Ancient Yuelong Mountain (600059): Expansion and introduction of war investment, expansion of nationalization of production capacity or start again

Ancient Yuelong Mountain (600059): Expansion and introduction of war investment, expansion of nationalization of production capacity or start again

Recent situation of the company The company issued a fixed increase plan on February 24, which is planned to be 7.

06 Yuan / share issued about 1 to Qianhai Furong and Yingjia Technology.

6.2 billion shares, the scale of funds to be raised is 11.

4.2 billion, the net proceeds will be used for the construction of the Huangjiu Industrial Park project (Phase I).

According to the company’s announcement, the total investment of the Huangjiu Industrial Park project is about 19.

After the project is put into production, the project can produce 10 inches of mechanized rice wine with an annual capacity of 12 years and put it into small wine cans.

Commenting that the project is intended to increase production capacity, we estimate that the next 5-8 years may have a significant boost to profitability.

At present, the company’s yellow wine brewing products are stable at 13-14 years / year, and the production capacity has basically reached the upper limit.

We estimate that after the project is put into production, the company has a total annual production capacity of about 24 years, which corresponds to about 17-22 annual sales of finished wine (production-sales ratio 70-90%).

Without considering structural upgrades, ASP 1 in 2018 will be maintained.

230,000 yuan / ton and 10% net interest rate, corresponding to 21-27 trillion revenue scale and 2.

1-2.

7 million net profit, compared with 22 in 2018.

3-57.

3% growth 无锡夜网 space.

Taking into account the land grant, the time for the original wine cellar to be built after the plant is set up and put into operation, we expect that the expansion of production capacity will boost earnings or gradually realize it in the next 5-8 years.

We believe that the company’s operating efficiency may improve and the management expense ratio has room to fall.

We believe that the company will soon release strategic investors or optimize the corporate governance structure. According to the company announcement, after the completion of the issuance, the chief strategic investor will hold a total of approximately 16 shares.

7%, the controlling shareholder Huangjiu Group holds 34 shares.

49%.

At the same time, we believe that centralized production of large-scale production in decentralized factories can further promote refined management, and the management expense rate may have a slight downside.

Expansion of production may lay the foundation for nationalization, and the company has the brand quality foundation. We believe it has the potential to be nationalized again.

As a leader in the rice wine industry, “Ancient Longshan” has a long history, has a core consumer group, and has a stable base market in Zhejiang, which can be used as a focal point for Zhejiang’s national expansion.

And rice wine has the highest alcohol content, good entrance, suitable for popular promotion.

It is estimated that as the fixed increase is not completed, we will not make adjustments to the share capital for the time being.

We maintain our earnings forecast unchanged, but we raise our target price by 3 as we are optimistic about the company’s long-term out-of-province expansion.

5% to 8.

02 yuan, corresponding to 35 in 2020/21.

3/33.

5x P / E, currently expected to correspond to 35 in 2020/21.

2/33.

The price-earnings ratio is 3 times, and currently it is 0.

4% upside, maintain Neutral rating.

Risks If other wine types further increase their marketing efforts in East China, the rice wine market may continue to shrink.