Benefiting from the recovery of yellow chicken prices, the company's performance rebounded significantly in the first half of the year compared with the same period last year. The company's 2022H1 realized operating income of 1.628 billion yuan, + 16.71% over the same period last year, and realized a net profit of 4.8761 million yuan belonging to the owner of the parent company, + 196.54% over the same period last year. The recovery in performance over the same period last year was mainly due to a marked increase in the price of yellow chicken compared with the same period last year. Specifically, the company's 2022H1 sold a total of 1814.85 million commercial chickens, an increase of 10.99% over the same period last year, while benefiting from the elimination of production capacity. The average price of commercial chicken sales in the second quarter began to pick up month-on-month. Among them, the average sales price in April, May and June rose 10.9%, 34.38% and 45.85% respectively over the same period last year. However, due to the cost-side pressure caused by the sharp rise in feed raw material prices, the company's 2022Q2 profit is still under pressure.
The elimination of yellow-feathered chicken capacity is accelerated, and industry profits are expected to continue to pick up. As of July 31, 2022, there were 2.68 million sets of ancestral chicken stock (in production + reserve), an increase of 3.98% compared with the same period last year; 22.79 million sets of parent generation stock (in production + reserve), down 4.28% from the same period last year; and 5.12% lower than the same period in 2019. After more than a year of depressed prices in the yellow feather broiler market, the parental breeder stock column is currently at a new low level in three years. Further, judging from the performance of the company's live poultry business, affected by the renewed rise in grain prices in the first half of the year, the profits of the yellow feather chicken breeding end are still under obvious pressure. the gross profit margin of the company's live poultry business decreased by 8.91pct to-5.01% compared with the same period last year, and gross profit decreased by 261.54% to-20.5257 million yuan compared with the same period last year.
To sum up, we believe that profit pressure is expected to promote the continuation of production capacity in the industry, and it is expected that the profits of yellow feather chicken farming may continue to improve from 2022, and the company's annual performance is optimistic.
The profitability of the chilled business has been gradually verified, and the company is optimistic about the growth space under the chilled trend. The revenue of 2022H1's chilled business was 980 million yuan, an increase of 16.95% over the same period last year, accounting for 60.20% of the total income. While the live poultry business was still under pressure, the gross profit margin of the chilled business increased by 3.92pct to 26.52% over the same period last year, and gross profit increased by 37.57% to 260 million yuan over the same period last year.
The weak cycle and high gross margin attributes of the business model are gradually verified. Considering that the chilled proportion of domestic yellow chicken consumption is low, there is plenty of room for growth driven by the policy promotion of restricting live poultry trade and consumption upgrading in the future, and the company has established a core moat through "channel + logistics + whole industry chain operation". In the future, it is expected to fully benefit the growth dividend brought by the chilled trend of yellow chicken.
Risk hint: there is an uncontrollable epidemic in the process of breeding, and food prices rise sharply to increase feed costs.
Investment advice: the company is deep ploughing chilled, gathering C-end high-quality yellow feather chicken target, short-term optimistic about the beta market brought by chicken prices, medium-and long-term optimistic about the company's growth space under the chilled trend, maintain the "buy" rating. Taking into account the obvious pressure on the cost side of the company caused by the rise in grain prices in the first half of the year, we reduced the company's 22-23 net profit forecast to 0.48 million yuan (originally 153 million yuan), and estimated that the 24-year net profit was 217 million yuan, the corresponding EPS for 22-24 years was 0.47x1.47x2.13 yuan, and the corresponding share price PE was 88.7pm, 28.3pm, 19.6X.