Incident: The company released its 2022 semi-annual report. The company achieved revenue of 2,386 million yuan in the first half of 2022, an increase of 7.14% over the previous year; the net profit of the mother was 155 million yuan, an increase of 213.6% over the previous year.
Salmon supply continued to be tight, and profit levels rose sharply and recoverably in the first half of 2022. In the first half of 2022, the company achieved revenue of 2,386 billion yuan, an increase of 7.14% over the previous year. Of these, salmon products achieved revenue of 1,769 million yuan (+13.91%), with a gross margin of 18.25%; seafood such as pollock and Arctic sweet shrimp achieved revenue of 455 million yuan (+10.02%), with a gross margin of 17.28%. The subsidiary Australis achieved revenue of 1,684 million yuan, an increase of 9.64% over the previous year, and profitability increased dramatically. The average gross margin of 2022H1 was 19.9%, an increase of 20.92 pct over the previous year. Mainly benefiting from the impact of the global salmon supply shortage and continued recovery in demand this year, global salmon prices have risen markedly since the first quarter. According to research firm Kontali's report, the global supply of 2022H1 Atlantic salmon fell about 6% year on year; of these, the 202H1 Norwegian Atlantic salmon harvest was 642 million tons (WFE), down 5% year on year; Chile's Atlantic salmon harvest during the same period was 351,000 tons (WFE), down 1% year on year; global salmon supply shortages are expected to be difficult to ease in the next few years, and supply will continue to be tight.
Looking at the volume and price split, 2022H1 Australis salmon received 38,200 tons (Q1-19,800 tons, Q2-183,000 tons) and sold 35,900 tons (Q1-18,200 tons, Q2-17,700 tons); the unit sales price of Atlantic salmon in the first half of the year was 7.05 USD/kg WFE (Q1-6.91 USD/kg, Q2-7.19 USD/kg), up 46.9% year on year; shipping cost was 4.16 USD/kg WFE, year on year Up 19.5%. Furthermore, the company expects to receive 95,500 tons of salmon for the full year of 2022, of which about 32,400 tons will be received in Q3 and 24,600 tons in Q4.
Control scarce license license resources and integrate the operation of the entire industry chain
Through the acquisition of Australis, a leading salmon company, the company has entered a high-value link in the industrial chain. Relying on scarce resources such as licenses, the company is expected to further strengthen industry barriers; it is also expected to benefit from the tight balance between supply and demand in the salmon market for a long time. As overseas demand gradually picks up, the prosperity of the salmon industry continues to rise, the company's revenue continues to grow, and profitability has increased dramatically. At the same time, the company has achieved integrated operation of the whole industry chain for the salmon business, from egg incubation, freshwater breeding, seawater aquaculture, harvesting and processing to brand sales, creating an ecological closed loop in the industrial chain, and has unique advantages in all process steps. “overseas+domestic” and “offline+online” are making efforts at both ends.
Investment advice
We believe that salmon, as the mainstream consumer fish product in Europe and the US, is in a rigid demand; while farming licenses and harvests have become scarce resources around the world. The corresponding market value of the company's salmon shipments is far lower than that of major overseas leading companies (the average market value of leading overseas companies received was about 2.1 billion yuan/10,000 tons, and the company harvested 84,000 tons in 21 years). The company has a scarce salmon farming license and industrial chain layout. It is expected that it will benefit from overseas and domestic consumption recovery trends one after another, and seafood sales revenue is expected to rise rapidly. We expect the company's revenue for 2022-24 to be 648/72.7/85.1 billion yuan and net profit of 3.8/55/ 7.1 billion yuan, maintaining the “buy” rating.
Risk warning: risk of natural disasters, risk of market price fluctuations for raw materials and products, risk of trade environment and exchange rates, risk of sales falling short of expectations,