Plum Group: The Empty MSG Amino Acid Giant

we recently conducted a survey of the company, is expected to be the bottom of the company's results in the second quarter of this year, the future performance is expected to continue to release, 13 years of performance is expected to burstzJB
1, Plum Group to MSG and amino acids for the main businessThe company achieved revenue of RMB7.47 billion in 2012, up 3.15% YoY, and 3.15% YoY in the first quarter of 2013MSG and glutamate as the main products, in 2012 revenue of 3,957 million yuan, an increase of 3.67 percent YoY, revenue accounted for about 53%, followed by amino acid products, 2012 revenue of 1.9 billion yuan, up 28.4% YoY, mainly sucsine and lysine, has maintained a high growth, the current income ratio of about 25%In addition, there are organic fertilizer compound fertilizer and liquid ammonia starch productsNote: Meng Qingshan holds 27.48% of the company's shares, and its co-actions are Yang Weiyong, Wang Aijun, Wang Hongshan, He Jun, Yang Weiying and Cai Wenqiang, holding a total of 35.41% of the Company's shareszJB
2, profitability in recent years continued to declineIn terms of product profitability, the gross margin of MSG and glutamate, amino acids and liquid ammonia showed a continuous downward trendThe company's combined gross margin continued to decline from 30% in 2010 to 22.8% in 2012The net profit margin fell from 15.7 per cent in 2010 to 8.1 per cent in 2012The main reason is that the MSG industry due to the large-scale expansion of production of the Yifeng Group caused MSG prices continue to fall, and cost pressure together to compress the industry gross marginzJB
　　3, MSG industry integration is nearing the end, good with a more abundant cost and price double advantage of the plum MSG industry production is expected to be about 2.5 million tons, the industry 4 has accounted for more than 75% of the industry's output Yanfeng and Meihua both believe that the industry integration is nearing the end, we expect the future industry earnings are expected to stabilize and rebound, the Ministry of Industry and Information Technology to eliminate backward MSG production capacity favorable industries Plum has a MSG production capacity of 500,000 tons, due to the process cost advantage and overseas customers long-term cooperation price advantage, and compared to the main competitor gross margin of 7 percentage points advantage, overall, Meihua MSG profitability will be expected to stabilize and recover MSG SALES GROWTH IS EXPECTED TO BE FLAT AND SLIGHTLY HIGHER IN THE FUTURE zJB
　　4, amino acid business development, plum has cost and after-the-process advantages The company's share of susine in the world's first, reached more than 40% of the production capacity, the original capacity of 80,000 tons, new capacity of 60,000 tons, lysine and Susine in sales with synergy, so at the same time expanded the production scale of lysine, in the original 60,000 tons on the basis of the addition of 200,000 tons The amino acid industry oversupply, amino acid prices weakened, the beginning of April of the avian flu caused its price to fall further, lysine prices fell particularly badly However, meihua has the cost advantage brought by Xinjiang corn and coal and the advantage of the late-launch process, plum plum Xinjiang lysine gross margin than the industry leader Dacheng biochemical is expected to have a 10-20 percentage point advantage The new amino acid production capacity is expected to reach full production due to cost advantage Amino acid prices are showing signs of stopping the decline and recovering, so it is expected to be a sell-out for the company zJB
　　5, Prundo sugar is a profit point of view 1) Prundo-Sugar productapplication prospects are good, but technical difficulties are high; 2) the company broke the monopoly situation of Japan's Linyuan, there is no report of large-scale production, the company's product production has technical advantages, the current prospects for profitability are better; 3) the new project 1000 tons is expected to be in the second half of 14, up to the post-partum can gradually contribute annual profits of about 100 million yuan zJB
　　6, valuation and investment advice The company's 13-15 revenue is expected to be RMB8,769 million, RMB10.290 billion and RMB11.768 billion, corresponding to EPS of RMB0.24, RMB0.42, RMB 0.49 and PE 2 1.97 times, 12.32 times, 10.60 times, is expected to be the bottom of the performance in the second quarter of 13 years (may decline yoy), followed by quarter-by-quarter release, the first "buy" rating, 12-month target price of 7.6 yuan Concerned about the collapse of avian influenza lysine prices stopped falling and rebounded, after the integration of MSG prices stabilized and rebounded zJB we recently conducted a survey of the company, is expected to be the bottom of the company's results in the second quarter of this year, the future performance is expected to continue to release, 13 years of performance is expected to burst zJB
