Editor's note: As soon as the edible oil price limit period expires, Luhua takes the lead to increase the price by 10%. At present, other brands of edible oil have not yet raised their prices. The supermarkets also said that they have not heard of the price increase plan, but the price increase of edible oil is actually Undercurrent surging. The limit order has already expired, and industry insiders said that this may trigger a rise in the edible oil industry. So, who will be the most benefited from the rise in edible oil prices? This article counts one by one.

Luhua took the lead in raising the price surge of edible oil.

Analysts believe that, as far as the existing pressures on the company's business are concerned, the price of late cooking oil will not have much room to fall, and the price increase is a major trend.

Since some edible oil companies were asked to limit prices at the end of last year, Luhua recently started the first rise in edible oil prices*. Luhua Group officials said publicly that the company's peanut oil prices increased by 5%, in addition to the cancellation of peanut oil promotions. This move triggered concerns about a new wave of rising oil prices.

The three major companies cautiously dealt with the price increase of Luhua. Public reports showed that in order to curb inflation expectations, in November last year, the National Development and Reform Commission “negotiated” with companies such as COFCO, Yihai Kerry, China Textile Group, and Jiusan Cereals to require small packages for food. Before the end of March this year, oil must ensure that the oil price is stable and the supply is adequate. Later, the "Limit Order" was postponed until the end of June.

In the nearly six months after the edible oil limit order was implemented, Lu Hua became the first large-scale enterprise that publicly announced the price increase of edible oil.

Chen Lina, an East Grain Oil analyst at AIG, told the China Economic Times reporter on July 11th that Lu Hua was not involved in the “interview” target and could, to a certain extent, raise prices independently. Arowana and Fulinmen in the limit price, indicating that the country may consider mainly soybean oil, while Luhua mainly produces peanut oil, subject to the sharp rise in the price of peanut raw materials and limit price expired, the first to raise prices.

As of now, with the exception of Luhua, other edible oil companies have not yet publicly stated that they will increase their prices. However, there are views that after the tentative price hikes in Luhua Peanut Oil, if the relevant departments relax the price controls, they will inevitably cause the edible oil companies to “follow the trend” and trigger a surge in prices.

“I don’t know the situation. It is specifically decided by the subordinate grain and oil companies. However, they may not be able to answer this question because it is difficult to say what is in business.” Zhang Yong, general manager of the China Textile Industry Group and general manager of the Strategy Department July 11 Told the China Economic Times reporter.

The reporter then called the director of the North District of the Public Affairs Department of Yihai Kerry. His telephone number has not been connected. According to a person close to Yihai Kerry, the reporter disclosed that since the price of Luhua edible oil rose, Yihai Kerry has been very cautious about the issue.

COFCO Group made a clear statement to the China Economic Times on July 11th that the Fulinmen brand currently has no price increase plan. COFCO also stated that it will optimize its management, increase production capacity and efficiency, control costs, supply high-quality products, maintain market stability and meet consumer demand.

Earlier, there was news that the country sold less than 2.12 million tons of temporary soybeans to five companies, including COFCO, China Textile, Yihai Kerry, Huifu, and Jiusan Grain & Oil.

“The State Reserve’s targeted low-cost sell-off has reduced some of the company's cost pressures. When the current price-limit policy is cancelled, the official has not given a positive response. This is why large grain and oil companies are afraid to rush to increase their prices. The price, they may have to look more at the government's direction." Chen Lina said.

End of the edible oil price limit period will increase prices across the board July 11th, Beijing Auchan Supermarket Co., Ltd. (hereinafter referred to as “Auchang”) confirmed to reporters that edible oil is about to raise prices, involving almost all brands, but their respective price increases have not been determined .

On July 10th, according to news from the Luhua Group, due to the end of the edible oil limit and the price of peanut as a raw material, the peanut oil of the Luhua brand will rise by 5%, and notices of price increases have already been issued nationwide.

Luhua was rated as the first wave of rising prices of edible oil.

The relevant person of Luhua said that since the price of peanut almost doubled in the past year, even if the price is adjusted by 5%, it will not necessarily offset the pressure caused by the increase in peanut prices.

A COFCO person confirmed this view and believes that peanut oil and rapeseed oil will be tighter in the second half of this year, and the price pressure will be greater.

