Events:
In the first half of 2022, the company realized operating income of 3.31 billion yuan, an increase of 36.3% over the same period last year, and its net profit was 150 million yuan, an increase of 146.9% over the same period last year. Among them, revenue and net profit in the second quarter were 1.84 billion yuan and 110 million yuan respectively, up 24.4% and 163.5% respectively over the same period last year.
Text of the report:
Eel farming has had a bumper harvest, with both volume and price rising this year and next. The company cut into the field of eel culture in 2020, the eel culture cycle is generally 1.5-2 years, and the scale of the pond began to release in 2022. In the first half of the year, the company sold 3390.85 tons of commodity eel, contributing nearly 300 million yuan in income and more than 120 million yuan in gross profit. At the end of the second quarter, the company's expendable biological assets reached 848 million yuan. According to the fair value of 10 yuan per eel (fry), it is conservatively estimated that the eel stock is more than 80 million. If estimated according to the 3P specification, the total eel output of the company will reach 24000 tons in the next 2 years (of which more than 4000 tons are expected in the second half of 2022). And the company is also strengthening the strategic layout of the breeding end, vigorously and orderly promoting the construction of 10,000 mu industrial base projects in Fujian, Guangdong, Jiangxi, Guangxi, Hunan and Hubei provinces, and the breeding scale will be further expanded in the future. In addition, in the 2022 eel year, Japanese eel seedlings failed to catch, and the catch decreased significantly. The catch of Japanese eel seedlings that can be released in mainland China decreased by about 40% compared with the same period last year, and eel prices are expected to continue to rise.
The category of special water feed is expanded, and the area of livestock and poultry feed is expanded. In the first half of 2022, under the impact of the epidemic and economic fluctuations, the feed business grew steadily, including 90500 tons of special water materials, an increase of 25.6 percent over the same period last year, and 576900 tons of livestock and poultry feed, an increase of 26.0 percent over the same period last year. In the future, the company will rely on the successful experience of the leading eel feed industry, comprehensively promote the "ten fish" strategy, rely on the advantages of technology, brand and talents, and strive for excellence. The goal is to achieve the production and sales of ten varieties of special aquatic feed products in the forefront of the country. In terms of livestock and poultry feed, the company will give full play to its location advantages, actively build factories outside the province while maintaining the leading position in Fujian province, and steadily promote the strategic planning of "building regional leading enterprises of Fujian animal husbandry industry and gradually carrying out national layout".
Profit forecast and rating: in view of the higher-than-expected growth of the company's eel farming scale, we raised the company's net profit in 2022-2024 to 3.25pm 702pm 927 million yuan, EPS 0.75pm 1.61pm 2.13 yuan, corresponding to Pmax E 29.35pm 13.58max 10.28 times. With reference to the comparable company's valuation, the company will be given 15 times PE in 2023, raising its target price to 24.15 yuan and maintaining its buy rating.
Risk hints: eel price fluctuation risk, feed raw material price fluctuation risk, aquatic epidemic risk.