Main points of investment:
The company released its third quarterly report for 2022. On the evening of October 20, the company released its third quarterly report for 2022. In the first three quarters of 2022, the company achieved operating income of 5.31 billion yuan, + 32.8% year-on-year, and net profit of 241 million yuan, + 187.3%, compared with the same period last year.
In the third quarter alone, the company achieved operating income of 2 billion yuan, + 27.5% year-on-year, and net profit of 90.808 million yuan, + 293.9% over the same period last year. On September 28, the company has disclosed the pre-increase announcement (the estimated net profit for the third quarter is 90.12 million yuan), and the main performance indicators are basically consistent with the pre-increase announcement.
The feed business grew steadily. In the first three quarters of 2022, the company sold 155000 tons of special aquatic feed, + 21.3% year-on-year, and sales revenue of 1.434 billion yuan, + 19.1% over the same period last year. Sales of livestock and poultry feed reached 901000 tons, + 16.8% over the same period last year, and sales income reached 3.034 billion yuan, + 26.3% compared with the same period last year.
Eel culture: the eel price stage is under pressure, the cost continues to be optimized, and the profitability is realized steadily. In the first three quarters of 2022, the company achieved commercial eel sales of 5819.4 tons. From a quarterly point of view, Q1/Q2/Q3 realized commercial eel sales of 891, 2500 and 2,428 tons respectively. Due to the high temperature weather in July-August, the rhythm of Q3 eel coming out of the pond was delayed, and quarterly sales decreased slightly compared with the previous quarter (the original plan was 2000 tons of Q3 fish, but the actual fish output is still higher than expected). The operating income of eel culture is 490 million yuan, and the average sales price is about 84,800 yuan / ton. From a quarterly point of view, the average price of Q3 export commodity eel is about 80000 yuan, a month-on-month decline of about 0.5 million yuan / ton. Referring to the average price of Japanese eel and American eel industry (according to Chinese eel net, the average selling price of 2.5p Japanese eel Q3 is 87000 / ton, month-on-month ratio-3.7%, month-on-month ratio 2.5p American eel sales price is 81000 / ton, month-on-month ratio is-7.3%), it is estimated that Q3 company will still maintain the fish production specification of 2.5p-3p, and the net profit contributed by eel culture business is estimated to be 6000-65 million yuan. Net profit per ton fell 20-30, 000 yuan / ton to about 25-26000 yuan. With the increase of fish output season by season, the scale effect appears one after another, and the breeding cost is still in a continuous decline, and the complete cost of the company's commercial eel is expected to drop to less than 55,000 yuan / ton.
It is optimistic that the profits of the eel culture business will continue to increase in 2023. Industry: the catch of supply-side eel seedlings has declined for two consecutive years, and the demand-side-domestic catering demand is expected to recover. It is optimistic that eel prices will continue to rise in 2023. Because the source supply of eel is completely dependent on natural fishing, coupled with an one-year breeding cycle. It means that the supply level of eel in that year will depend on the fishing situation of eel fry in the previous year. From the historical data, there has been a significant decline in the catch of eel fry in three of the past eight years, while the price of eel has increased by varying degrees in the following year (Table 1). After the bumper harvest of eel seedlings in the 2020 fishing season (from the end of 2019 to the beginning of 2022), the harvest of East Asian seedlings in the fishing season from 2019 to 2022 has dropped sharply for two consecutive years, which is expected to support the warming of the bottom of eel prices. the current eel price is still at the bottom of the medium-and long-term cycle. there is plenty of upward elasticity.
Company: consumptive biological assets are growing rapidly, and the number of seedlings is expected to more than double in 2022, ensuring a substantial increase in the scale of eels coming out of the pond in 2023. Referring to the company's mid-2022 report (corresponding to the end of the 2022 eel fry fishing season), as of June 30, the company's expendable biological assets were 848 million yuan, an increase of 58% over the beginning of the year and 198% over the same period in 2021. The number of eel seedlings in the company is about 30 million in 2021, and the size of eel seedlings in the pond is expected to exceed 80 million in 2022, supporting the company's eel production to double in 2023.
Maintain earnings forecasts and maintain "buy" ratings. It is optimistic that eel prices will rise in 2023, and that the scale of the company will continue to increase rapidly. It is estimated that the company's operating income from 2022 to 2024 will be 880%, 10.37 billion yuan, or + 26%, 29%, 19% compared with the same period last year. The net profit returned to the mother was RMB 3.69 million, RMB 7.54 million, compared with the same period last year, which was + 341%, "105%" and 30%. The current share price corresponds to the PE level of 22X/11X/8X, maintaining a "buy" rating.
Risk hint: the price of eel fluctuates greatly; the amount of eel seedling is lower than expected; the price of feed raw materials rises sharply.