The reporter saw at the Auchan supermarket branch in Beijing that many edible oil brands, including Arowana, Fulinmen, and Toli, were all just adjusted prices after July 4.

Arowana deep-sea fish oil blending oil 5L equipment rose to 79.7 yuan / barrel, West King corn germ oil 5L equipment rose to 87 yuan / barrel, Fortune's non-rotary sunflower oil 5L load rose to 77.9 yuan / barrel, multi-force sunflower peanut The blending oil 5L installed rose to 104.8 yuan/barrel.

The monitoring data of edible oil prices since late May showed that compared with May 22, prices of pure sunflower oil, peanut blended oil, soybean blended oil, and pure peanut oil rose by 1.3%, 1.2%, and 0.9% respectively on July 11. %, 0.7%, pure soybean oil prices fell 0.1%, pure rapeseed oil prices were flat. In terms of regions, the prices of soy blended oil in Beijing, Yunnan, and Shanghai rose by 7.3%, 5.3%, and 4.4%, respectively.

From December 2010, the relevant departments called for discussions with companies such as the Conglomerate Group and the Yihai Kerry Group. The price requirements were made and the edible oil limit price was implemented for more than six months.

An unconfirmed source said that the "price limit" measures on edible oils by related departments will be delayed until August 15. After mid-August, with the coming of the Mid-Autumn Festival and the National Day, edible oil prices may be generally raised.

How about raising the price of edible oil and a domino that pushes up the CPI?

In recent days, while there are still a large number of promotional products piled up in major supermarkets, the news about the rise in edible oil prices has become hotter and hotter, and the supermarket price looms. In the context of the high CPI index, is the edible oil price hike? Will a new domino pushing up prices fall? With these questions, the reporter visited several supermarkets, wholesale markets, and industry experts in Beijing in recent days.

The edible oil brand has a price increase and there are promotions. On July 10th, the reporter went to a Carrefour supermarket in Beijing. The shelf price of Lu spent 5S pressing a peanut oil 5L was 106 yuan. The price tag was updated on June 2. In addition, the supermarket also has a 5.436 litre promotional peanut oil of the same kind, priced at 116 yuan, and presented a bottle of vinegar produced by Luhua, the promotion of the price tag is updated on July 4.

A salesperson from the Carrefour Supermarket told reporters: “The current edible oil price is very unstable and I don’t know if it will go up one day.” She pointed to a bottle of Olive Oil which is now priced at RMB 305 and said, “This Barrel oil sold 275 yuan yesterday, and today's notice rose by 30 yuan."

The reporter visited the Beijing Carrefour and Wal-Mart Supermarkets and found that the prices of different edible oils have risen, and others have been promoting sales. A shop assistant at Wal-Mart, who is responsible for edible oils, pointed to the Luhua 5.436 litre promotional item priced at 115.90 yuan. He said: "This is already sold at 130 yuan in other supermarkets."

In Beijing Feixiu Land Yuquan Road grain and oil wholesale market, Wang Rongping, a distributor of special wholesale Luhua Peanut Oil, told reporters that in the afternoon of July 6th, Luhua Peanut Oil Company had received notification of an increase in oil prices, such as the new purchase, 5 liters of bottled The price of Luhua 5S pressed peanut oil rose from 99.5 yuan to 110 yuan, an increase of about 11%.

However, this news has not been confirmed by the authority. The reporter called Luhua Group's Beijing branch on the 10th. Staff members' answers to the question of whether or not the Beijing area raises the price are rather ambiguous. They only said that the responsible person was unable to determine during the vacation. As of 10pm on the evening of the 10th, some large supermarkets in Beijing, such as Carrefour, did not respond to the reporter's report on whether or not they had received notification of the increase in edible oil prices.

Wang Rongping explained to the reporter that according to the sales staff of the Luhua peanut oil production company, although a barrel of peanut oil rose 10.5 yuan, each barrel sent a small bottle of premium oil, which was about 10.5 yuan, which was basically the same as before the rise. .

When talking about the reasons for the price increase of peanut oil, Wang Rongping said that since the beginning of this year, the price of peanuts, which is the main raw material for the production of peanut oil, has risen again, and due to the repeated increase in the price of gasoline, the freight rate has been rising, and there has been labor costs, etc. With other factors such as rising costs, the production cost of peanut oil continues to increase.

