The Scene Of Corn Seed Industry Improved; Kangnong Seed Industry IPO Of Hubei New Third Board Company Was Accepted

At present, the market generally believes that agriculture, forestry, animal husbandry and fishery are in a downward cycle, and the decline of seed industry performance cannot be avoided. But at the same time, the crop of corn appears frequently in various policy documents.

This may be a shot in the arm for Hubei kangnong Seed Co., Ltd. (hereinafter referred to as "kangnong seed industry").

Since 2020, China's corn inventory consumption ratio has dropped to 38.75%. On February 25, 2021, the Ministry of agriculture and rural areas clearly required an increase of 10 million mu of corn area. From the top to the bottom, the Ministry of agriculture and rural areas repeatedly mentioned the increase of corn planting area in order to increase China's corn inventory.

Corn inventory bottoming out, planting area inflection point is perhaps for kangnong seed industry to rush to the market. Chen Mengyao, an analyst at Guolian securities, said: "we believe that in the next three to five years, corn will enter a new round of policy driven adjustment cycle of planting structure. The corn seed industry will enter a high boom zone with both quantity and price rising. "

However, since the beginning of this year, this growth trend has slowed down. At a press conference held by the Ministry of agriculture and rural areas on July 20, song Danyang, deputy director of the Department of market and information technology of the Ministry of agriculture and rural areas, introduced that from January to June this year, the average wholesale price of corn in the production areas was 1.39 yuan per kilogram, which was 44% higher than the average price in the first half of last year and 20% higher than the average price in the second half of last year.

Corn seeds will rise both in volume and price

According to Chen Mengyao's calculation, based on the planting area, seed quantity per mu data provided by wind and the seed unit price data in the national crop seed industry development report, assuming only considering the cyclical factor, the seed price will increase by 50% annually in the next three years driven by the high price of corn, and the seed price in 2021-2023 will be 33.75, 38.81 and 44.63 yuan / kg respectively; The planting area will increase by 15% in the next three years, increasing by 1 million, 2 million and 2.5 million hectares respectively, and the unit seed consumption will decrease by 0.07 kg / mu every year; It is estimated conservatively that the market space of corn seed is expected to reach 50 billion yuan in the next three years.

Since the financial crisis in 2008, in order to ensure food security, the state began to implement the corn temporary storage policy. Driven by this, the enthusiasm of farmers increased, corn prices continued to rise, China's corn acreage and inventory continued to rise. However, according to the data of the National Bureau of statistics, from 2015 to 2020, China's corn sown area fell from 675 million mu to 632 million mu, and the final inventory also fell back to 113 million tons. By the end of the planting season of 2019 / 20, the corn inventory consumption ratio has declined to 38.75%, which is close to the inventory safety line.

According to the national grain and oil information center, the corn planting area will increase by 3.3% this year, and the turning point of corn planting will appear. Chen Mengyao said that it is expected that the quantity and price of corn seeds will rise from the planting season of 2021 and 2022. The self bred high-quality maize varieties have greater upward price elasticity, and the high-quality seed industry leader will be the core benefit asset in this round of seed cycle.

In this case, kangnong seed industry began to embrace the capital market. According to the public information, kangnong seed industry is the first corn seed enterprise to land on the new third board in Hubei Province. It is mainly engaged in "breeding, breeding and pushing" new varieties of corn crops, and its sales revenue mainly comes from corn hybrids. From 2018 to 2020, its operating revenue will be 93.5392 million yuan, 115 million yuan and 112 million yuan respectively; The net profits attributable to the parent company were 28.7372 million yuan, 38.6902 million yuan and 37.9944 million yuan respectively.

In September 2020, the company issued 3240000 shares at a price of 10.00 yuan per share, and the total amount of funds raised was 32.4 million yuan, which was mainly used for seed purchase funds, employee wages, etc.

Kangnong seed industry said at that time that there were 27 IPO objects, including 11 registered shareholders, 14 core employees, 1 supervisor and core employee, and 1 qualified investor. Among them, Fang Yanli is the controlling shareholder, actual controller, chairman and general manager of the company, Peng Xuwei is the director and deputy general manager of the company, Chen Qinghua is the director and employee supervisor of the company.

