Shun Xin Agriculture (000860): Growth and Confirmation of Coexistence of Niulanshan Investment Value

Shun Xin Agriculture (天津夜网000860): Growth and Confirmation of Coexistence of Niulanshan Investment Value
At present, the market’s cognitive differences on Niulanshan, especially whether the liquor products can be smoothly upgraded, how the growth is sustainable, how is the net profit margin, this report tries to solve four questions: 1) What is the company’s reasonable estimate?2) How sustainable is the growth of liquor business?3) How big is the room for liquor net margin improvement?4) What is the internal and external division and reasonable estimation of pork real estate? Estimate: The core price band of Niulanshan medium- and low-grade liquor is 10-50 yuan. Consumers mainly consume high-frequency self-drinking, which is different from the consumption logic of high-end and high-end liquor mainly with banquets. It has a strong FMCG attribute.Just need to be strong and not afraid of macroeconomic fluctuations.Compared with comparable companies such as fast-moving consumer goods company Yili, Tsingtao Brewery, Haitian Flavor, Qianhe Flavor, etc., Niulanshan’s CAGR of 20-20% in 2019-2021 exceeds comparable companies, and it is estimated to be much lower than the average consumer product.The company estimates that the liquor business of FMCG properties is expected to be more than 30 times estimated. At present, the impact of real estate pork on the company’s overall performance is gradually weakening, the integration incentives and the sustainability of development are gradually improving, the suppressing predictive factors are gradually eliminated, and the liquor industry’s main industry breakthrough supports better alternatives. Discussion on the sustainability of growth: The company is still in the stage of national expansion. The actual market share of low-end liquors under 20 yuan is only 10%. Compared with mature markets such as East China and Shandong, as well as consumer products industries such as dairy products and beer, NiulanshanLow-end wine concentration still has 2-3 times room for improvement.In terms of structural upgrades, most provinces and cities in the country are still in the second bullion volume period. Fine aging wines with a price of 30-50 yuan are still in the market introduction and cultivation period. Compared with other mergers, they have a first-mover advantage in market cultivation.Continue to drive scale growth for more than 5 years. Discussion on the net interest margin space: 1) Impact of structural upgrade: We analyzed the upgrade of Niulanshan’s low-end wine consumption and increased the proportion of mid-to-high-end wine to upgrade the two product structures. We separately measured the corresponding increase in the gross profit margin and net profit of liquor.Looking at the structural upgrade in the long term, the net increase in liquor can be increased to about 20%; 2) Price increase effect: The company is currently in a period of national expansion, and the ex-factory price of the product is expected to increase after the stable competition pattern is shifted.Second, the price will be increased and the sensitivity analysis will be obtained. On the basis of 2018, the price of White Bull II will increase by 0 every time.5 yuan / 500ml, the company’s overall net profit margin of liquor increased.6 units.We believe that under the joint promotion of structural upgrade and price increase, the net profit margin of Niulanshan Liquor is expected to reach more than 20% in the medium and long term. Estimated market value of pork real estate: The company’s breeding pig breeding is the opposite of slaughtering profit. In the absence of African swine fever and other special circumstances, the pig price cycle has little effect on the profit of the pork sector. The pork business has a high net profit of about 60-80 million. Refer to comparable companies, porkUnder normal circumstances, the plate can be estimated at 15 times, corresponding to a market value of about 1 billion yuan.The net assets of the real estate business are negative, and the overall sales situation is not estimated for the time being. It is expected that the company’s main business will be more clear after the future replacement. Investment suggestion: Regardless of price increase, the company’s revenue from 2019 to 2020 is predicted to be 1.37 yuan, 1.83 yuan, 60-month target price is 60.39 yuan, equivalent to the 33X price-earnings ratio in 2020, corresponding to the liquor industry’s 28X price-earnings ratio, maintaining the “Buy-A” rating. Risk Warning: National Expansion Is Less Than Expected; Structural Upgrade Is Less Than Expected, Pork Sales of Real Estate Are Than Expected