Whether it will become another push up CPI dominoes This year, the prices of cooking oil in some areas have continued to rise slightly. According to statistics from the Beijing Bureau of Statistics and the National Bureau of Statistics Beijing Survey Corps, food prices rose by 9.0% from January to May of this year, with the price of oil rising by 13.1%.

Data released on July 9 showed that the national consumer price index (CPI) reached 6.4% in June, hitting a new high in 35 months, of which pork prices rose 57.1%, becoming the largest pusher of the CPI. In this context, the volatility of edible oil prices has gradually become a sign of a certain kind of wind vane. Will edible oil be another domino that pushes up CPI?

In this regard, Hong Tao, an expert on market operations and control of the Ministry of Commerce, believes that from the overall situation, unlike the pork, the current oil products do not have the basis for significant price fluctuations.

First of all, from June to August each year is the off-season of agricultural and sideline products. According to market rules, demand will decline, while the market supply is still sufficient. From the recent review of the national oil reserves by the State Grain Administration, the current reserves are sufficient.

Second, the grain market, which is closely related to the oil market, remains stable. This year, China's summer grain continues to maintain a bumper harvest and the international market is also well supplied. At the same time, China’s grain demand has been diversified and the total demand has increased. Soybean imports are expected to reach nearly 60 million tons this year, and the anti-risk capability has been further strengthened.

Again, despite the continuous rise in the cost of peanut oil production this year, overall, the price of edible oil in the international market has declined. In this context, no one in the highly competitive domestic market is willing to lose market share because of a sharp price increase.

The government should play a guiding role not to give speculators an opportunity. It is understood that summer is the off-season sales of edible oil, and the peak season is after September. Some industry sources stated that Luhua Peanut Oil raised its prices in the off-season by means of promotions, mainly to prepare for the arrival of the sales season.

The reporter learned from the statistics department of the grain and oil wholesale market of Yuquan Road in Beijing, that the distributors of most of the edible oil brands in the market have not yet received notifications of price increases from manufacturers. Liu Jingliang, head of the statistics department, told reporters that many edible oil producing companies are watching and observing the attitude of the national regulatory authorities on rising prices of edible oil. If they want to impose fines, then the profits will be low and even losses will not rise. If the price is not punished after the price increase, other companies will certainly be irresolute, "to the same price increase."

Hong Tao and other experts indicated that the increase in CPI was not a demand-pull type because there was no product out-of-stock or in short supply, but it was a cost-driven type and should rely mainly on financial means for governance, such as agricultural Machinery subsidies, fertilizer subsidies, and avoidance of production materials. Too fast to reduce the production costs of producers. On the one hand, the government introduced a huge amount of subsidies for farmers and farmers at the beginning of the year. At the same time, the recent management of arbitrary charges and unlawful fines can effectively reduce the costs of production and distribution.

Hong Tao pointed out that the government has a whole set of mechanisms for regulating the prices of agricultural and sideline products, taking full consideration of market factors and the characteristics of different agricultural products (000061), such as measuring adjustment requirements based on a series of indicators such as the proportion of the price of meat and the proportion of domestic and international prices. These methods are scientific.

Specific to the field of edible oil, there are a wide variety of edible oils in the country, with diverse sources, competitive enterprises, and in the off-season, the market has a certain degree of self-regulation. The government should respect the laws of the market, use legal means, maintain the market order, focus on deterring a few speculative enterprises from raising prices, hoarding, protecting the interests of small and medium-sized enterprises, and opposing monopolies, but also pay attention to the dumping of a few enterprises.

Some experts and people in the industry said that at present, the increase in edible oil prices has no obvious reaction in the market. However, there are various kinds of true and false news in the society. The government should play a guiding role in information, increase the transparency of information, and promptly release the authority. The market supplies information to prevent market panic and provide no opportunity for speculators.

China-Thailand Alliance: The price of edible oil will resume its upward trend. The terminal price limit for edible oil has continued for six months and will expire in early June. The current round of edible oil limit prices began at the end of November 2010, when international grain and oil prices reached a high level after a rise in the past six months, and the domestic CPI index rose rapidly from 3.6% in September to 5.1% in November. Abnormally obvious. In this context, the National Development and Reform Commission interviewed about 4 major edible oil production enterprises (Yihai Kerry, COFCO, China Textile Group, and Jiusan Oil) and requested that they not be raised from the beginning of December to the beginning of April. The selling price of packaged edible oil. After the end of April **, the NDRC reconsidered again and demanded that the price could continue to hold until the beginning of June. Therefore, the price of terminal cooking oil has so far been "frozen" for nearly six months.

