\u3000\u3 China Vanke Co.Ltd(000002) 041 Shandong Denghai Seeds Co.Ltd(002041) )
Event:
Shandong Denghai Seeds Co.Ltd(002041) released the 2021 annual report: in 2021, the company achieved an operating revenue of 1.1 billion yuan, a year-on-year increase of 22.2%, and a net profit attributable to the parent company of 230 million yuan, a year-on-year increase of 128.3%.
Key investment points:
Corn seed revenue increased by 24.7% year-on-year, and the gross profit margin increased by 8.6pct. In 2021, the situation of oversupply in the corn seed market has improved. The company seized the opportunity of the recovery of commodity corn purchase price and corn seed demand and increased the sales of corn seeds. The corn seed business achieved an operating revenue of 980 million yuan, a year-on-year increase of 24.7% and the revenue accounted for 88.9%. In 2021, the gross profit margin of the company’s seed business was 38.2%, with a year-on-year increase of 8.6pct. At the same time, the company’s sales of wheat seeds and rice seeds increased year-on-year.
The research and development of corn varieties has been continuously innovated, and new wheat varieties have passed the national examination. The company is the first pilot enterprise to implement the integration of breeding, propagation and promotion in China, and has established relatively stable seed production and processing bases in Xinjiang, Gansu, Ningxia and Shandong. By the end of 2021, the company had applied for 219 variety rights and obtained 170 variety rights; There are 16 authorized patents, including 9 invention patents and 7 utility models. The company has established cooperative relations with some Chinese universities and relevant multinational companies to continuously carry out technical reserves and innovation. At present, the company has 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 China’s hybrid maize, improving the variety reserve and significantly enhancing the re upgrading ability of high-yield varieties. In October 2021, 478, YE107, dh382, DH351, ye52106, 8001, 515 and dh65232 maize inbred lines selected by the company were selected as the “national outstanding contribution maize inbred lines” released at the opening ceremony of the 29th Beijing seed industry conference, accounting for 14.6%. In addition, the company’s new wheat variety Denghai 202 passed the national examination and approval, and the new wheat variety Denghai 216 passed the examination and approval of Shandong Province.
Profit forecast and investment rating: with the promotion of various national policies and measures for the development of seed industry and the revision of seed law, the problems of homogenization and low price vicious competition in China’s seed market are expected to be solved, which is conducive to the leading companies of seed industry to improve their market share; In 2022, the supply and demand of corn and grain will remain relatively tight, the price of corn is expected to run at a high level, and the higher planting income of corn will continue to support the demand for corn seeds; We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 3.1/4.2/500 million respectively, and the corresponding PE will be 72.2/53.1/44.7 times respectively, maintaining the “overweight” rating.
Risk warning: natural disaster risk; Corn seed demand is less than expected risk; Risk of rising seed production cost; Risk of sales volume falling short of expectations; The company’s performance is lower than the expected risk.
