\u3000\u3 China Vanke Co.Ltd(000002) 041 Shandong Denghai Seeds Co.Ltd(002041) )
Matters:
The company released the performance express of 2021: in 2021, the company realized an operating revenue of 110727 million yuan, an increase of 22.20% over the same period of the previous year; The total profit was 239554100 yuan, an increase of 247.01% over the same period of last year; The net profit attributable to shareholders of listed companies was 232798800 yuan, an increase of 128.33% over the same period of last year.
Guoxin agriculture’s view: 1) we believe that Shandong Denghai Seeds Co.Ltd(002041) 2021 has a good performance. As the target of pure corn seeds, it is expected to continue to maintain high-quality and upward growth in 2022 driven by the growth policy dividend brought by the implementation of genetically modified crops and the cycle reversal brought by the rise of food prices. In terms of cycle, we expect that the high boom of China’s corn, wheat and other grain prices in 2022 is expected to continue. In the winter of 2021, there will be problems of late sowing and low germination rate in the main wheat producing areas. The wheat output may decrease in 2022. Due to the substitution relationship between wheat and corn, the corn price is also expected to strengthen; As a post grain price cycle, the prosperity of seed industry will rise in the next 2-3 years. Stimulated by high grain prices, farmers’ demand for brand seeds is much better than that of the industry, and the volume and price of leading enterprises rise together; In terms of growth, the implementation of GM may be accelerated. After the implementation of GM, the entry threshold of the industry will be further improved, and the market share of leading enterprises will usher in a golden promotion period of about three years, with more prominent growth attributes. 2) Risk warning: seed production risk caused by bad weather; The implementation of GM policy was less than expected. 3) Investment suggestion: Shandong Denghai Seeds Co.Ltd(002041) is the purest corn seed target of a shares, or will become the best beneficiary of the upward boom of corn seed industry. In the process of steadily advancing the transgenic policy, it is optimistic to judge that the commercialized transgenic varieties are expected to be officially listed and sold around 2023. The company is expected to continue to lead the upgrading of varieties in the industry with its excellent R & D strength of corn hybrid breeding. It is expected to fully benefit from the growth opportunities brought by the industrial transformation. Therefore, we raised the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent company in 21-23 years will be RMB 2.3/3.3/450 million (it was originally estimated that the net profit attributable to the parent company in 21-23 years will be RMB 2.0/3.2/450 million), the profit growth rate will be 128.3% / 40.6% / 37.2% respectively, and the earnings per share will be RMB 0.26/0.37/0.51, maintaining the “buy” rating.
Comments:
In 2021, the net profit attributable to the parent company increased by 128.33% year-on-year, and the high boom of corn seed industry is expected to continue
The company released the performance express of 2021, and achieved an operating revenue of 1.101 billion yuan in 2021, an increase of 22.20% over the same period of last year; The total profit was 240 million yuan, an increase of 247.01% over the same period of last year; The net profit attributable to shareholders of listed companies was 233 million yuan, an increase of 128.33% over the same period last year. During the reporting period, the price of commodity grain corn increased, farmers’ enthusiasm for growing grain increased, the company’s seed business improved, and the sales of corn seeds, wheat seeds and rice seeds increased compared with the same period of last year. Among them, the corn seed business accounted for more than 90% of the company’s overall revenue. In 2021, it benefited from the improvement of the fundamentals of the seed industry and realized the simultaneous rise of volume and price. On the one hand, the corn seed inventory was at a low level in 2021, and the corn seed inventory of the leading enterprises was almost cleared; On the other hand, maize seed production in 2021 was seriously affected by high temperature and heat damage in the critical period of pollination, especially in major seed production bases such as Gansu and Xinjiang, which led to a significant reduction in the overall maize seed production of the industry in 2021. Therefore, the supply of maize seed was significantly reduced. Under the continuous stimulation of high grain prices, farmers’ planting enthusiasm was quite high, and the price increase of seed enterprises was obvious. We expect that the high boom of China’s corn, wheat and other grain prices in 2022 is expected to continue. In the winter of 2021, the main wheat producing areas will have problems of late sowing and low germination rate. The wheat output may be reduced in 2022. Due to the substitution relationship between wheat and corn, the corn price is also expected to strengthen. Therefore Shandong Denghai Seeds Co.Ltd(002041) as the purest corn seed target in a shares, it is expected to become one of the seed enterprises that benefit from the upward boom in grain prices such as corn and wheat.
The supply side of corn seed industry has been significantly improved, and the Growth Logic of high-quality enterprises has been strengthened
On December 24, 2021, the Standing Committee of the National People’s Congress passed the decision on Amending the seed law of the people’s Republic of China (Draft). This amendment strengthens the protection of new plant varieties by expanding the scope of protection of new plant variety rights, expanding protection links, establishing a substantive derivative variety system, strengthening the liability for infringement damages, etc. We believe that this will significantly improve the business environment at the supply side of the seed industry, and seed enterprises with innovative R & D strength at the head will benefit from the core.
In addition, the accelerated landing of GM will bring variety transformation to the industry, and the leading enterprises will usher in a high-speed growth stage of rising prices and increasing market share. At present, it is estimated that there are nearly 10000 varieties to be promoted in the industry. If GM is implemented, it is expected that the promoted varieties will shrink significantly, which will effectively alleviate the pressure of homogenization competition in the industry and benefit the operation and development of leading enterprises.
The company has strong corn breeding strength and is expected to continue to lead the upgrading of industry varieties
The main varieties of corn seeds of the company are Denghai, Xianyu, Liangyu and other series of corn hybrids, and the R & D is at the leading level in the industry, which is mainly reflected in: 1) the company has 6 national and 3 provincial R & D platforms; 2) In October 2021, 478, ye 107, dh382, DH351, ye 52106, 8001, 515 and dh65232 maize inbred lines bred by Shandong Denghai Seeds Co.Ltd(002041) were selected as “national outstanding contribution maize inbred lines”, accounting for 14.55%, showing the company’s outstanding breeding innovation strength; 3) Li Denghai, the founder of the company, is known as “the father of compact hybrid maize in China”. He has successively completed the progressive substitution of five generations of Maize Hybrids represented by Yedan 2, Yedan 6, Yedan 13, Denghai 661, Denghai 605 and Denghai 618, leading the development direction of Hybrid Maize in China. It is expected that in the future, relying on its excellent R & D strength of maize hybrid breeding, the company is expected to jointly cultivate high-quality transgenic varieties by the same-sex owned companies and continue to lead the upgrading of varieties in the industry.
Investment advice: maintain the “buy” rating
Shandong Denghai Seeds Co.Ltd(002041) is the purest corn seed target of a shares, or will become the best beneficiary of the upward boom of corn seed industry. In the process of steadily advancing the transgenic policy, it is optimistic to judge that the commercialized transgenic varieties are expected to be officially listed and sold around 2023. The company is expected to continue to lead the upgrading of varieties in the industry with its excellent R & D strength of corn hybrid breeding. It is expected to fully benefit from the growth opportunities brought by the industrial transformation. Since the increase of corn grain price in 21-22 is higher than expected, which is conducive to the sales and price improvement of the company’s corn seeds, we raised the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent company in 21-23 will be RMB 230 / 3.3 / 450 million (originally estimated that the net profit attributable to the parent company in 21-23 will be RMB 200 / 3.2 / 450 million), the profit growth rate will be 128.3% / 40.6% / 37.2% respectively, and the earnings per share will be RMB 0.26/0.37/0.51, maintaining the “buy” rating.
Risk tips
Seed production risk caused by bad weather; The implementation of GM policy was less than expected.