The price of cooking oil has stagnated and the oil companies have suffered serious losses. After the price limit policy was initiated, the prices of edible oils of large groups no longer rose, and the brand oils of small and medium-sized enterprises also lost their price increases at the terminal. The terminal oil price stagnation is also gradually transmitted to the refined oil segment. The crushing profit of the cash purchase and sales in the squeeze chain has been negative for 4-5 consecutive months. Even if the hedging model is used, the crushing profit is also reduced to a low level. Taking Dongling Grain & Oil (000893) as an example, the net profit margin in the first quarter fell from 2.2% in the first quarter of last year to 0.9% (6.0% in the fourth quarter of last year and 3.4% in the whole year), reaching the low point in recent years. The profitability of Xiwang Food (000639), which is in the process of refining oil and small packaging, was not satisfactory. In the first quarter, the gross margin of small packaging dropped from 27% to 21%, and the refined oil gross profit margin also declined. It is expected that the downward trend of the industry's profit rate will continue in the second quarter.

It is expected that the price limit will not continue, and the price of edible oil will rise in the second half of the year. At present, domestic soybean oil and rapeseed oil prices (bean oil 9800, rapeseed oil 9900) fell by 4.5% and 7.0% respectively compared with November highs (10270 soybean oil and 10650 rapeseed oil). This contrasts sharply with the price increase of major domestic foods. Since the price limit depends on the State Reserve's use of low-priced soybeans, rapeseed, and other raw materials to meet with companies to maintain prices, it is unsustainable when the raw materials are in short supply. The current price limit has caused the industry's overall profitability to decline, and the policy objective has been reached. We expect that the price limit policy will be liberalized in the second half of the year and edible oil prices will re-enter the rising period.

Benefit of the subject: Dongling grain and oil, Xiwang food. We believe that A-share oil companies face reversal opportunities for investment in the recovery of edible oil prices. In the previous period, the stock prices of Dongling Grain Oil and Xiwang Foods all experienced a drop of around 30%. With the recovery of the performance and the expected improvement, the stock price will regain upward momentum.

Risk factors: The price limit policy continues; edible oil prices are weak.

Galaxy Securities: Weather dominates edible oil prices in the next two months. Event We recently organized a conference call on “Edible Oil”. The main conclusions of the meeting are as follows:

Judging from the current supply and demand situation of edible oil in China, the fundamentals do not support the rise in edible oil prices. Soybean oil is the largest variety of edible oil consumed in China, and the CBOT soybean price has a decisive impact on global soybean oil prices, judging from the current crop year. No matter if the supply and demand of soybeans from the United States or the world are difficult to support the possibility of soaring prices of soybeans. Future price movements will depend on the weather conditions in the major US Midwestern regions in June and July. From the perspective of supply and demand fundamentals, if there is a drought in the main US production areas, the edible oil prices may increase by 10%. If the weather is normal, the edible oil prices may fall by 10-20%.

2. Our analysis and judgment of soybean oil became the first variety of edible oil in China. In 2000, China’s soybean oil consumption was 3.5 million tons, accounting for 26%, and rapeseed oil consumption was 4.3 million tons, accounting for 32%. In 2010, soybean oil consumption was 12.15 million tons, accounting for 41% of palm oil consumption. 6.27 million tons, accounting for 21%, rapeseed oil consumption 6.1 million tons, accounting for 21%. Within 10 years, soybean oil consumption has grown rapidly, and it has now become the largest oil in domestic edible oil, followed by palm oil and rapeseed oil.

