Author | Where not annoying
On June 19, Longping Hi-Tech, a leading seed industry, received 6 institutions that came to investigate.
A month ago, on May 18, Longping Hi-Tech held a performance briefing, with 42 institutions participating.
Earlier, on the evening of April 28, Longping Hi-Tech's 2023 annual report was posted on the Internet, and 47 institutions participated in online exchanges overnight; At the end of February, 8 institutions went to the company for on-site investigation......
Obviously, in 2024, Longping Hi-Tech's institutional attention will increase significantly. The reason for this is not unrelated to the "counterattack" of the annual report performance.
In 2023, Longping Hi-Tech will achieve revenue of 9.223 billion yuan, a year-on-year increase of 22.45%; The net profit attributable to the parent company was 200 million You know, the company is still suffering from losses in 2022.
After a year, the performance has increased by 1 billion. Does this mean that Longping Hi-Tech has begun to enter the right track at the performance level? If so, where does the impetus for growth come from?
Xiangguce is trying to find the answer behind the annual report.
Short-term: "rice + corn" leading domestic market share
The old rule, let's look at a set of financial data first:
From 2019 to 2023, Longping Hi-Tech's revenue will be 3.130 billion yuan, 3.291 billion yuan, 3.503 billion yuan, 7.532 billion yuan (adjusted), and 9.223 billion yuan respectively; The net profit attributable to the parent company was -294 million yuan (adjusted), 116 million yuan, 62 million yuan, -833 million yuan (adjusted) and 200 million yuan respectively.
Net profit fluctuates repeatedly, revenue volume continues to grow, Longping Hi-Tech has quietly grown into a domestic seed industry leader with revenue of nearly 10 billion.
To analyze the growth momentum of a company's performance, it is natural to start with the main business.
At present, Longping Hi-Tech's main business includes three major sectors: staple food crops, specialized and special new crops, and agricultural services.
Among them, the rice seed and corn seed business in the staple food crop sector has the largest market and the widest demand, which is where the company's "money" lies.
Since 2010, Longping Hi-Tech's rice seed and corn seed business have accounted for more than 60% of its total revenue.
By 2023, the proportion of "rice + corn" will expand to 84.65%. Among them, corn seeds accounted for 65.38% and rice seeds accounted for 19.27%, which can be called the company's two core businesses.
As a listed company named after Yuan Longping, the "father of hybrid rice", the rice seed business is naturally the foundation of Longping Hi-Tech.
After the listing, the company continued to use capital operation means to expand the rice business territory.
According to incomplete statistics, the company has successively acquired or controlled Yahua Seeds, Golden Rice Seeds, Hunan Youzhi, Fujian Keli and other enterprises, building a leading channel and market advantage in China.
In 2023, Longping Hi-Tech's domestic rice seed revenue will reach 1.777 billion yuan, a year-on-year increase of 36.50%; The gross profit margin reached 36.37%, an increase of 8.49 percentage points year-on-year, and the market share was 18%, ranking first in China. In addition, it has been exported to the Philippines, Vietnam and other countries.
The market-leading position of the company's rice business also comes from strong product strength.
For example, Jingliangyou Huazhan and Jingliangyou 534 have ranked among the top two in the promotion area of hybrid rice in China for five consecutive years.
In 2023, Weiliangyou 8612, Weiliangyou 7713 and Longliangyou 8612 were identified as super rice varieties by the Ministry of Agriculture and Rural Affairs, and the company's super rice varieties have reached 14. Among them, Weiliangyou 8612 has become a new generation of hybrid rice in the country.
At the same time, Longping Hi-Tech's corn seed business also pressed the "acceleration button".
In recent years, the company has successively acquired or controlled Hubei Huimin, Hebei Xuntian Agriculture, Lianchuang Seeds, Yunnan Xuansheng, Longping Development and other enterprises, and the scale of corn seed business has continued to expand.
From 2017 to 2023, the revenue of Longping Hi-Tech corn seed industry increased from 350 million yuan to 6.030 billion yuan, with a compound annual growth rate of 60.71%.
In terms of breakdown, in 2023, the domestic revenue of the company's corn seed business will be 2.268 billion yuan, a year-on-year increase of 72.30%; The market share increased from 7% to nearly 10%, ranking first in China.
Abroad, the corn varieties developed by the subsidiary Longping have an annual promotion area of more than 80 million mu in Brazil, with a revenue of 3.886 billion yuan, ranking third in the Brazilian market.
Similar to the rice business, the company's corn seed single product also has obvious advantages.
In 2023, Longping Hi-Tech will occupy three of the top ten varieties of hybrid corn in the domestic promotion area. Among them, Yufeng 303 ranked first in the country for the first time, and Zhongkeyu 505 ranked third in the country for two consecutive years.
Obviously, through continuous industrial integration + technology empowerment, "rice + corn" has become the core business of Longping Hi-Tech, which is not only leading in China, but also achieving the goal of "going out".
In the short term, the development momentum of the two major businesses will become a strong driving force for the company's performance growth.
Mid-term: "Two Dragons" fused into a winner
If you take a long-term view, the winner or loser of Longping Hi-Tech's performance growth should be the integration of "two longs" - the integration effect of Longping Hi-Tech and Longping Development will determine the company's performance for a long time.
In 2023, Longping Hi-Tech will increase its stake in Longping Development to 49.42% and include it in the company's consolidated financial statements with a voting rights ratio of 57.14%.
The results are immediate.
The first is to drive growth in operating performance.
