26/05/2020

COFCO Sugar (600737): Dawn reverse at the bottom of the cycle

COFCO Sugar (600737): Dawn reverse at the bottom of the cycle

The company is a leader in the domestic sugar and ketchup businesses.

As the largest sugar industry company in the year, the company manages about 300 tons of sugar annually, accounting for more than 15% of the country ‘s total consumption, and imports about 50% of the country ‘s total sugar imports. It has 220 inventory spaces and 1.5 million tons of refining.Production capacity, the domestic homemade sugar production capacity is about 75 tons, and another 38 tons of homemade sugar production capacity; the company is still the largest and the second largest ketchup company in the world, selling ketchup 23 in 2018.

52 Minimum wage, which accounts for about 30% of domestic exports.

At present, the sugar industry is the company’s largest business, accounting for 91% of revenue and 82% of gross profit.

The mechanization rate of the main raw materials of the products is high, and the cost is consolidated with the industry.

The company’s sugar / ketchup business gross margin has been significantly higher than its peers in the past three years, mainly due to the high mechanical base rate of the raw material base.

At present, the company’s sugar beet sugar has basically formed a large-scale, mechanized and standardized planting model. Large-scale planting area accounts for 60% of the total area, and the mechanical harvesting ratio reaches 92%.

In the field of tomato sauce, the company’s raw material cultivation has basically achieved full mechanization, and mechanical harvesting accounts for more than 50% of the volume.

Currently the company is vigorously developing the cane sugar business, and will raise 4 this year.

The construction of 4 billion double-high bases is expected to replicate the successful experience in the field of beet sugar and tomato sauce.

Backed by COFCO, it has capital, R & D and channel advantages.

As the company’s major shareholder, COFCO Group provides some support for the company’s development.

First, in terms of capital, the company has gradually raised 15 billion US dollars since listing, far exceeding its peers, which has transformed the company’s capital advantage. Second, in terms of research, the company’s high-quality team combined with the strength of COFCO Futures makes the company’s sugar price trend more accurate;Thirdly, in terms of channels, the company has hosted China Sugar, which has greatly strengthened its sales capabilities. The consumer brands of the Group also provided support for the company’s direct sales of sugar.

El Ni?o continues to ferment, the price of sugar may usher in an inflection point.

The sugar bull market has historically been closely related to 北京男士spa会所 the weather, especially the El Nino phenomenon has been the engine of the bull market.

The El Ni?o phenomenon, which began last fall, is likely to continue into this summer, and the Indian state of Mabang has been affected.

Mutian technology survey shows that the area of sugarcane harvested in the Indian state of Madang in the 19/20 season (the output accounts for about 22% of India) is expected to be only 850,000 acres, which is lower than the 1.1 million acres of the 18/19 pressing season, and may continue to decline.

Despite the above-mentioned compression pressure factors, if El Nino continues to develop, the crops in Thailand and Guangxi will also be affected. Similar to the situation in 2014-2016, sugar prices may usher in a cycle of growth.

Covered for the first time, some “overweight” levels.

Based on the assumption that the company’s stable operation and the improvement of the sugar market, we predict that the company’s operating income for 2019-2021 will be US $ 20,924.1 billion, and US $ 28.2 billion, with multiple growth rates of 19 respectively.

4%, 15.

1%, 17.

1%; net profit attributable to mothers is 0.

7.4 billion, 10.

9.5 billion, 13.

35 ppm, with annual growth rates of -85.

2%, 1372.

2%, 21.

9%.

Comparing the estimates of international peers, the company merged at the bottom of the cycle7.

88 to 9.

27 yuan is a relatively safe estimate. Considering that the probability of the El Nino phenomenon lasting until the autumn and winter season is expected to bring a rebound in sugar prices, we recommend an appropriate layout at a reasonable price.

risk warning.

Sugar prices continue to be at risk of slump, crude oil prices have plummeted, and import and export policies have been adjusted.