Su Kennongfa (601952) Tracking Express: Operation Stable, Waiting for Food Prices to Rise

Su Kennongfa (601952) Tracking Express: Operation Stable, Waiting for Food Prices to Rise
The company’s recent stable operation has not been affected by the new crown pneumonia epidemic.The company expects that in the dual drive of the acquisition of Golden Sun Grain and Oil and the promotion of social service business, its revenue will increase by 63 in 2019.5%; but due to the sluggish rice and wheat prices, the profit slightly shifted.The company’s main business may still be under pressure in the short term, and it is expected that it will benefit from a rebound in food prices and a reduction in land rent costs in the medium and long term.Reduce EPS forecast and maintain “Buy” rating. The operation is stable and has not been affected by the epidemic.The company’s main business was the previous cultivation of rice and big wheat, and it also operated rice and rice seed businesses.February is just the season for growing in the fields, it is not yet the season for rice cultivation, and it is not the season for selling rice seeds.Only the rice business is slightly affected by the delay in 杭州桑拿网 resuming work, but it is expected to be limited.Overall, the company’s operations have been stable recently and have not been affected by the new crown pneumonia epidemic. In 2019, revenues increased rapidly, and profits fell slightly.The company recently released a report on 2019 results.It is expected to realize (statutory audit, the same below) operating income in 2019.800 million (same increase of 63.5%), net profit attributable to mother 5.900 million (twice).57%).The high increase in revenue was mainly due to the company’s acquisition of Golden Sun Grains and Oils (merged into 20.2.8 billion in revenue), and promote the impact of agricultural socialization services.The slight decrease in profits was mainly due to the sluggish trading in the grain market and the significant decline in prices of major agricultural products 北京夜网 such as rice and wheat.Performance was lower than expected. Wait for food prices to pick up and land rents to fall.In the short term, as domestic rice and wheat inventories are still high and grain prices are still low, the company’s main business is expected to remain under pressure.In the medium and long term: 1) Rice and wheat prices are expected to rise, and the company’s main business has improved.The main reasons are: adjustment, the adjustment of rice and wheat planting area and the expiration of the old grain will drive the inventory to disappear; gradually, the stock of corn has been low, and the price of corn has continued to rise, which has accordingly promoted the growth of alternative consumption of rice and wheat.2) Government rent is expected to improve.The company’s land is mainly from Jiangsu Nongken Group.The rent standards of the two companies are adjusted every five years based on changes in food prices.The next rent adjustment will be in 2021.The low food prices since 2018 may lead to improvements in the company’s land rent costs. Risk factors.Abnormal weather led to a reduction in rice / big wheat production in spring, and the state sold its reserve rice / wheat. Profit forecast and estimation.In the short term, the downturn in rice and wheat prices may weigh on the company’s main planting business.In the medium to long term, if the expected reversal of food prices and improvement in land rents are realized, it is expected to drive the company’s earnings elasticity release.Based on this, the EPS forecast for 2019/20/21 is reduced to zero.43/0.45/0.62 yuan (was 0.47/0.54/0.72 yuan). Taking into account the stability of the company’s operations and the catalytic role of the national land policy, referring to the historical forecast level of similar companies, a 20-fold estimate for 2020 is given, and the target price is lowered to 9 yuan.