As the ice leader of yellow chicken in the central region, the company has been expanding production capacity, products and channels in recent years, and the follow-up is expected to benefit from the marginal improvement of yellow chicken prosperity. It is expected that the cost of yellow chicken will rise in 2022 and the production capacity of the industry will continue to be eliminated. Considering these possible effects, we downgrade 2022, increase 2023, and add 2024 EPS forecast to 1.48xb 2.06max 1.34 yuan (the original EPS forecast for 2022-2023 is 1.89pm 1.75 yuan), combined with 2023 peer company valuation (Shengnong / Xiantan / Lihua / probiotics / people and average valuation is about 19 times) Considering the company's competitiveness in the field of chilled chicken, the company was given a 2023 performance of 20 times PE, corresponding to the target price of 41.20 yuan, maintaining a "buy" rating.
The company released its quarterly report for 2022, with revenue of 784 million yuan (+ 8.00% year-on-year), net profit of 12 million yuan (+ 42.89%) and gross profit margin of 19.21% (year-0.16pcts) in the first quarter of 2022.
Our comments on this are as follows:
Live poultry loss, chilled steady increase, 22Q1 small profit. Split up, the company 22Q1 sold 8.7492 million live birds (+ 4.77% compared with the same period last year), the sales revenue was 192 million yuan (+ 1.49% compared with the same period last year), the average income was only 21.91 yuan, and the average sales price was 11.66 yuan / kg (- 2.57% compared with the same period last year). However, affected by the rise in the price of feed raw materials, we judged that the live poultry plate suffered a slight loss. The overall growth rate of the chilled business is stable, and the judged volume has increased by more than 20%, leading to a stable overall profit.
Yellow chicken boom or repair, H2 performance is expected to continue to improve. In the short term, affected by the local COVID-19 epidemic control, the transportation of live poultry is blocked, and the average price of yellow chickens is under short-term pressure. However, with the gradual depletion of production capacity caused by persistent losses in the industry since 2020, superimposed by the marginal improvement in subsequent consumption, we estimate that the boom in the yellow chicken industry H2 may be repaired. On chilled products, the company's volume is increasing steadily, and the channel continues to sink, enriching categories, promoting the sales of middle and high-end products, and it is expected that the gross profit margin of chilled products will stabilize upward.
Chilled faucet steadily expand production capacity, medium-and long-term growth can be expected. In recent years, with the gradual increase of the ban on the sale of live poultry, "live poultry to chilled" has become a major trend of the industry, and there is a broad space for the chilled market in the future. As a chilled chicken leader, the company continues to expand downstream channels. By 2021, the company's live poultry products have been sold to 10 provinces and cities, including Hunan, Hubei, Henan and Guangdong, and the sales network of chilled poultry products covers 28 provinces and cities, including Hunan, Hubei, Chongqing, Beijing, Shanghai and Guangdong. Some provinces and cities have sunk to city-level and county-level cities. In 2021, the company opened up the market of chilled poultry products to the three eastern provinces, with annual chilled sales of 76100 tons (+ 22.22%) and sales revenue of 1.826 billion yuan (+ 15.04%). In 2021, the company set up a subsidiary Hunan Xiangjia Food Heart Food, and began to set foot in the field of cooked food and prefabricated food, extending the layout to the downstream industrial chain. In addition, the company has steadily promoted the construction of 13.5 million high-quality chicken standardized breeding base, 10,000 breeding pig breeding project, 200000 commercial pig farm project and annual slaughtering 1 million live pigs and meat products deep processing project, and the follow-up capacity expansion is expected.
Increased risk: low poultry prices; breeding epidemic outbreaks; natural disasters; policy promotion is not as expected.
Investment suggestion: as the ice leader of yellow chicken in the central region, the company has been expanding production capacity, products and channels in recent years, and the follow-up is expected to benefit from the marginal improvement of the yellow chicken industry. Taking into account the rising cost of yellow chicken in 2022 and the continuous decline of industry capacity, we downgrade 2022, increase 2023, and increase the 2024 EPS forecast to 1.48x2.06x1.34 (the original EPS forecast for 2022-2023 is 1.891.75), combined with 2023 peer company valuation (Shengnong / Xiantan / Lihua / probiotics / people's average valuation is about 19 times), taking into account the company's competitiveness in the field of chilled chicken Give the company 2023 performance 20 times PE, corresponding to the target price of 41.20 yuan, maintain the "buy" rating.