The scale of live pigs is the first in the industry, and the reserve of breeding sows is sufficient.
In 2021, the company sold 40.263 million live pigs, including 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs, ranking first in the industry as a whole. 2.8973 million pigs will be slaughtered in 2021, with a capacity utilization rate of about 70 per cent. By the end of 2021, the company has completed a breeding capacity of more than 70 million, and the number of breeding sows is 2.831 million.
Pig "supply is strong and demand is weak", and capacity removal continues.
By the end of 2021, the stock of 43.29 million breeding sows in China has dropped by about 5.15% from the high point in June 2021, and the current industry capacity removal is expected to continue under the background of breeding losses; due to the overall weak demand after the festival, "strong supply and weak demand" may lead to a double-dip in pig prices.
Multi-advantages gather to cast the company's core competitiveness.
① cost control industry leader: the company is expected to achieve a full cost of about 15 yuan / kg in the fourth quarter of 2021 and drop to 13 yuan / kg in 2022. ② has outstanding breeding advantages and continuous slaughtering efforts: the company has set up 11 subsidiaries to carry out breeding pig breeding R & D and sales business; it is estimated that the slaughtering capacity will reach 37 million by the end of 2022. ③ technology advantages to promote intelligent farming: the company vigorously develops intelligent feeding system and cloud service platform and other information intelligent systems, using information technology to drive agricultural modernization. ④ epidemic control strength: the company's epidemic prevention measures cover the upgrading of hardware facilities to the strengthening of management measures, and the control effect is remarkable. The average litter size per litter in 2021 is 1.2 to 11.96 higher than that in 2020.
Profit forecast and investment advice: considering the significant cost advantage of the company's pig farming, the profitability is expected to be enhanced with the rebound of pig prices in the future, the slaughtering business continues to increase and capacity utilization is expected to increase gradually, and the company's future performance is expected to return to high growth. It is estimated that in 2021-2023, the company will achieve revenue of 773.51 1109.14xpx 149.359 billion, net profit of 72.12x103.38x82b, EPS of 1.37x1.96xpx, respectively, and 40.7x/28.4x/16.1x corresponding to PE, maintaining the "buy" rating.
Risk tips: the risk of persistent low pig prices, the risk that pigs are less than expected, and the risk of outbreaks such as African classical swine fever.