The supply and demand of US soybeans is in a delicate balance, and the key lies in the weather. In 2010, it is estimated that the output of U.S. soybeans will reach 3.329 billion U.S. dollars and the ending stock will be 200 million U.S. dollars, or 5.4 million tons. In the history of the United States, the largest ending stocks reached about 500 million pounds (appeared in 2006-2007), and the lowest was 138 million pounds, which is currently in a relatively tight inventory state in history. In the coming year, if the weather is normal, the stock of U.S. soybeans can reach 300 million U.S. dollars, but the U.S. flood disaster may cause damage to the yield, and the final inventory may only be 1.5-160 million U.S. dollars. Therefore, we need to pay close attention to the weather in the United States. At present, the expectation of a bumper harvest in the South American continent is gradually realized, and China’s imports are expected to decline. From these two points of view, the current inventory in the United States is tight, but it basically meets the demand. Pay attention to weather conditions in the US soybean production areas in the coming June and July. At present, the US soybean price is about 1400 cents. If the weather is normal, the price may fall near 1100 cents (20% decline). If the yield deteriorates, the price may rise to around 1500 cents (10% increase).

The country’s edible oil reserves are relatively abundant and have regulatory capabilities. If edible oil prices rise, the government may adopt the following measures: (1) sell the national reserve vegetable oil at a lower price; (2) import foreign soybeans and increase domestic soybean reserves. Entrusted state-owned enterprises such as China National Grain Storage Co., Ltd. and a fat crushing plant to process and invest in the market. If a drought occurs in the main US producing areas, resulting in a 5% reduction in U.S. soybean yield, the total output may be reduced by 150 million pounds, or about 5 million tons. It is understood that the stock of soybeans in the State Reserve of China exceeds this figure of production reduction and is passed by the government. Storage can ease supply concerns in the market.

At present, China's oil crushers are generally at a loss. Imported soybean press processing factory: At present, the domestic oil mills that use imported soybeans for crushing produce a net loss of about 210 yuan per ton of soybeans. (The loss has lasted for 6 months, and the loss is up to 300 yuan. Before that, it had a high profitability situation of about one and a half years). Domestic soybeans: Domestic enterprises that use domestic soybeans for crushing have a profit of around 60 yuan per ton of soybeans. Most of the oil processors in China use imported soybeans, so the oil processing industry generally suffers losses.

3. Investment advice Domestic listed companies with A shares related to fats and oils are Dongling Grain & Oil (000893) and Xiwang Food (00639); Hong Kong stocks are: China Agri Holdings (0606. HK), China Food (0606. HK), and China Corn Oil ( 1006. HK). Given that China's oil crushers are currently at a loss, and that China's edible oil supply and demand situation is relatively abundant, we temporarily give the oil processing industry a neutral rating. If the weather in the main soybean producing areas of the United States in the next two months is not conducive to crop growth, the rise in the spot price of edible oil will lead to an improvement in the performance of oil processors and there may be trading opportunities.

Three edible oil concept shareholders Ling grain oil (000893)

South China regional soybean press leader. After the company's assets restructuring in 2008-09, it has become a grease leader with 2.2 million tons of soybean crushing capacity and 300,000 tons of refined oil production capacity, and has become the leading soybean press in South China. In the future, the company will begin construction of a 1.5 million-ton/year soybean crushing production line in Nansha, which is expected to be put into operation by the end of 2011, thereby increasing the company's soybean crushing capacity from 2.2 million tons to 3.7 million tons, further consolidating its leading position in southern China. .

Xiwang Food (000639)

The company is a domestic corn oil leading enterprise and one of the two major oligarchs in the domestic corn oil industry. It has an industry leading position in both corn oil production capacity and output. It has annual processing of 360,000 tons of corn germ oil and 200,000 tons of corn oil refined oil annually. Tons, corn oil, small packaging oil production capacity of 150,000 tons. The company's Xiwang brand small packaged oil increased from 18,000 tons in 2009 to more than 50,000 tons in 10 years. The company plans to produce 100,000 tons and 150,000 tons of small-package oil for its own brand in the next year. The company will become the next year. The largest domestic corn oil sales brand surpassed Jinlongyu and Fortune corn oil brands. We believe that the company will replicate the high-growth path of the Lanzhou Peony Peanut Oil next to Binzhou (03-09 sales increased from 46,000 tons to 390,000 tons, with an average annual growth of 43%).

Jin Jian Rice Industry (600127)

The company's main business scope is: development, production, sales of high-quality grain and oil products, agricultural and sideline products, new food, oil chemical products, high-quality rice seeds, hotel catering and company-owned products and technical equipment import and export business.