In 2023, Longping Development will contribute revenue of 3.886 billion yuan, driving Longping Hi-Tech's revenue to reach 9.223 billion yuan, approaching 10 billion yuan, and has entered the top eight in the global seed industry, in addition, contributing a profit of 59.7809 million yuan, helping Longping Hi-Tech turn losses into profits and make a profit of 200 million yuan.
The second is to make up for shortcomings.
Through this acquisition, Longping Hi-Tech is expected to introduce Brazilian corn germplasm resources and modern breeding system into China, make up for the shortcomings of domestic corn germplasm resources, and apply Brazil's genetically modified corn promotion experience to the domestic market.
Longping Development was born out of Dow Agro's specific corn seed business segment in Brazil, and has a scientific research layout and business network in South America, China, the United States, Africa and other markets, and owns three brands: MORGAN, FORSEED and TEVO.
Especially in South America, Longping has established a research and development and scientific and technological innovation platform for corn, soybean, sorghum and other crop seeds.
However, in the first quarter of 2024, Longping Hi-Tech made a profit of 77 million yuan, a year-on-year decrease of 48.95%, mainly due to the poor performance of Longping Development due to factors such as low food prices in Brazil.
In fact, the negative impact of low food prices in Brazil is already being felt in 2023. In that year, Longping Development recorded a net profit of 71.9944 million yuan, a year-on-year decrease of 86.15%.
At the performance briefing held on May 18, Longping Hi-Tech said that under the unfavorable industry environment, the company's Brazilian corn seed sales and revenue in 2023 will still increase steadily. The company will actively respond to industry challenges, continue to strengthen and enhance competitiveness, and prepare for performance growth after the improvement of the market environment.
In terms of categories, in addition to the core business of corn seeds, Longping Development is also actively exploring the expansion of sorghum and soybean businesses to moderately increase profitability and improve cash flow.
What's more, food price fluctuations are cyclical, and Longping Hi-Tech is cautiously optimistic about the market outlook.
Corn seed prices in Brazil began to rise in 2018, peaked in 2022, and then showed a downward trend in 2023, showing a clear cyclical character, the company said.
In other words, it may be the bottom of Longping's development. With the stabilization and recovery of Brazilian food prices, Longping Development will effectively boost the performance growth of Longping Hi-Tech in the future.
Long-term: The R&D level is leading in the world
In the globally competitive seed industry, whether a company can go steadily and far depends on its R&D strength and technical background.
As a listed company originating from scientific research institutes, Longping Hi-Tech has always invested in R&D with high enthusiasm, and has gradually gathered the top seed industry R&D team and resources in China.
Among the "Top Ten Outstanding Figures in China's Seed Industry", Yang Yuanzhu and Wang Yibo, Brazilian corn expert Edimilson Linares, and vegetable industry leaders Ma Dehua and Liu Rongyun ...... Led by well-known scientists, Longping Hi-Tech has built a huge R&D team of 746 people.
On this basis, Longping Hi-Tech has cooperated with more than 20 scientific research units across the country and an external team led by a number of academicians to fully promote the accelerated development of the company's and even domestic seed industry science and technology.
In 2023, Longping Hi-Tech's net profit attributable to the parent company will be 200 million yuan, but the R&D investment will be 817 million yuan.
The company has spared no effort to invest in R&D and has achieved remarkable results, with 39 varieties of rice and 22 varieties of corn in 2023. Under the innovation, the leading edge of Longping Hi-Tech products is constantly consolidating.
More importantly, the project of "Research on the Application of Rice Gene Editing and Other Technologies" is progressing smoothly, with a total of 20 excellent germplasms for gene editing and 16 excellent germplasms for radiation mutagenesis.
If the rice field wants to achieve leapfrog yield and quality improvement again, the answer should be in gene editing technology, and Longping Hi-Tech has taken the lead.
In the field of maize transgenics, Longping Hi-Tech has not only been at the forefront of the mainland's industrialization pilot by combining the superior resources of China and Brazil, but also established a DH-GS maize technology innovation system with whole genome selection technology and monodiploid linkage innovation, reaching the world's leading level.
It is worth mentioning that the company's corn transgenic varieties have significant advantages.
At present, the mainland has issued a certificate for the approval of genetically modified corn varieties and a license for the production and operation of genetically modified corn seeds. As of the first quarter of 2024, 10 genetically modified corn varieties of Longping Hi-Tech have passed the national examination, and the number of varieties that have passed the examination is leading the country. In 2023, the company will pilot the industrialization of genetically modified corn with a demonstration of 1.14 million mu, ranking first in the country in terms of demonstration area.
Conclusion
Be a good seed
Overall, in 2023, Longping Hi-Tech's domestic business will grow significantly, and the foreign Longping development will contribute revenue, helping the company's revenue to approach the 10 billion mark; Net profit also successfully turned losses into profits, returning to the growth track.
Although in the first quarter of this year, the fluctuation of the Brazilian business brought about by the consolidation made Longping Hi-Tech's performance under short-term pressure.
However, it is always necessary to take a long-term view.
The market advantages of the two core businesses of "rice + corn", the synergies brought by the integration of "two dragons", and the world's leading R&D strength will become a powerful engine for the company's performance growth.
In addition, as genetically modified seeds are gradually approaching, Longping Hi-Tech's first-mover advantage will also bring considerable growth space.
Boosted by the three major engines, Longping Hi-Tech's revenue exceeding 10 billion may only be regarded as a small goal.
Oriental Wealth data shows that since the disclosure of Longping Hi-Tech's annual report, 5 institutions have given a "buy" rating.