company has formulated a strategy for actively looking for M & A projects with synergistic effect. This strategy of Zhongyi shows that the management is optimistic about the future flavor industry and will acquire upstream and downstream companies if there is an opportunity in the future.
Maintain a highly recommended rating:
Zhongyi has steadily developed its existing business, promoted the construction of Changtai Phase II and Gu Lei projects, and actively extended M & An expansion in the future. Zhongyi, as the leader of the subdivision industry, now has a low valuation, PE 5.5x PB 0.65x, and maintains a strong recommendation with a target price of HK $3.14m.