This is also interpreted by the outside world as equity incentive measures for the core management before the listing sprint. On December 9, 2020, kangnong seed industry officially entered the stage of listing guidance, guiding securities companies to open source securities. It is planned to submit the application materials for listing on the Shenzhen Stock Exchange gem in the second half of 2021.

Layout diversified market

At present, Longping high tech is the leading enterprise in this field. Its main products are rice, corn, vegetables, fruits and other crop seeds. In 2020, the three kinds of seeds account for 42% / 30% / 9% respectively. In 2020, the company's revenue was 3.291 billion yuan, with a year-on-year increase of 5.41%; The net profit attributable to the parent company was 116 million yuan, with a loss of 298 million yuan in the first half of this year.

In contrast, kangnong seed industry has a strong dependence on corn seed business. In 2019, its corn hybrid sales accounted for 98.26% of the operating revenue.

In order to solve the problem of single business dependence, kangnong seed industry started the "buy buy buy" mode in 2020. In 2020, kangnong Seed Co., Ltd. successfully acquired 100% equity of Hubei Jingli Seed Industry Co., Ltd. and Hubei Taiyue traditional Chinese medicine Seed Industry Co., Ltd. with a total investment of nearly 3 million yuan, kangnong Seed Industry Co., Ltd. hopes to realize the full coverage of corn sales network in eight provinces in Southwest China, with an annual output value of more than 400 million yuan.

After the implementation of the above diversified acquisition, kangnong seed industry put forward the development strategy of "one main body and two wings", that is, taking corn seed industry as the leading factor, vigorously develop genuine Chinese herbal medicine seed seedlings and konjac seeds.

This effort will achieve some results by the end of 2020. Sales of corn hybrids accounted for 95.89% of the operating revenue, down 2.37% compared with 98.26% in the same period.

Developing new products

The demand of corn seed depends on the demand of corn. After the price of corn rises, farmers' enthusiasm for planting is improved, and the demand for high-quality seeds promotes the rise of seed price. In this case, the R & D capability of enterprises becomes the key to break the situation.

By comparison, in 2020, there will be 456 full-time R & D and R & D service personnel of rice, corn and vegetables in Longping hi tech, accounting for 16.50% of the total number of the company. The R & D cost accounted for 10.52%. In contrast, the R & D cost of kangnong seed industry, which is smaller, accounts for only 6.41%, which is still 15.43% higher than that in 2019.

However, kangnong seed industry is also consciously improving its R & D capability. In 2020, kangnong seed industry will continue to expand the construction of breeding bases, speed up the research and development of new maize varieties, and approve 25 new maize varieties.

But at present, Longping high tech and Denghai seed industry still firmly occupy the top two in the market. In 2015, the revenue of Denghai seed industry was 1.478 billion yuan, accounting for 4.87% of the city; By 2020, its corn business revenue is 785 million yuan, accounting for 2.4% of the city. Longping hi tech has become the largest corn seed company with the largest market share through M & A, with the market share rising from 1.38% in 2015 to 3.02% in 2020. In contrast, kangnong seed industry has a certain gap with the industry giants in terms of R & D capacity and market scale.

At present, kangnong seed industry has built 26 research and development platforms in major corn areas in China, with more than 2000 mu breeding research and development base and stable seed production base of about 30000 mu.

In order to improve production capacity and research and development, kangnong seed industry is also working hard. Kangnong seed industry said that it would make full use of the advantages of traditional breeding technology to sort out the high-quality germplasm resources of tropical and subtropical maize in China on a large scale, fully explore the natural dominant trait genes, and improve a large number of core maize germplasm resources.

It is worth noting that in April this year, kangnong seed industry appointed Peng Xubing as the general manager of the company. According to the public information, Peng Xubing has been the director of Changyang County Agricultural Science Institute; Deputy general assistant of scientific research and director of Wuhan Research Station, Xiangfan Zhengda Agricultural Development Co., Ltd; Changyang County agricultural product quality and safety supervision and testing station head. He is now the chief expert of Hubei kangnong Seed Industry Co., Ltd., engaged in scientific research and breeding for many years.

The appointment of Peng Xubing as general manager may represent kangnong's determination to improve scientific research ability.