Dongling Grain and Oil (000893)

: Each shuffle in the industry has made the company more powerful. The slightly revised version of the equity incentive plan has changed slightly from the previous one. The first is that the number of stock options has been reduced from the original 7.1 million to 6.77 million, and 600 million shares have been retained. . The stock options are valid for four years, and 600,000 shares of non-resident management members are granted with stock appreciation rights and the exercise price is set at 27.55 yuan. We have reason to believe that the management is fully prepared for this equity incentive plan and is confident to achieve the profit target of 230 million yuan.

The Company's risk-free NDF business profit forecast The company's 2010 annual report discloses that the non-deliverable forward NDF business investment amounted to RMB 1.743 billion, and the first quarter of the year was RMB 1.888 billion. According to the year-on-year appreciation of *** and the change in interest rates, we estimate that the non-risk business will have a total profit of more than 40 million yuan.

The NDF yield to maturity depends on four factors: *** deposit interest rate, U.S. dollar rate, NDF contract rate, and maturity market rate. Konka Group's US$600 million investment in 2009 launched “Dollar ***** Pledge deposit + overseas NDF portfolio business, the yield to maturity is 1.5%-2.0%. NDF specific business operations please refer to our appendix below.

The industry shuffled again and the company's Nansha Phase 2 project was put into production next year. The domestic soybean crushing industry faced two major reshuffles in 2003 and 2008. The company has experienced and has continued to grow. The end of the decade to the first half of the 11th period was a small industry disturbance caused by the national price limit policy. We have seen that many soybean processing companies have experienced financial difficulties. Although the company’s earnings in the first half of the year were influential, the balance sheet was very healthy. Currency funds increased from RMB 2.32 billion at the beginning of the year to RMB 3.28 billion at the end of the first quarter. Inventories decreased from RMB 1.35 billion at the beginning of the year to RMB 1.3 billion.

In order to meet the industrial downturn, the company has huge cash holdings and quietly develops and completes the civil engineering work for the second phase of the project. The Nansha Phase II 1.5 million tons soybean processing project is expected to be put into operation next year. We forecast that soybean processing volume will increase by 57% next year. Profit increased by 62%.

Long-term Crushing Profits and Refined Oil Profit Analysis of the Industry We have calculated that the average long-term crush profit for the seven years from 2004 to 2010 was RMB 83 per ton (calculated without hedging), which includes the low tide in the industry in 2003.

We also found that China's soybean crush margin (5.2%) was almost half of that of US peers (9.6%) due to the comparison of the gross margins of the soybean crushing industries in China and the United States. This was due to the fact that the concentration of Chinese soybean crushing companies was not high and companies started to work. The rate is low. However, based on the industry's constant reshuffle and the increase in the share of large companies, we believe that the gross margin of China's soybean crushing industry will have much room for improvement.

The 5.2% gross profit margin is roughly equivalent to 110 yuan per ton crush profit. We have calculated that the gross margin of the soybean crushing industry is between 5% and 8%, and the crush profit per tonne corresponds to 108-170 yuan. At the same time, according to our observations, the industry's refined oil profits are basically between 70-100 yuan per ton.

The company implements a robust and comprehensive hedging strategy The principle of company hedging is robust and flexible. The hedging is mainly covered in three areas: Soybean and related agricultural products (000061) Options and ** Contracts, Forward Freight and Shipping Related Services** Contracts ,Non-deliverable forwards**** (NDF business). Looking at the company’s hedging surplus and losses in recent years, we can see that management has a strong management ability in risk control and there is a management premium factor. For the company's hedging risk control, comparing the company’s business with that of COFCO, the scale of the two businesses is 1 to 5, and the company’s annual hedging profit or loss is tens of millions, while COFCO Holdings’ hedge profit or loss is often tens of millions or tens of millions. Billion big.

In the first half of the year and the second half of the year, our calculated crush profit can also be calculated. In the first quarter of this year, the company reported a loss of 34.49 million in inventory loss, and only reported 19.47 million profit. In the second quarter, our calculated crush profit has a loss of RMB 30-50 per ton, but the company's soybean and related agricultural options and ** contracts are slightly profitable. Before accruing NDF revenue (due to the contract not yet due), the company accrued The inventory depreciation reserve can be partially deducted. We forecast that there will be more than 20 million profit in the second quarter. In the first half of this year, there were a total of about 50 million profits, which was a year-on-year drop of 10%. In the second half of this year, with the support of edible oil price increase and strong soybean meal prices, the company’s crush profits will rebound. We expect to achieve the company's profit target of 230 million in the whole year.

