Core point of view
The company is the leader of domestic integrated laying hen seed production industry, and the market share is rising steadily. The company is a technology-based laying hen breeding enterprise integrating grandparents' and parents' egg breeding, egg breeding engineering technology research and development, egg hatching and chicken sales. The company adopts the mode of "centralized breeding, decentralized incubation" to give full play to the location advantage of being located in the desert steppe. In 2020, the company achieved revenue of about 540 million yuan, and commercial egg chicks were the main source of income for the company. Sales increased year by year. According to the annual report, the market share climbed from 2.2% in 2013 to 12.5% in 2020.
The prosperity of the industry is on the rise, and the head seed production enterprises are expected to fully benefit. In 2020, the loss of the laying hen industry caused farmers to make up the fence low, and the stock column of laying hens continued to decrease. With the advent of the peak season of egg demand, high feed costs were added to form a strong support for egg prices, and the enthusiasm of farmers to fill the fence is expected to increase.
The pattern of commercial laying hen breeding industry in China is still scattered. With the increasing requirements of environmental protection and egg safety production, national integrated seed production enterprises are expected to give full play to their own advantages and give priority to the improvement of downstream breeding concentration. to provide stable and high-quality seed and seedling products for large-scale farms.
The advantage of aquaculture efficiency is expanded, and high-speed expansion is expected in the future. On the basis of adopting a series of improved and high-yield laying hens selected by Hyland Company of the United States, the company has integrated and innovated the welfare breeding model of "full-net high-bed flat raising" egg breeders to further improve the laying efficiency and egg quality of breeder hens, and the utilization rate of breeding eggs is significantly higher than the average level of the industry. With the requirement of "building the first brand of biosafety in Chinese laying hen industry", the company implements high-standard biosafety prevention and control, which is expected to stand out in the context of non-chemical resistance. The company steadily promotes the market share promotion plan, this year plans to set up a southern seed industry center in Hunan, supporting the incubator to accelerate the pace of production expansion.
Profit forecast and investment advice: we estimate that the EPS of the company in 2021-23 will be 0.68Universe 0.88 Placement 1.06 respectively. With reference to the valuation level of the industry, and considering that the company is the only listed company in the egg breeder industry, the company is given a "buy" rating of 35 times the valuation of PE in 2021 and a reasonable value of 23.70 yuan per share.
Risk hints: major epidemic risk; raw material price fluctuation risk; egg price fluctuation risk.