Company overview: agricultural industrialization national key leading enterprises, multi-dimensional development space company turned to grain and oil business since 2009, subsidiary Dongfang granary won the "national key leading enterprises of agricultural industrialization". Assume the important task of national "food security and food safety". The company has stable controller and clear structure: Oriental granary is responsible for modern agriculture and health food industry, Oriental commercial investment is responsible for new urbanization development industry, and the company participates in financial business and port transportation business through joint ventures, including China China Minsheng Banking Corp and Jinzhou Port. In recent years, the company continues to explore the transformation of grain and oil traders. In July 2020, the company changed its industry to the agricultural and non-staple food processing industry. In 2019, the performance of the grain and oil business has grown for four consecutive years, with CAGR reaching 30 per cent in four years. With the accelerated return of funds from the real estate sector, the impact on net profit is expected to continue to reduce, the company may meet the profit inflection point.
two。 The purchase and sale of agricultural products-- the steady support of the main business
In the short term: the purchase and sale of agricultural products is the company's largest source of performance, and corn is one of the largest varieties. As national reserves run out in 2020, downstream demand rises again, and corn prices are expected to continue to rise. With the rise in corn volume and prices, the company's purchasing and sales business is expected to see high growth in 2020. In the medium term:
The company acquired an 80% stake in China Mai.com, the largest information integration platform in the corn sector, in 2019. The acquisition will help the company accelerate its upgrade from a traditional agricultural trader to a bulk trading platform service provider. In the long run: in recent years, 1) the inter-provincial demand of grain logistics in China is growing rapidly; 2) the policy encourages large grain enterprises to build a supply chain platform. Through years of layout, the company has established a relatively complete agricultural product supply chain system nationwide, and is expected to gradually share the dividend of inter-provincial demand growth in grain and oil logistics in the future.
3. Agricultural products processing business-- rapid release of high growth potential
Processing business is the key force for the company's main business to maintain high growth rate for a long time in the future: 1) Rice & fat. The company will take the brand rice as the fulcrum to quickly open the market to form the characteristic agricultural product brand with rice, noodle and oil as the core, as well as "Yinxiang" brand bean products. From 2020, the company will further enhance the competitiveness of processed products from two aspects of brand and channel; 2) bean products. The company acquired Fujian bean products leader Xiamen Yinxiang bean products, the latter is the BRICS leaders' Xiamen summit food supplier, Haidilao International Holding hot pot bean products supplier, won the title of "China's top 50 bean products industry". The production and marketing scale of bean products in China has been growing steadily for a long time, and the demand for hot pot ingredients in the subdivision field is increasing year by year. The company's bean products business is expected to multiply the price of Dongfeng, based on Fujian to open up the national market; 3) rice bran technology. The company has "full-fat stable rice bran" technology, which fills the gap in domestic technology in this field. Related technologies and products are widely used, and have been used in rice processing, health food, beauty and makeup fields.
Profit Forecast & Investment suggestion: we expect that from 2020 to 2022, the company will achieve revenue of 159.73 million yuan and net profit of 646 million yuan, corresponding to EPS0.17/0.21/0.25 yuan. We are optimistic that the company's agricultural products purchase and sales business will benefit from the rise in corn volume and prices in 2020, the national agricultural product supply chain system has been gradually improved, and the new grain and oil processing business has been gradually rolled out with the accelerated launch of brand rice noodle oil health food, giving 30 times PE in 2021, with a target price of 6.23 yuan, with a "buy" rating for the first time. Risk tips: agricultural product price risk, agricultural policy change risk, brand & channel construction is not as expected.