Taking a careful look at net assets per share. The company established an asset swap program in 2008. It will put in the soybean crushing business of net assets, and will put the original air-conditioning compressor business out of the company. The company fills up. During the financial turmoil in 2008, the company’s 1.5 million-ton soybean processing project (covering an area of ​​400,000 square meters with its own terminal) in Nansha Phase I was only assessed at 428 million yuan. The 1.2 million-ton soybean processing project (an area of ​​153,000 square meters with 50,000 tons of self-owned docks) of the China Grain Guangxi Qinzhou Phase I project to be started in 2010 needs to invest 2 billion yuan (including 1 billion in fixed assets). In contrast, it can be seen that the company is undervalued. The ROE of the company in 2010 was as high as 38% (far higher than the industry level). We take 15% ROE to adjust the net assets per share, then the new net asset per share of Dongling Grain and Oil is 5.73 yuan. Based on the adjusted net assets per share, the P/B is 3.58, which is not what it originally looks as 8.86.

Raise the rating to “highly recommended” The soybean processing industry will recover from the low tide in the first half of the year in the second half of this year. The company has good risk control capabilities and capacity expansion capacity in due course. We forecast the company's profitability for the next three years (11-13 years). The growth rate was 28%. Earnings per share were 1.06, 1.71, and 1.87. The intrinsic value of the company was calculated based on a PE of 18 times per share for a 12-year earnings of RMB 30. Now that the stock price has fallen significantly below the company’s reasonable intrinsic value, we have upgraded the company’s “recommended” rating to “highly recommended”.

Risk factors: The government controls the consumption of edible oil prices from time to time, and the profitability of the company during a certain period of time is less than our forecast.

Xiwang Food (000639)

Brief evaluation report: cost pressure relief, high growth guaranteed 1, 2011 small package sales "guarantee 8 fight 10"

From January to May, the company sold approximately 25,000 tons of small packaged corn oil, and sold 18,000 tons in the first half of last year, and it is expected to sell 30,000 tons in the first half of this year. The third and fourth quarters are the peak season for sales. The annual sales are expected to exceed 80,000 tons and strive to reach 100,000 tons. Next year, it will strive for 150,000 tons.

2, the cost pressure has eased 70% of the cost of corn oil is the germ, the first quarter corn germ 3900 yuan / ton, affecting gross profit, fell to 23%. Packing fee is 1100 yuan/ton, gross oil processing fee is 400 yuan/ton, which is relatively stable. Since May, the price of germs has dropped and the gross profit margin will bottom out.

3. The price limit expires. The price increase is expected to be stronger. The refined oil price will decline after reaching a high of RMB 10,300/ton in February. It will stabilize in May at a price of RMB 9300/ton. It is expected to start rising in June and start rising in August and September. In the second half of the season, it can be over 10,000 yuan/ton.

At the end of May, the country’s price-reduction policy on edible oil was abolished. With the price hanging upside down, the crushing companies suffered losses, and the expected increase in edible oil prices was strong. It is expected that the price will be adjusted in the second half of the year. If other oil prices increase, the company will adjust the price and the increase will be higher than other oils.

4. Expenses determine the final performance In addition to the tree brand and extension market, the company has huge expenses. Sales expenses are planned to be 120 million yuan throughout the year, management costs will be controlled at 50 million yuan, and three-period expenses will be approximately 190 million yuan. Among them, the advertising fee is 70 million yuan, and the salaries of sales personnel reach 36 million yuan each year. A one-time purchase fee of 20 million yuan, year-by-year amortization, this year and next year to absorb the pressure of this part of the larger pressure, affecting the current performance.

5. Investment advice It is expected that Xiwang Food will establish a high-end corn oil brand this year and next year, and then go into other high-end oil products. The construction of the terminal market and sales network is a process of large investment and effective implementation, and weak financing requirements will restrict the company's release of performance. In the future, the company will develop rapidly and it will be a better long-term investment type, and it is recommended to increase its holdings.

Jin Jian Rice Industry (600127)

Research briefing: performance is waning. Investment timing still needs to wait for events: We investigated Jin Jian Rice Industry, the company's secretary-general, director and securities affairs representative reception, and discussed the company's development planning and operation.

