\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 598 Heilongjiang Agriculture Company Limited(600598) )
Key investment points
Performance summary: in the first quarter of 2022, the company achieved an operating revenue of 720 million yuan, a year-on-year increase of 13%, and the net profit attributable to the parent company was 440 million yuan, a year-on-year increase of 17.4%. After deduction, the net profit attributable to the parent company was 429 million yuan, a year-on-year increase of 14.9%.
Comments: the company’s operating revenue and profit increased steadily during the reporting period, mainly due to the growth of contracting revenue. In 2021, the company’s land contracting revenue reached 2.79 billion yuan, an increase of about 4%. At present, the state attaches great importance to food security, farmers have high planting enthusiasm, and the land value 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. We believe that the company’s land contract rent is expected to continue to rise in the process of increasing planting prosperity, driving the stable growth of the company’s performance.
Affected by international relations, climate and other factors, global food prices are on the high side. Due to geographical conflicts, 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 be reduced by about 54.6% in 2022, and Shenzhen Agricultural Products Group Co.Ltd(000061) exports will be reduced by 20% or more compared with 2021. The Shenzhen Agricultural Products Group Co.Ltd(000061) price trend of global corn and wheat is still upward. At the end of 2021, La Nina phenomenon appeared for the second consecutive year, which is expected to exacerbate rainfall and drought around the world, thus affecting the output of food crops, and food prices are still in an upward trend. The company has high-quality land resources, which are mainly distributed on the Sanjiang Plain, one of the three most fertile black soil belts. It is a “natural granary” with strong market competitiveness. If the land rent is increased, the performance flexibility of the company is large. China’s Shenzhen Agricultural Products Group Co.Ltd(000061) demand is still high. According to customs data, China imported 28.35 million tons of corn in 2021, a year-on-year increase of 151%. The overall grain import was 65.376 million tons, a year-on-year increase of 82.7%; The import volume was US $20.07 billion, an increase of 110%. According to the data from January to February 2022, grain imports were 10.821 million tons, a year-on-year decrease of 1.1%; The import volume reached US $3.73 billion, an increase of 21.9%. We believe that under multiple influencing factors, China’s demand for grain will remain high, and the planting boom will be strongly supported.
The standardization of seed industry has been continuously strengthened and the development environment has been gradually optimized; Transgenic related work has been gradually promoted and has a broad market. The No. 1 central document of the central government clearly puts forward the importance of food security and seed security; 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 deliberated 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 Commission organized to modify the national corn and rice variety approval standards, adding consistency and authenticity requirements in the basic conditions for both corn and rice. In the process of standardized development, excellent seed enterprises and land companies with R & D strength will have a better growth environment. In January 22, the Ministry of agriculture and rural areas decided to revise some provisions of the four regulations, including the administrative measures for the safety evaluation of agricultural genetically modified organisms, the administrative measures for the approval of major crop varieties, the administrative measures for the production and operation license of crop seeds and the provisions on the naming of agricultural plant varieties, so as to further standardize the management of genetically modified organisms. Genetically modified organisms have growth space and development prospects in China. If they are industrialized in the future, The seed industry will usher in structural adjustment, and the dividends generated will be shared by farmers, seed industry, chemical fertilizer and land enterprises. As a high-quality grain production base, the company has the advantages of scale, resources, resources, management and green products, which will benefit from it.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.59 yuan, 0.65 yuan and 0.74 yuan respectively, and the corresponding dynamic PE will be 22, 20 and 18 times respectively, maintaining the “buy” rating.
Risk warning: Shenzhen Agricultural Products Group Co.Ltd(000061) price is lower than expected, farmers’ farming enthusiasm is lower than expected, and weather conditions are lower than expected.
