First, analyze the development situation and future trend of layer industry.
China is the largest egg producing and consuming country in the world, and its egg output has ranked first in the world since 1985. With the increase of per capita egg consumption of rural residents, it is expected that the egg market capacity will further increase in the future. At present, the pattern of laying hen industry in China shows the characteristics of "small scale, large group". Compared with the developed countries in Europe and America, there is still a certain gap in the breeding level and production efficiency of Chinese laying hen industry. However, due to the requirements of environmental protection policy and the promotion of production safety, the industry concentration continues to increase, and the trend of large-scale breeding is obvious. High-quality laying hens will get brand premium in the future.
In terms of layer breeding, although the market share of domestic ancestral laying hens is high, there is still a gap between the performance of domestic ancestral laying hens and foreign ancestral laying hens. It is expected that under the background of in-depth egg breeder research and rich breeding materials in China, the performance of domestic ancestral laying hens is expected to be gradually improved in the future, and its market share can be further improved.
Second, the company's laying hen business is in the forefront of the industry, and all indicators continue to improve.
Xiaoming Co., Ltd., headquartered in Ningxia, is an integrated layer breeding enterprise with "introduction, reproduction and promotion". The company uses the advanced breeding model to create the sales model of "centralized breeding, decentralized incubation". The goods radiate more than 31 provinces and regions across the country and are exported to Mongolia. In recent years, the company's indicators continue to improve, the market share of major commodities continues to increase, and its voice in the product supply chain continues to strengthen. Under the large-scale development trend of the layer industry, the company's excellent business performance can strengthen the scale advantage and win more big customers.
Third, the company's competitive advantage is prominent, attaching importance to biosafety and laying the foundation for development.
The company establishes advanced disease prevention and control system and attaches importance to biosafety. Through geographical isolation, strict control of entry vehicles and drinking water, closed management of farms and other means to ensure the safe and efficient operation of enterprises. In the perfect biosafety system, the company creates the business model of "centralized breeding, decentralized incubation", reduces production costs through centralized breeding, improves management efficiency, and innovates in breeding links. Adopt the welfare breeding model of "whole network, high bed and flat breeding" to improve product quality, so that the quality of egg breeder chickens has been recognized by customers and formed a good reputation.
In the aspect of product sales, decentralized incubation is used to fully open up the market, reduce the loss of product transportation, and realize the efficient utilization of hatchery production capacity.
The rapid expansion of business forms the advantage of scale. In 2020, the company's commodity generation chicks have reached 12.52% of the domestic market share, and the business scale ranks among the forefront of the industry. Through large breeding scale, mature industrial layout and extensive sales network, the company can ensure sustainable development and better resist the risk of industry fluctuations.
Fourth, fund-raising projects: further enhance production capacity and enhance the competitiveness of the company.
After the listing of the company to raise funds, the company will invest money in Alashan and Minning new laying hen breeding projects. We expect that with the gradual landing of the fund-raising project, the company's breeding technology will be significantly improved to ensure the company's future production capacity and strengthen the advantage of large-scale farming.
Investment advice and profit forecast: it is estimated that from 2021 to 2023, the company will achieve an income of 807 million yuan, an increase of 25.97%, 18.71%, 24.57%, and a net profit of 1.15, 1.7, 136 million yuan, with a year-on-year growth rate of 129.43 percent, 47.08 percent, 19.78 percent, and 0.900.73 yuan, corresponding to EPS 0.61. With reference to the average valuation of the last cycle of comparable company valuation, we conservatively give the company a PE of 28 times its performance in 2022, corresponding to a 22-year company market capitalization of 4.75 billion yuan and a corresponding target price of 25.2 yuan. Cover for the first time, giving a "buy" rating.
Risk tips: poultry epidemic risk; raw materials and price fluctuation risk; the company's dependence on foreign egg breeder risk; fund-raising investment project implementation risk; short-term stock price fluctuation risk.