Rice processing is squeezed on both ends. The company now has a processing capacity of 150,000 tons of rice and needs to receive 300,000 tons of rice. As a brand rice, it is necessary to ensure the supply of rice, and it is difficult to have flexibility in the timing of acquisition. The cost of upstream acquisition of rice is rising. The company's brand rice mainly enters Shangchao, the price is subject to certain monitoring, and some varieties need to be approved for price increase, and are squeezed by the upstream and downstream. Rice processing companies survive in the cracks and have difficulty achieving results. The company sells rice mainly in high-end rice, gross profit is only 8%, and mid-range rice gross profit is even less than 5%.

There are difficulties in acquisition and high costs. Due to the shortage of supply at the purchase end, the millet is not directly exposed to the sun and is directly collected. The water content is relatively high, generally around 20%, and the national regulations cannot exceed 13.5%. After reclaiming, there are five points that need to be digested by the company and enter the drying system. During the drying process, there is energy consumption and material consumption. The higher water content directly leads to high acquisition costs. At the same time, depreciation is higher than similar companies. The company's initial investment is large, all imported equipment, high maintenance costs, the past 30,000 tons of capacity investment of nearly 1 billion, much higher than the current investment of 20 million to 30 million yuan of similar companies.

Jinjian Pharmaceutical is still the main source of profit. As of December 31, 2009, Hunan Jinjian Pharmaceutical Co., Ltd. has total assets of RMB 359,745,222.05 and liabilities of RMB 183,667,821.97. It is estimated that it will contribute RMB 300 million in operating income in 2010 and the gross profit margin will be approximately 40%. With a net interest rate of 10% and a profit of 30 million yuan, it is the main source of company profits. Deshan Pharmaceutical Factory's A-line has reached an annual output of 40 million bags of soft bag infusions. Through repurchase, the shareholding has increased from the previous 97% to 100%. There is no further expansion plan.

Due to the sales radius, the scale of the dairy industry is difficult to expand. The company's milk industry is mainly pasteurized fresh milk, which is maintained at 5 degrees Celsius for 5 days. As a local brand, sales are good, but due to the sales radius, it is difficult to scale up. In 2009, the company added a normal temperature line, and the sales variety increased. As a result, the sales revenue of the dairy industry in 2010 increased by about 15% from the same period of last year, but due to its small proportion in sales revenue, it contributed to the profit.

Seed industry income is stable, and rice processing and pharmaceuticals will continue to dominate the future. The company's holding Jinjian Seed Industry has 73.66% equity, seed industry registered capital of 30 million yuan, annual sales income of 30 million yuan, gross profit of approximately 35%, and net profit of 1.5 million yuan. In the future, the main business of the company will still be rice and pharmaceuticals. At present, the company's rice brand ranks third in the country's top ten brands.

Government subsidies are an important part of profits. To declare the industrialization of grain and oil deep processing and scientific research achievements, agricultural industrialization, discounted technological transformation, drying energy conservation, transformation of major national scientific and technological achievements, service platform for small and medium-sized enterprises, and deep processing of rice in the province to related departments at the national, provincial and municipal levels. Center and other projects. Obtained 15 million yuan in subsidies for the development of leading state-owned agricultural industries in 2010. The government subsidies are an important part of the company's profits.

The company has restructuring expectations. The company's largest shareholder, Agricultural Bank (601288), obtained a 146 million shares from the company’s largest shareholder, Changde City Grain and Oil Company, in a debt-resolved manner in June 2006, holding a share of 43.27%. The Commercial Banking Law stipulates that financial institutions may not hold shares in non-financial institutions. The Agricultural Bank of Changde Branch promised to dispose of the equity for two years. Through the reform of shareholding structure and persistence, the shareholding of Agricultural Bank of the largest shareholder fell from 43.27% to 20.62%. Dealing with 20.62% of the shares, the replacement of the largest shareholder is more certain from the perspective of laws and regulations. Our company's brand awareness and channel resources have a strong appeal to investors.

The performance tends to be flat and the restructuring is waiting for the opportunity. Judging from the current business structure of the company, it is expected that 2010-2012 will be at a low profit, EPS will be 0.01 yuan, 0.03 yuan and 0.05 yuan, corresponding to the current valuation of the stock price is high, giving a neutral rating. Higher stock prices mean higher restructuring costs and need to wait patiently.