\u3000\u30 Jinzai Food Group Co.Ltd(003000) 87 Winall Hi-Tech Seed Co.Ltd(300087) )
Key investment points
Performance summary: the company’s operating revenue in 2021 was 2.52 billion yuan, a year-on-year increase of 57.4%, the net profit attributable to the parent was 170 million yuan, a year-on-year increase of 26.7%, and the net profit attributable to the parent after deduction was 150 million yuan, a year-on-year increase of 37.9%.
Comments: the rapid growth of the company’s revenue and profit in 2021 is mainly due to three reasons: 1) the continuous growth of the main seed business, and the market performance of hybrid rice, hybrid corn and other varieties is good. The annual seed sales are 100 million kg, with a year-on-year increase of 51.8%. The revenue of rice is 1.21 billion yuan, with a year-on-year increase of 39%, accounting for 47.9% of the total revenue. The revenue of corn seeds is 220 million yuan, with a year-on-year increase of 63.5%, and the revenue of wheat is 150 million yuan, A year-on-year increase of 71.4%; 2) The company used high-quality characteristics to drive the growth of order agriculture. Its products were mainly supplied to Chinese grain, breeding and other enterprises. The annual sales volume of order grain business was 270 million kg, a year-on-year increase of 71.6%, and the sales volume of silage business was 180 million kg, a year-on-year increase of 783.7%; 3) The smooth implementation of the employee stock ownership plan has fully mobilized the enthusiasm of the company’s employees, closely combined the interests of the operator and the company, promoted joint struggle and achieved good results.
Affected by climate, Russia Ukraine conflict and other factors, global food prices are high, the state attaches great importance to food security, farmers have high planting enthusiasm, and the demand for seeds increases accordingly. The Ministry of agriculture and rural areas and the Ministry of finance made clear the policy support for the key work of grain production in 2022, which mentioned the stable implementation of cultivated land fertility protection subsidies and the issuance of one-time subsidies to actual grain farmers to alleviate the impact of increased expenditure caused by the rise of agricultural materials prices. In terms of rice, with the approval of the State Council, the minimum purchase prices of early indica rice (third-class), medium and late indica rice and japonica rice produced in 2022 are 124 yuan, 129 yuan and 131 yuan per 50kg respectively, up 2 yuan, 1 yuan and 1 yuan respectively, which will be further increased on the basis of 2021. Due to the impact of geographical conflict, the area of spring sowing in Ukraine has decreased, mainly including corn, barley and other crops. According to the latest news released by the Minister of agriculture of Ukraine, its grain output may decrease by about 54.6% in 2022, and the global corn price trend is still upward. There is still a gap between supply and demand of corn in China. According to customs data, China imported 28.35 million tons of corn in 21 years, a year-on-year increase of 151%. At the end of the 21st century, La Nina phenomenon appeared for the second consecutive year, which is expected to exacerbate rainfall and drought around the world, and then affect the output of grain crops. As a high-tech seed industry enterprise with “integration of breeding, propagation and promotion”, the company has layout in rice, corn, wheat and other fields, and its performance is expected to improve with the planting landscape.
The development of seed industry has been gradually standardized, the development environment of seed enterprises with real R & D strength has been optimized, and the work related to transgenic has been steadily promoted. If it can be commercialized smoothly, the market space is broad. No. 1 central document issued by the CPC Central Committee and the State Council clearly raised the importance of food security and seed safety. Similarly, it was also mentioned in the three clear tasks for seed issues in the central economic work conference to carry out seed source “neck” technology research, and determined to fight a turnaround. In July 2021, the meeting of the central Deep Reform Commission considered and adopted the action plan for the revitalization of the seed industry, emphasizing the importance of food security. In order to implement the relevant requirements, the office of the National Crop Variety Approval Committee organized to modify the national corn and rice variety approval standards, increase the consistency and authenticity requirements in the basic conditions of corn and rice, and adjust the number of detection differences. In addition, China’s GM will usher in a huge market of standardized and benign competition. If industrialization can be realized in the future, the generated market space will be divided among seeds, farmers and land, Winall Hi-Tech Seed Co.Ltd(300087) as a high-quality high-tech seed industry enterprise with “integration of breeding and promotion”, it will benefit from it. According to the evaluation data of China national audit, the rice quality of Quanyin variety is excellent (mainly at level 1-2 and generally at Level 3), while other indicators are also leading the industry, which is in line with the upgrading trend of residents’ consumption habits in the future. The market share is expected to increase to 20%, further driving the growth of sales revenue of the company’s rice business. At the same time, the company pays attention to R & D and innovation and promotes product iteration. During the reporting period, the company and its holding subsidiaries added or realized 97 multi regional national approved varieties through independent or cooperative breeding, including 92 rice and 5 corn.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.49 yuan, 0.65 yuan and 0.89 yuan respectively, and the corresponding PE will be 52 / 39 / 28 times respectively. Maintain the “buy” rating.
Less than the expected market competition or risk of the company.
