\u3000\u30 China Baoan Group Co.Ltd(000009) 98 Yuan Longping High-Tech Agriculture Co.Ltd(000998) )
Event:
Yuan Longping High-Tech Agriculture Co.Ltd(000998) released the 2021 annual report and the first quarterly report of 2022: in 2021, the company achieved an operating revenue of 3.5 billion yuan, a year-on-year increase of 6.5%, and a net profit attributable to the parent company of 60 million yuan, a year-on-year decrease of 46.1%. In the first quarter of 2022, the company realized an operating revenue of 910 million yuan, a year-on-year increase of 6.5%, and a net profit attributable to the parent company of 50 million yuan, a year-on-year increase of 34.4%.
Key investment points:
In 2021, the seed production increased by 15.4% year-on-year, and the corn seed income increased by 2.7% year-on-year. In 2021, the company’s seed production was 140 million kg, with a year-on-year increase of 15.4%. The operating revenue was 3.5 billion yuan, with a year-on-year increase of 6.5%, of which the revenue from rice seeds was 1.3 billion yuan, accounting for 37.2%, with a year-on-year decrease of 6.2%, and the revenue from corn seeds was 1.01 billion yuan, accounting for 29.0%, with a year-on-year increase of 2.7%. In 2021, the net profit of the company was 173 million yuan, a year-on-year decrease of 25.5%, and the net profit attributable to the parent company was 62 million yuan, a year-on-year decrease of 46.1%, mainly due to the recognition of asset impairment loss of 450 million yuan.
Variety promotion and R & D remained ahead, and the R & D of genetically modified maize was steadily promoted. According to the statistical data released by the National Agricultural Technology Center, the company’s hybrid rice varieties occupy seven of the top ten varieties in the promotion area of Hybrid Rice Varieties in China, and take the top six. Corn varieties occupy four of the top ten varieties in the promotion area of Corn Varieties in China. In 2021, the company had 451 full-time R & D and R & D service personnel for rice and corn abroad, accounting for 16.7% of the total number of the company. In 2021, 66 new plant variety rights were granted, including 39 for rice and 18 for corn, and a total of 595 new plant variety rights were granted; It has obtained 30 authorized patents and accumulated 91 valid patents. In terms of transgenic breeding, relying on the two main bodies of Hangzhou Ruifeng and Longping biology, the company has carried out the development of insect and herbicide resistant maize genetic characters and the transfer of transgenic maize varieties. The transgenic maize products Ruifeng 125 and Ruifeng 8 have obtained the safety certificate for production and application; The equity structure of Longping biology has been optimized, and the research and development of insect resistance and herbicide resistance of transgenic maize has also made phased breakthroughs. Yufeng 303, the company’s market leading corn variety, has completed various preparations for the industrialization of biological breeding, and the product lines of corn varieties and transgenic traits have been further enriched.
In 2022q1, the sales of corn seeds increased, and the net profit increased by 34.4% year-on-year. In the first quarter of 2022, the company achieved a sales revenue of 910 million yuan, a year-on-year increase of 6.5%, a net profit of 110 million yuan, a year-on-year increase of 74.1%, and a net profit attributable to the parent company of 50 million yuan, a year-on-year increase of 34.4%. The company’s performance increased significantly in the first quarter, mainly due to the growth of corn seed sales. In the first quarter, the net profit deducted from non parent company was 50 million yuan, a year-on-year decrease of 50.8%, mainly due to the increase in investment losses recognized in associates and joint ventures.
Profit forecast and investment rating: with the introduction of the national action plan for the revitalization of seed industry and the promotion of the revision of seed law, the problems of low price competition and counterfeiting in China’s seed market will continue to improve. As a leading company in seed industry, the company is expected to increase its market share; The company’s transgenic maize breeding reserves and R & D lead the market, and is expected to benefit from the promotion of transgenic commercialization for a long time; We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 260 / 33.3 / 400 million respectively, and the corresponding PE will be 80.4 / 62.6 / 52.4 times respectively, maintaining the “buy” rating.
Risk warning: natural disaster risk; The seed production area is less than the expected risk; Risk of rising seed production cost; The risk of intensified industry competition; The company’s performance is lower than the expected risk.
