Event

According to the company's report for the third quarter of 2022, the company realized revenue of 2.719 billion yuan in the first three quarters, an increase of 24.39% over the same period last year, and a net profit of 97.2292 million yuan, an increase of 1061.80% over the same period last year. 2022Q3 realized revenue of 1.107 billion yuan, an increase of 40.00% over the same period last year, an increase of 31.23% over the previous year, and a net profit of 92.3531 million yuan.

Brief comment

1. The prosperity of aquaculture business led to a significant increase in the company's performance in the third quarter.

In the first three quarters of 2022, the company achieved revenue of 2.719 billion yuan, an increase of 24.39% over the same period last year, and its net profit was 97.2292 million yuan, an increase of 1061.8% over the same period last year. 2022Q3 achieved revenue of 1.107 billion yuan, an increase of 40.00% over the same period last year, an increase of 31.23% over the previous year, and its net profit was 92.3531 million yuan, turning a loss into a profit compared with the previous month, mainly due to the increase in sales of live poultry and chilled products and the rise in product prices.

From the perspective of profit margin, the company's 2022Q3 sales gross margin is 22.55% (year-on-year + 3.98pcts, month-on-month + 9.58pcts), and net sales margin is 8.79% (year-on-year + 9.22pcts, month-on-month + 9.50pcts).

From the expense point of view, the company's 2022Q3 sales expenses are 109 million yuan (year-on-year-12.33%, month-on-month + 32.10%), management expenses are 22.2297 million yuan (year-on-year + 14.61%, month-on-month + 9.51%), and financial expenses are 4.3558 million yuan (year-on-year + 16.50%, month-on-month ratio-0.54%). This is mainly due to the increase in borrowing and the increase in interest expenses caused by the issuance of convertible bonds. The R & D cost is 8.803 million yuan (year-on-year + 100.80%, month-on-month + 14.36%), mainly due to the company's increased investment in poultry breed research and development and food research and development.

2. The live poultry business has turned from loss to profit, and the ice fresh business has developed steadily.

① Live Poultry sector: 2022Q3 Company sells 11.6553 million live birds (year-on-year + 34.97%, month-on-month + 24.00%), with an average sales price of 15.04 yuan / kg (year-on-year + 38.24%, month-on-month + 25.65%), achieving sales revenue of 315 million yuan (year-on-year + 89.76%, month-on-month + 52.91%). Affected by the rise in feed prices, the full cost of the company's 2022Q3 live poultry business is expected to rise slightly compared with 2022Q2. Taken together, we expect the company's live bird sector to contribute more than 50 million yuan, which is more profitable than 2022Q2. Looking forward to 2022Q4, yellow chicken supply is tight, demand is stable and increasing, superimposed with high pig prices, yellow chicken prices are expected to maintain a booming market; taking into account the company's relatively stable breeding costs, steady growth in production volume, live poultry business is expected to maintain a good profit.

② chilled plate: benefiting from the booming price of live poultry, the price of the company's chilled food business is higher than that of 2022Q2; the third quarter is the peak consumption season, and the company's sales of chilled products are about 25000 tons, which is also higher than that of 2022Q2; the rising cost of live poultry farming drives up the cost of chilled business; taken into account, it is expected that 2022Q3 this sector may contribute more than 30 million yuan.

Under the support of 2022Q4 consumption season, product prices and sales may still improve, superimposed cost control may be enhanced, and the profitability of the chilled business may be further improved.

3. Profit forecast and rating: the price of yellow chicken continues to be booming, and the company's live poultry business benefits significantly; the chilled business maintains a relatively steady growth trend. Taking all things into consideration, we expect the company to achieve a revenue of 3.900x4552xpx in 2022-2024, a net profit of 1.80pm, 2.41m, 2.88 per share for EPS, and 23.2x/17.3x/14.3x for PE, respectively, maintaining a "buy" rating.

Risk hints: the risk of large fluctuations in feed raw material prices, the risk of outbreaks of animal diseases such as bird flu, the risk that the company's scale expansion is not up to expectations, and the risk of depressed terminal demand caused by the outbreak.