Fengyuan Biochemistry: Integrated Resources of Industrial Chain As the Largest Point of View

company is the leading enterprise in the deep processing of agricultural products, the main products are fuel ethanol, citric acid, lysine, ethylene oxide, L-lactic acid, edible oil and other agricultural products deep processing products06 Cofco Group acquired 20.74% of the company's shares as the largest shareholderIt is expected that the basic earnings per share in 2009 will be 0.26 yuan, up more than 365% YoY, mainly due to increased investment in technology reformThe company's short-term focus is on endogenous profitability, citric acid and lysine and other products are at the bottom of cyclical fluctuations, earnings are expected to recover, in the medium and long term the company has the potential for restructuringnon-food fuel ethanol has become the focus of biofuel development in the futureCOFCO Group is actively building a domestic biochemical energy platform, currently holding 3 of the five ethanol fuel companies, 1 stake in the company, with bioethanol production capacity of 1.22 million tons / year, accounting for 75% of the countryChina Grain and Oil Holdings signed a non-competition agreement with COFCO Group prior to its listing in March 2007, and COFCO Holdings has a preferential right to purchase five competitive businesses, including Fengyuan BiochemicalsIf Cofco Holdings does not exercise the right of purchase in the 5th year (2011) when the option takes effect, COFCO should resell the corresponding stake to a non-affiliate within 6 monthsIf, for any reason after the first five years, it is deemed necessary to make an additional assessment of the right of choice, the decision on the extension may be decided by an independent non-executive director and a majority voteUnder the background of high oil price, we judge the future development prospects of fuel ethanolWe believe that the possibility of abandoning the Fengyuan biochemical platform is extremely low in the perspective of the distribution of biofuels by CNPCstrengthen management after COFCO took office, the company's production efficiency and profitability level greatly improved, management level to improve the cost decline, through technological transformation and process optimization, the company's product production of material consumption, energy consumption continued to decline, the overall business of the ROE level significantly increased, to the level of COFCO holding closecompany's main product fuel ethanol production capacity of 440,000 tons, sales scope includes Anhui Province and Jiangsu, Shandong, Hebei 14 cities, due to the country's four pilot enterprises divided into market sales, the state flexible subsidies, profitability is relatively stableOther biochemical products such as citric acid, lysine, ethylene oxide and lactic acid account for more than 40% of revenue, is currently at the bottom of cyclical fluctuations, is expected to gradually recover in 10 years of product demand, prices are expected to continue to rise, profit sourBased on our estimates, the company's 2010 results are around RMB0.35 per shareThe current share price is RMB9.71, which corresponds to 27.7 times PE in 2010, giving a "neutral" ratingThe ability of COFCO's board of directors to make a decision in June 2010 to exercise the company's prior rights to purchase prior to April 3, 2011 will be a catalyst for the share price company is the leading enterprise in the deep processing of agricultural products, the main products are fuel ethanol, citric acid, lysine, ethylene oxide, L-lactic acid, edible oil and other agricultural products deep processing products 06 Cofco Group acquired 20.74% of the company's shares as the largest shareholder It is expected that the basic earnings per share in 2009 will be 0.26 yuan, up more than 365% YoY, mainly due to increased investment in technology reform The company's short-term focus is on endogenous profitability, citric acid and lysine and other products are at the bottom of cyclical fluctuations, earnings are expected to recover, in the medium and long term the company has the potential for restructuring non-food fuel ethanol has become the focus of biofuel development in the future COFCO Group is actively building a domestic biochemical energy platform, currently holding 3 of the five ethanol fuel companies, 1 stake in the company, with bioethanol production capacity of 1.22 million tons / year, accounting for 75% of the country China Grain and Oil Holdings signed a non-competition agreement with COFCO Group prior to its listing in March 2007, and COFCO Holdings has a preferential right to purchase five competitive businesses, including Fengyuan Biochemicals If Cofco Holdings does not exercise the right of purchase in the 5th year (2011) when the option takes effect, COFCO should resell the corresponding stake to a non-affiliate within 6 months If, for any reason after the first five years, it is deemed necessary to make an additional assessment of the right of choice, the decision on the extension may be decided by an independent non-executive director and a majority vote Under the background of high oil price, we judge the future development prospects of fuel ethanol We believe that the possibility of abandoning the Fengyuan biochemical platform is extremely low in the perspective of the distribution of biofuels by CNPC strengthen management after COFCO took office, the company's production efficiency and profitability level greatly improved, management level to improve the cost decline, through technological transformation and process optimization, the company's product production of material consumption, energy consumption continued to decline, the overall business of the ROE level significantly increased, to the level of COFCO holding close company's main product fuel ethanol production capacity of 440,000 tons, sales scope includes Anhui Province and Jiangsu, Shandong, Hebei 14 cities, due to the country's four pilot enterprises divided into market sales, the state flexible subsidies, profitability is relatively stable Other biochemical products such as citric acid, lysine, ethylene oxide and lactic acid account for more than 40% of revenue, is currently at the bottom of cyclical fluctuations, is expected to gradually recover in 10 years of product demand, prices are expected to continue to rise, profit sour Based on our estimates, the company's 2010 results are around RMB0.35 per share The current share price is RMB9.71, which corresponds to 27.7 times PE in 2010, giving a "neutral" rating The ability of COFCO's board of directors to make a decision in June 2010 to exercise the company's prior rights to purchase prior to April 3, 2011 will be a catalyst for the share price (name)