Main points of investment
Leading in the special water feed industry, eel breeding and processing opens the new incremental company to cultivate special aquatic feed for 20 years, the sales volume of the leading product eel feed steadily ranks first in the world for many years, and the market share of many kinds of feed products such as large yellow croaker and grouper ranks first. After listing in 2017, the company acquired Hualong Group horizontally involved in livestock and poultry feed, acquired Jiangxi Xilong longitudinally into the field of eel food, 2021 raised 560 million yuan through non-public offerings, and increased the layout of eel farming-food processing sector. has now completed the "raw material trade-feed-breeding-animal protection services-aquatic products and livestock and poultry products sales-food terminal" of the whole industry chain layout. In 2022, eel farming released fish and contributed to excess performance increment. In the first three quarters, revenue totaled 5.312 billion yuan, an increase of 32.80 percent over the same period last year, and the net profit returned to the mother was 241 million yuan, an increase of 187.26 percent over the same period last year.
Special water feed: consumption upgrades enable special water materials, and the company's market share continues to improve residents' demand for aquatic products to upgrade to special aquatic products. As a result, the special aquaculture industry has developed rapidly and led to a continuous increase in demand for special aquatic feed. The domestic production of special aquatic feed reached 2.208 million tons in 2021, with a compound growth rate of 7.46% in the past 15 years, significantly higher than the 4.39% growth rate of the aquatic feed industry in the same period. With the continuous expansion of the scale of special aquaculture and the improvement of the permeability of special water feed, the special water feed industry still has a broad room for increment.
The company has been ploughing special water feed for 20 years, and its market share continues to increase. The company is the leader of the domestic special aquatic feed industry, with rich product categories, outstanding advantages of eel feed, and feed sales have repeatedly reached new highs. In 2021, the market share of special water feed reached 7.95%. In the first three quarters of 2022, sales reached 155400 tons, an increase of 21.25% over the same period last year. From 2017 to 2021, the average gross profit of special water feed is as high as 20.57%, and the profitability has always been in the leading position in the industry.
Since 2018, the company has vigorously implemented the "ten fish" strategy of special water materials, and strives to achieve national leadership in the production and sales of ten subdivided products such as eel and grouper in the short and medium term. The company continues to expand its special water feed production capacity, with an actual production capacity of about 300000 tons. At the same time, it is actively developing new feed products and improving existing products, and is committed to creating the world's largest special water feed supplier.
Eel culture: the layout of the whole industry chain of eel, deepening the national eel brand eel fry completely dependent on natural fishing, the reduction of fish fry will cause a shortage of commercial eel supply in a year's time. China's eel culture technology is mature, with an average survival rate of 80%, 95%. Domestic eel production reached 250700 tons in 2020, accounting for about 80% of the world's total output, ranking first in the world for many years. Eel consumption decreased gradually under the influence of the epidemic, and export orders improved obviously. at the same time, with the increase of export to domestic sales, the localization of eel consumption rose.
The company's eel culture is developing rapidly. The company has achieved its first batch of fish since the fourth quarter of 2021, and exported more than 5800 tons of eel in the first three quarters of 2022, moving towards the target of 8000 tons for the whole year, with a gross profit margin of more than 40%. Compared with other farmers, the company has stable supply of eel seedling resources, advanced culture model, leading culture technology, and has the advantages of scale and the whole industry chain. The company plans to increase and expand the production capacity of live eel by 3850 tons per year, and build a number of eel farms, which is expected to further increase fish production after it is put into production in the future.
The company's food business is beginning to show results. The company has created a variety of well-known roast eel products, set up live broadcast matrix online, and created industry TOP1; offline layout such as central kitchen, Shang Chao, catering and other channels with the help of flow economy, and has now formed a perfect national marketing network layout integrating distribution and sales. At present, the national eel brand is beginning to show its edge. According to Taobao data, in this year's Singles Day marketing campaign, the company's roasted eel brand "Eel Hall" sold more than 30,000 pieces in a single day, and Taobao ranked first in the roast eel category. The company will issue an additional 137 million yuan to expand the production capacity of roasted eel by 3000 tons per year, which is expected to further enhance the added value of the whole eel industry chain business.
Profit forecast and valuation
The company is the leader of the special water feed industry, vigorously implementing the "ten fish" strategy, and striving to create the world's largest special water feed supplier. At the same time, in-depth layout of eel farming and roast eel business, with technology, scale, the whole industry chain and other advantages, is expected to become a new driving force for the company's future performance growth. It is estimated that the company's net profit from 2022 to 2024 will be 3.32 million yuan, 642 million and 838 million yuan respectively, an increase of 296.88 percent, 93.54 percent, 30.62 percent, 0.76, 1.47, 1.92 yuan per share and 23.07, 11.92, respectively, respectively, compared with the same period last year. PE is 9.12 times. Compared with its peers, the average valuation of the comparable company in 2023 is 16.54 times, and the company's valuation of 11.92 times is significantly low, taking into account the high threshold for special aquatic feed technology and the rapid development of the eel farming business with high gross profit margin, the company should enjoy a valuation premium. Cover for the first time, giving a "buy" rating.
Risk hint
(1) risk of price fluctuation of raw materials
(2) supply risk of eel seedlings
(3) risk of natural disasters and epidemic diseases
(4) the risk of eel price fluctuation.