Event: Xiangjia shares achieved operating income of 1.63 billion yuan in the first half of 2022, + 16.7% year-on-year; net profit of 4.876 million yuan, + 196.5%; deducting non-net profit of-3.453 million yuan, + 77.0% of the same period last year.
In the second quarter, the company's operating income was 840 million yuan, year-on-year + 26.2%, home net profit-6.817 million yuan, year-on-year + 48.5%, deduction of non-net profit-10.675 million yuan, year-on-year + 47.6%.
The volume of production increased steadily in the first half of the year, live poultry lost money, and the profitability of chilled products rebounded. (1) in terms of live poultry business, the company's yellow chicken is expected to produce more than 39 million birds in the first half of the year, of which live poultry sales are 1815 million (year-on-year + 11.0%), revenue 410 million (year-on-year + 20.8%) and gross profit margin-5.0% (year-on-year-8.9pct). The single Q2 live poultry sold 9.4 million feathers (year-on-year + 17.5%), and the average sales price was about 12.0 yuan / kg (year-on-year + 15%, month-on-month + 3%). Affected by the rise in raw material prices, Q2 live poultry business is still expected to lose money. (2) for the chilled business, it is estimated that the slaughtering volume in the first half of the year is close to 2100 million feathers (year-on-year + 20%), the revenue of chilled products is 980 million yuan (year-on-year + 16.9%), and the gross profit margin is 26.5% (year-on-year + 3.9pct).
It is estimated that the slaughtering capacity of Q2 alone is 1123 million feathers (+ 11% compared with the same period last year), and the income of chilled products is estimated to be about 500 million yuan. The overall slaughtering and sales volume of the chilled business has maintained a steady increase, and the profitability has rebounded compared with the same period last year.
The production capacity is gradually eliminated, and the price of yellow chicken is booming. Due to the continued low prices in the previous period, the production capacity of yellow chicken has been gradually eliminated from the high level. in July 2022, the Association monitored that the average number of columns in production of grandparents was 1.49 million, which was-1% of the same period last year, and that of parents was 13.66 million, which was-5% of the same period last year. At the end of July, the generation of parents in the production deposit column has been deconstructed by about 14% since the high point in 2020. According to the association, the average price of Q1 and Q2 commodity hairy chickens is about 16.3 yuan / kg and 15.7 yuan / kg, which is + 1% and + 8% compared with the same period last year.
After the price of Q2 bottomed out, Q3 further rose to around 18 yuan / kg. It is expected that as consumption enters the peak season in the second half of the year, the price of yellow chicken will continue the upward trend, and the company's breeding business will turn from deficit to profit.
Aquaculture capacity continues to expand, further layout of high-end pork, egg business. At the end of June, the company's fixed assets were 112.25 billion yuan (year-on-year + 11%), projects under construction were 48.31 billion yuan (year-on-year + 186%), and productive biological assets were 7.42 billion yuan (year-on-year + 28%). The company has a production capacity of 7500 million yellow chickens in 2021 (25% compared with the same period last year), and is expected to approach 9000 million birds in 2022, with a medium-and long-term goal of 200 million birds. In addition, in order to enrich the product category, the company continues to distribute the breeding of live pigs, laying hens and meat pigeons, and further develop poultry and pork prefabricated dishes. In terms of live pigs, the company plans to focus on local categories such as Shimen black pigs and develop medium-and high-end black pork products. at present, it has a slaughtering capacity of 1 million heads, and the first phase plans to raise 10,000 breeding pigs and 200000 commercial pigs, and more than 50,000 commercial pigs are expected in 2022. As for laying hens, the company strives to create high-quality selenium-free eggs with an estimated production capacity of 3 million eggs by the end of the year.
Investment suggestion: as the leader of Huazhong Yellow Chicken, the company takes the lead in transforming chilled products and cultivating brand products. With the expansion of breeding and slaughtering scale, the market share of chilled products is expected to continue to increase. In the short term, after the continuous removal of yellow chicken production capacity, prices have risen in the third quarter, and the company's breeding business is expected to make a substantial turnaround. We estimate that the company's EPS from 2022 to 2024 will be 1.27,1.68,2.05 yuan respectively, based on the closing price on August 22, 2022, corresponding to PE of 33.7,25.4,20.8 times, maintaining the "prudent overweight" rating.
Risk hints: animal diseases, fluctuations in livestock and poultry prices, sharp increases in raw material prices, and policy changes