Event

According to the 2021 annual report and the first quarterly report of 2022, the company realized revenue of 2.033 billion yuan in 2021, an increase of 9.15% over the same period last year, and net profit of 56.5814 million yuan, down 61.88% from the same period last year. It is proposed to pay a cash dividend of 1 yuan (including tax) for every 10 shares of all shareholders; 2022Q1 achieved revenue of 486 million yuan, up 10.00% from the same period last year, and net profit of 11.7771 million yuan, down 55.62% from the same period last year.

Brief comment

1. Profits decline due to factors such as revenue growth and rising raw material costs.

In 2021, the company achieved a total operating income of 2.033 billion yuan (year-on-year + 9.15%), including 712 million yuan for fresh products (8.50% year-on-year), 1.06 billion yuan for conditioning products (3.94% year-on-year) and 245 million yuan for commercial broiler (year-on-year + 383.87%). The sharp increase in revenue from commercial broilers is mainly due to the expansion of breeding scale (in preparation for the production of intelligent factories) and the increase in the number of exported broilers. The company's net profit is 56.5814 million yuan (- 61.88% compared with the same period last year), which is mainly due to the high performance base caused by the demolition compensation of 61.796 million yuan for the demolition of the company's old factory area in 2020, and other factors such as the sharp rise in the price of raw materials such as corn and soybean meal in 2021.

2022Q1 has a total operating income of 486 million yuan (+ 10.00% compared with the same period last year) and a net profit of 11.7771 million yuan (- 55.62% compared with the same period last year). On the one hand, the decline is due to the continuous decline in pork prices, which has led to lower prices of fresh chicken products than in the same period last year, and on the other hand, due to rising prices of raw materials such as soybean meal and exchange rate changes.

In terms of profit margin, the company's sales margin in 2021 was 8.90% (year-5.50pcts), including 1.73% for fresh products (year-6.53pcts), 14.62% for condiments (year-2.68pcts) and 3.60% (year-2.41pcts) for broilers. The decline in gross profit margin is mainly affected by the sharp rise in the prices of raw materials such as corn and soybean meal, the continued volatility and downward exchange rate of RMB against the US dollar in 2021, and the substantial increase in export transportation costs. The company's net profit rate on sales is 2.78% (year-on-year-5.19pcts). 2022Q1's gross profit margin and net profit margin are 8.90% and 2.42%, respectively, compared with the same period last year-4.31pcts/-3.59pcts.

On the expense side, in 2021, the company's sales / management / R & D / financial expenses were 5067.01, 4190.52, 377.96, 12.7867 million yuan, respectively, compared with the same period last year, + 10.96%, 14.33%, 0.98%, 33.01%, respectively, of which the decrease in financial expenses was mainly due to the increase in the net cash flow of working capital in the raised funds, and the decrease in the amount of bank financing affected the reduction of interest expenses. And the increase of deposit interest income caused by idle raising funds for financial management. The sales / management / R & D / financial expenses of 2022Q1 company are 1148.94%, 1159.90, 111.05, respectively, which is-4.47%, 1.51%, 11.20, 59.39% respectively compared with the same period last year.

2. The sales of chicken condiments keep growing, and the production capacity is gradually released.

In 2021, the company produced and sold 55000 tons of chicken conditioning products (compared with the same period last year), of which 12000 tons were exported (+ 9% year-on-year); 47.28 million broilers were slaughtered (6% year-on-year); 59.88 million commercial chicks were purchased and 58.64 million broiler chickens were listed; production and supply of commercial broiler feed 250000 tons (year-on-year + 25%); production of 8500 tons of organic fertilizer and sales of 0.45 million tons of organic fertilizer.

The company's current production capacity is 360000 tons of feed, 54 million commercial broilers are slaughtered annually, and 180000 tons of broiler products are serious. the company is under construction and new production capacity has been put into production to help the company's performance growth. ① by the end of 2021, the company's chicken conditioning production capacity of 72400 tons (year-on-year + 24.83%), capacity utilization rate of 75.94% (year-on-year-11.93pcts). The decline in capacity utilization is due to the company's two production lines with an additional capacity of 14400 tons in June 2021, which are still in the climbing stage; the "smart factory project with an annual output of 40,000 tons of chicken condiments" is expected to be put into production in December 2022, when the total production capacity of chicken conditioning products is expected to reach 112400 tons. ② by the end of 2021, the company's fresh chicken production capacity of 120000 tons (no new capacity), capacity utilization rate of 94.74% (year-on-year-5.17pcts); "annual slaughtering 50 million broilers intelligent slaughtering plant project" is expected to be put into production in August 2022, when the total production capacity of chicken fresh products is expected to reach 240000 tons.

3. The company continues to make efforts on the prefabricated food race track, and the product matrix is becoming more and more abundant.

Under the catalysis of the epidemic situation, the domestic prefabricated food industry is still in the stage of rapid development, and the company takes advantage of the momentum. The company held an online new product conference this month, a total of 6 Chinese cuisines were launched-Spring Snow Roast Chicken, Spring Xuesheng fried Chicken, stir-fried Chicken Grill, Spicy Chicken shredded, Steamed Chicken with Chili Sauce, double Pepper Chicken; 6 Western cuisine-raw chicken steak, screaming roast chicken wings, Korean fried chicken, German grilled sausage, double protein chicken energy burger, conditioned chicken wing tip. These include recent popular plant protein products. The initial sales channels of this new product include not only international hypermarkets, high-end supermarkets, regional key benchmarking platforms, but also local supermarkets, chain convenience stores and prefabricated food circulation customer groups. at the same time, there is also a layout in WeChat business channels, community group buying and other online sales channels. The launch of the new product will further improve the company's product matrix and strengthen the company's competitiveness in the field of prefabricated dishes. The chicken brand "Shangxiang" jointly built by the company and JD.com has ranked first in JD.com 's fresh chicken sales for five consecutive years. By the end of 2021, the number of JD.com fans has reached 15 million and the brand is well known. "Shangxiang Chicken Wings" won the Jingdong Gold Standard Meat selection Gold Award (the only meat award). In addition, the company has achieved full coverage of B-and C-end users, and customized production for B-end customers at the same time. It is expected that in the future, with the continuous launch of new products, further expansion of brand influence and customer development, the company's performance is expected to continue to grow.

4, profit forecast and rating: at present, the company's new production capacity is still in the climbing stage, and the construction capacity is expected to be put into production in 2022, which will lead to an increase in the company's product sales, and the company's revenue growth is expected to increase with the increase in capacity utilization. The high price of feed raw materials this year has led to pressure on the gross profit margin of the company's products. We believe that with the decline in raw material prices, the company's business profitability may be enhanced, superimposing the company's layout in the field of prefabricated dishes. Taken into account, the company's revenue from 2022 to 2024 is expected to be 2.28622758Universe 3.326 million yuan, the net profit of return to the mother is 0.73 Universe 1.23Universe 0.82 million, the EPS is 0.36 Universe 0.61, respectively, and the corresponding PE is 40.5x/24.0x/16.2x, respectively, maintaining the "overweight" rating.

Risk tips: epidemic risk, raw material supply risk, chicken price fluctuation risk, entrusted breeding risk, environmental protection risk, food safety risk, exchange rate change risk, tax policy risk and so on.