　　1, Plum Group to MSG and amino acids for the main business The company achieved revenue of RMB7.47 billion in 2012, up 3.15% YoY, and 3.15% YoY in the first quarter of 2013 MSG and glutamate as the main products, in 2012 revenue of 3,957 million yuan, an increase of 3.67 percent YoY, revenue accounted for about 53%, followed by amino acid products, 2012 revenue of 1.9 billion yuan, up 28.4% YoY, mainly sucsine and lysine, has maintained a high growth, the current income ratio of about 25% In addition, there are organic fertilizer compound fertilizer and liquid ammonia starch products Note: Meng Qingshan holds 27.48% of the company's shares, and its co-actions are Yang Weiyong, Wang Aijun, Wang Hongshan, He Jun, Yang Weiying and Cai Wenqiang, holding a total of 35.41% of the Company's shares zJB
　　2, profitability in recent years continued to decline In terms of product profitability, the gross margin of MSG and glutamate, amino acids and liquid ammonia showed a continuous downward trend The company's combined gross margin continued to decline from 30% in 2010 to 22.8% in 2012 The net profit margin fell from 15.7 per cent in 2010 to 8.1 per cent in 2012 The main reason is that the MSG industry due to the large-scale expansion of production of the Yifeng Group caused MSG prices continue to fall, and cost pressure together to compress the industry gross margin zJB
　　3, MSG industry integration is nearing the end, good with a more abundant cost and price double advantage of the plum MSG industry production is expected to be about 2.5 million tons, the industry 4 has accounted for more than 75% of the industry's output Yanfeng and Meihua both believe that the industry integration is nearing the end, we expect the future industry earnings are expected to stabilize and rebound, the Ministry of Industry and Information Technology to eliminate backward MSG production capacity favorable industries Plum has a MSG production capacity of 500,000 tons, due to the process cost advantage and overseas customers long-term cooperation price advantage, and compared to the main competitor gross margin of 7 percentage points advantage, overall, Meihua MSG profitability will be expected to stabilize and recover MSG SALES GROWTH IS EXPECTED TO BE FLAT AND SLIGHTLY HIGHER IN THE FUTURE zJB
　　4, amino acid business development, plum has cost and after-the-process advantages The company's share of susine in the world's first, reached more than 40% of the production capacity, the original capacity of 80,000 tons, new capacity of 60,000 tons, lysine and Susine in sales with synergy, so at the same time expanded the production scale of lysine, in the original 60,000 tons on the basis of the addition of 200,000 tons The amino acid industry oversupply, amino acid prices weakened, the beginning of April of the avian flu caused its price to fall further, lysine prices fell particularly badly However, meihua has the cost advantage brought by Xinjiang corn and coal and the advantage of the late-launch process, plum plum Xinjiang lysine gross margin than the industry leader Dacheng biochemical is expected to have a 10-20 percentage point advantage The new amino acid production capacity is expected to reach full production due to cost advantage Amino acid prices are showing signs of stopping the decline and recovering, so it is expected to be a sell-out for the company zJB
　　5, Prundo sugar is a profit point of view 1) Prundo-Sugar productapplication prospects are good, but technical difficulties are high; 2) the company broke the monopoly situation of Japan's Linyuan, there is no report of large-scale production, the company's product production has technical advantages, the current prospects for profitability are better; 3) the new project 1000 tons is expected to be in the second half of 14, up to the post-partum can gradually contribute annual profits of about 100 million yuan zJB
　　6, valuation and investment advice The company's 13-15 revenue is expected to be RMB8,769 million, RMB10.290 billion and RMB11.768 billion, corresponding to EPS of RMB0.24, RMB0.42, RMB 0.49 and PE 2 1.97 times, 12.32 times, 10.60 times, is expected to be the bottom of the performance in the second quarter of 13 years (may decline yoy), followed by quarter-by-quarter release, the first "buy" rating, 12-month target price of 7.6 yuan Concerned about the collapse of avian influenza lysine prices stopped falling and rebounded, after the integration of MSG prices stabilized and rebounded zJB
(Xiangcai Securities Research Institute)