Incident: The company released its 2022 annual report. Quanyin Hi-Tech achieved revenue of 3.491 billion yuan, an increase of 38.47% over the previous year; net profit attributable to shareholders of listed companies was 233 million yuan, an increase of 38.03% over the previous year.
1. The scale of seeds is growing rapidly, and multi-variety reserves have shown results
The company's rice seed revenue in 2022 reached 1.54 billion, up 28% year on year, and sales volume increased 25.79% year on year; corn seed revenue reached 337 million, up 54% year on year, sales volume increased 39.36% year on year; wheat seed revenue reached 325 million, up 118% year on year, and sales volume increased 65.03% year on year. The rapid growth in seed scale has benefited from the company's active expansion in terms of varieties and channels: ① In terms of varieties, the company's variety types continued to increase. In 2019-2022, the company's rice varieties were nationally reviewed 23, 59, 92, and 54 varieties of the company's rice varieties were nationally reviewed, 1, 5, and 8 varieties of corn varieties were nationally audited, and in 2022, the company added 1 new cotton variety to pass national approval. The variety of the company continues to increase, laying the foundation for the expansion of the company's various categories of business. ② Regionally, the company continued to expand from the original middle and lower reaches of the Yangtze River (East China) to other regions. The company's advantageous sales regions (East China, Central China) continued to lead in sales revenue. At the same time, revenue volume in other regions increased rapidly. For example, revenue in the northwest region exceeded 350 million, an increase of 1685% over the previous year; revenue from the southwest region reached 137 million, an increase of 19% over the previous year. Furthermore, the company accelerated its overseas market layout, and seed exports reached a new high. In 2022, it exported 8.336,500 kilograms of seeds of various agricultural crops, an increase of 17.92% over the same period last year, boosting agricultural development in countries along the “Belt and Road”.
2. Increased R&D, a model for science and enterprise cooperation!
The company continues to invest in R&D. In 2020-2022, the company's R&D investment amounts were 56.17 million yuan, 83.28 million yuan, and 114 million yuan respectively. Previously, a team of scientists from the company's first-class seed industry research institutes within the United Nations established the “National Rice Commercialization Molecular Breeding Technology Innovation Alliance”, which is the “first batch of national agricultural science and technology innovation alliances” certified by the Ministry of Agriculture and Rural Affairs in the field of crop seed industry in the domestic crop seed industry. On this basis, the company and some research units or researchers of the Innovation Alliance jointly invested to establish a subsidiary, Zhongke Quanyin. In 2022, Zhongke Quanyin passed the National High-tech Enterprise Certification and was shortlisted for the 2022 National Disruptive Technology Innovation Competition.
3. The transformation of the seed industry is expected to accelerate. The company targets the top ten in the global seed industry!
The 2023 Central Committee Document No. 1 proposed “in-depth implementation of actions to revitalize the seed industry. ... Fully implement major biological breeding projects... accelerate the pace of industrialization of biological breeding of corn and soybeans, expand the scope of the pilot in an orderly manner, and standardize planting management”. In the field of biological breeding, as an important member of Syngenta's seed industry sector, Quanyin Hi-Tech is actively developing research and cooperation in biological breeding technology to reserve relevant resources. As of March 2023, Syngenta has obtained 3 agricultural genetically modified biosafety certificates (production and application), namely the herbicide resistant corn GA21, the insect-resistant herbicide corn BT11 × GA21, and the insect-resistant herbicide corn BT11 × miR162 × GA21. Among them, BT11 × miR162 × GA21 is resistant to meadow greedy night moths, has good field results, and has strong market competitiveness. The company set a goal of entering the top ten in the world seed industry by the end of the 14th Five-Year Plan. We believe that the company's variety and regional expansion path are clear, focusing on R&D investment and mobilizing the innovation enthusiasm of R&D personnel, and are expected to make steady progress on the way to achieving the goals!
Investment suggestion: The company's seed business is developing smoothly, but considering that the growth rate of silage corn may slow, we adjusted the company's revenue of 41.45/48.02/5.627 billion in 2023-2025 (the previous value was 43.1/5.24 billion in 23/24), an increase of 18.76%/15.85%/17.17%, and achieved net profit of 2.71/3.36/451 million (previous value of 31/371 million in 23/24), an increase of 16.02%/24.04%/34.41%. The company is deeply involved in the seed industry, rapidly expanding its business, continuing to focus on recommendations, and maintaining its “buy” rating.
Risk warning: risk of the epidemic; price fluctuations; risk of policy changes; promotion of contract farming falls short of expectations; promotion of genetically modified genes falls short of expectations.