incident. The company released its 2022 semi-annual report: 22H1 achieved total revenue of 2,386 million yuan, +7.1% year on year, net profit of 155 million yuan, compared to -136 million yuan in the same period last year; of this, the 22Q2 company achieved total operating income of 1,163 million yuan in a single quarter, +8.2% year on year, and Guimo's net profit of 45 million yuan, +125.9% year on year.
Salmon revenue grew steadily, and subsidiary Australis turned a loss into a profit. 22H1's salmon revenue increased 13.9% year-on-year to 1,769 million yuan, of which the Chilean subsidiary Australis's revenue increased 9.6% year-on-year to 1,684 million yuan, achieving net profit of 317 million yuan (-24 million yuan in the same period last year). In terms of volume and price, Australis's sales volume was -21.8% year-on-year to 35,900 tons of WFE. We think the main reason was the pace of harvest; the average sales price was +40.2% year on year. We think the main reason was: 1) the rise in salmon prices due to global market recovery and supply-side shortages, 2) the company's product structure was upgraded, and value-added product sales accounted for +2.68pct to 9.1% year-on-year. The company expects to harvest 95,500 tons of WFE in '22, up 4.3% from the quarterly forecast. Currently, the price of salmon has declined somewhat. We think it may be related to entering a low season for traditional consumption. It is expected that salmon prices will remain high under a tight balance between supply and demand over a long period of time. 22H1's pollock and Arctic sweet shrimp business revenue stopped falling and rebounded. Revenue was +10.0% year on year to 455 million yuan, and gross margin was +14.19pct to 17.3% year on year. Mainly due to strong sales and short supply in the pollock market, domestic sweet shrimp prices continued to be high.
The rise in salmon prices was compounded by structural upgrades, and 22H1's profitability improved markedly. The net interest rate of 22H1 was +12.62pct to 6.5% year on year, mainly benefiting from: 1) the company's gross margin increased sharply due to rising salmon prices and product structure upgrades, which increased 17.38pct to 17.1% year on year, 2) earnings from changes in fair value increased +566.9% year on year to 208 million yuan (revenue share +7.32pct year on year), mainly due to the increase in the market price of salmon and the recovery in the fair value of expendable biological assets. We believe that as large-scale smart factories are put into operation in 12 districts, commodity prices are adjusted, formula improvements are reduced, and the company's cost side is expected to be further optimized.
The net interest rate to the mother in 22Q2 was +2.01pct to 3.9% year on year.
Strengthen the expansion of the domestic market and continue to improve the product matrix. 22H1 has established strategic partnerships with many factories in South China and East China, and will continue to set up joint plants in the second half of the year to promote omni-channel coverage in China. The company strengthened brand promotion, continued consumer development, and accelerated the penetration of the Chinese salmon market.
In April '22, the “Jiawo Fresh” brand collaborated with the new retail brand Chaopu to launch chilled salmon products, which were well received by consumers, and the business achieved rapid growth; Fanli flavor prepared products were first launched on the Beijing Hema platform. The “Poopy Bear” brand continues to enrich its product matrix, developing new lunch meat series, fresh steamed series, and baby-standard jam series products; actively expanding offline mother and child channels, with products effectively covering 17 provinces and cities and more than 500 offline stores.
Profit forecasts and investment recommendations. We expect the company's EPS for 2022-2024 to be 1.50, 2.31, and 3.08 yuan/share, respectively. Referring to the valuation of A-shares comparable companies, the company was given 20-25 times P/E in 2022. The corresponding reasonable value range was 30.04-37.55 yuan, maintaining the “superior market” rating.
Risk warning. Repeated COVID-19 pandemics, fluctuating feed costs, risk of natural disasters, food safety risks.