Events:
Tiankang Bio released its 2021 annual report & first quarterly report of 2022: the company's total revenue in 2021 was 15.744 billion yuan, an increase of 31.35% over the same period last year, and its net profit was-686 million yuan, down 139.87% from the same period last year. The total revenue of Q1 in 2022 was 3.392 billion yuan, an increase of 1.58 percent over the same period last year, and the net profit was-69.6058 million yuan, down 123.12 percent from the same period last year.
Main points of investment:
The pig out of the fence grew steadily, and the low performance of pig prices at the bottom of the cycle was under pressure.
① 2021 company revenue of 15.744 billion yuan (year-on-year + 31.35%), return to the mother net profit-686 million yuan, pig farming sector into a deep loss. In 2021, the company sold 2.3125 million tons of feed (year-on-year + 21.08%) and sales revenue was 5.135 billion yuan (year-on-year + 21.08%); the company's animal vaccine sales volume was 1.318 billion yuan (ml) (year-on-year + 2.35%), and the sales revenue of animal protection business was 980 million yuan (+ 15.80%). The number of live pigs is 1.6033 million (year-on-year + 19.20%), sales revenue is 3.495 billion yuan (year-on-year + 0.52%), feed sales and pig production are growing steadily, and all sectors of the company have been developed. The decline in the company's performance is mainly due to the sharp drop in the domestic pig price of 2021H2, the loss of pig business caused by the high fattening cost of piglets purchased by the company's feed stocking department, and the impairment loss of 385 million yuan (of which 188 million is provided for breeding and 197 million for meat products).
In 2022, the total operating income of ② Q1 Company was 3.392 billion yuan (year-on-year + 1.58%), and the net profit was-69.6058 million yuan (- 123.12% compared with the same period last year). After the Spring Festival, with the slowdown in consumer demand for pork and the low shock of the average price of live pigs at 12-13 yuan / kg, the prices of feed raw materials such as soybean meal rose sharply after the war between Russia and Ukraine, and the breeding costs of the pig industry increased somewhat. Profits at both ends of the breeding end were squeezed, and the plate suffered deep losses. We expect that the pig price in 2022 will show a trend of low before and then high, and the contribution of the company's pig farming business will improve with the control of breeding costs at the company level.
The company has realized the complete closure of four key links in modern animal husbandry, namely, improved breed breeding of livestock and poultry, feed and feeding management, animal drugs and epidemic prevention, and processing and sales of animal products, forming an industry-wide chain structure for animal vaccines, feed and feed raw materials, breeding pig breeding, pig breeding, slaughtering processing and meat products sales, as well as the construction of breeding service system. Pigs are convenient, the company gives full play to the advantages of the integration of the industrial chain, through reasonable planning of self-produced feed and veterinary drug vaccine business to ensure that the whole process of breeding can be controlled, optimize sow structure, strengthen non-plague prevention and control measures, and reduce pig breeding costs. In terms of feed, the company actively expand the Shaanxi-Gansu-Ningqing market, further enhance the market share of the northwest region, and improve the competitiveness of the company. In terms of animal protection, the company is the only designated manufacturer of veterinary biological products by the Ministry of Agriculture in Xinjiang, with rich scientific research reserves. the company has established a dealer network at more than 100 provinces and cities throughout the country, and the proportion of seedlings in the market is constantly increasing. the competitiveness of animal protection has been further strengthened. In other aspects of business, the company's corn collection and storage and other business performance is good, providing protection for the company's feed and breeding, contributing to new performance increments. Diversified layout has also enhanced the company's ability to resist fluctuations in aquaculture business and contribute to long-term development.
Profit forecasts and investment ratings are covered for the first time. We think that the return net profit of 2022-2024 company is 0.63 million yuan and the corresponding PE is 3.339 billion yuan and 3.78 times respectively. As an integrated enterprise, feed and animal protection can provide better cash flow and profits. With the gradual return of pig prices and the continuous enhancement of the company's cost control ability, it is given an "overweight" rating.
The risk indicates the risk of low pig prices; the risk of repeated epidemic situation in the downstream breeding industry; the risk of intensified market competition; the risk of failure in new product research and development; the risk of rising raw material prices; and the risk that the company's performance falls short of expectations.