\u3000\u3 Shengda Resources Co.Ltd(000603) 668 Fujian Tianma Science And Technology Group Co.Ltd(603668) )
Special water materials started and extended downstream Fujian Tianma Science And Technology Group Co.Ltd(603668) founded in 2002, it is based on the field of special aquatic feed, and the dominant variety is eel feed. In 2017, the company was listed on the main board of Shanghai Stock Exchange, and then began horizontal and vertical business expansion. In 2019, the company acquired Jiangxi Xilong Food Co., Ltd. to build the eel food sector. In the same year, the company acquired Fujian Hualong Group feed Co., Ltd. to enter livestock and poultry feed. So far, the company has established a complete industrial chain layout of “raw material Trade – feed – breeding – Animal Protection Services – aquatic products and livestock and poultry products sales – food terminal”.
Special water feed: the industry continues to expand, and the company’s goal is the first. With the improvement of people’s living standards, the demand and output of special aquatic products continue to increase. Special aquatic products are mostly (partial) carnivorous aquatic products, which have special needs for feed. With the increase in the amount of special aquaculture and the increase in the permeability of special water materials, there is still great room for the development of special water materials in China. The company is a leader in the special water materials industry. In 2020, the output of special water materials was 157400 tons, accounting for 7.6% of the market. In 2021, the output increased by 11% year-on-year. In order to consolidate and develop the special water ingredients business, the company puts forward the “ten fish” strategy, and strives to achieve the first in the country in the production and sales of special water ingredients subdivided products of eel, grouper, big yellow croaker, California Bass, turtle, seedling, puffer fish, mandarin fish, abalone and sea cucumber in the medium and short term, so as to become the world’s largest supplier in the special water ingredients industry in the long term.
Eel business: the second growth curve, rapid volume in the future. China is the largest eel breeding country in the world. At present, eel prices are rising from the bottom. The highlights of the company’s success in building the whole eel industry chain are: (1) cost: the company entered eel breeding in 2020, which coincided with the bumper harvest of eel seedlings and low price, leaving a profit space for eel out of the pond in 21-22 years. At the same time, the company timely adjusted the seedling investment strategy of Japanese eel and American eel according to the seedling price to control the cost. In addition, as the leader of eel feed in China, the company has cost advantages in feed. (2) Production capacity: the company has built several eel farms through non-public offering and self owned funds, which is expected to increase rapidly in the future. (3) Food: the company focuses on the “eel hall” brand product system, actively expands China’s online and offline channels while stabilizing the export channels, and increases the annual production capacity of 3000 tons of frozen roast eel through non-public offering. Food business and breeding business complement each other and are expected to jointly promote the company’s performance.
Profit forecast and investment suggestions
It is estimated that from 2022 to 2024, the company’s sales of live eels will be 40000, 8000 and 12000 tons, and the sales of eel food will be 25000, 30000 and 3600 tons, realizing a net profit of 311, 573 and 818 million yuan, with a year-on-year increase of 272.5%, 84.2% and 42.7% respectively. With reference to the 22-year valuation level of comparable companies, the company is given 25xpe, the target price is 17.84 yuan, and the “buy” rating is given for the first coverage.
Risk tips
Raw material price fluctuation risk, eel seedling supply risk, eel price fluctuation risk and food safety risk
