FENGLE SEED(000713) Guoxin Securities·2024-05-06 08:30Investment Rating - The report maintains a "Buy" rating for the company [2][9][48]. Core Insights - The company has received approval for its first batch of genetically modified corn varieties, which is expected to benefit from the commercialization of genetically modified crops. Currently, two varieties have been approved, and the company anticipates an increase in sales scale and market share due to its first-mover advantage [2]. - The State Investment Group plans to acquire a 20% stake in the company, which is expected to enhance technical capabilities and resource integration. This acquisition has been approved by the State-owned Assets Supervision and Administration Commission, and it is anticipated that the new ownership will strengthen the company's core business and support national food security strategies [2]. - The company's seed business is projected to benefit from the new shareholder's resources and the promotion of genetically modified corn, while the agricultural chemical business may face pressure due to market downturns and increased competition [2][9]. Financial Performance Summary - In 2023, the company achieved operating revenue of 31.14 billion yuan, a year-on-year increase of 3.61%. However, the net profit attributable to the parent company was 0.40 billion yuan, a significant decline of 31.62% year-on-year, primarily due to lower prices of domestic chemical products and adverse external conditions affecting profitability [4][15]. - The seed business generated revenue of 8.84 billion yuan in 2023, reflecting a growth of 34.22%, with corn, rice, and wheat seed revenues increasing by 35%, 37%, and 37% respectively. The gross margin for the seed business was 28.60% [4][15]. - The agricultural chemical business reported revenue of 19.28 billion yuan, a decrease of 6.66% year-on-year, with the gross margin at 6.07% [4][15]. - For the first quarter of 2024, the company reported operating revenue of 5.80 billion yuan, a decline of 5.63% year-on-year, and a net loss of 0.14 billion yuan, a drastic drop of 271.43% year-on-year [4][15]. Profit Forecast and Financial Metrics - The company’s net profit forecasts for 2024 and 2025 have been revised down to 0.6 billion yuan and 0.8 billion yuan respectively, with a projected net profit of 1.2 billion yuan for 2026. Corresponding EPS estimates are 0.10, 0.14, and 0.20 yuan for 2024, 2025, and 2026 respectively [9][14]. - The financial metrics indicate a decline in net profit margin and return on equity (ROE) for 2023, with ROE at 2.1% compared to 3.1% in 2022 [14].