Incident: On March 28, 2023, the company released its 2022 annual report, achieving revenue of 1,609 million yuan, -9% year-on-year; net profit of the mother was 452 million yuan, and net profit for the same period last year was 48 million yuan, -1049% year-on-year. Looking at a single quarter, 2022Q4 achieved operating income of 524 million yuan, +62% year on year; net profit of the mother was 120 million yuan, -1% year on year.
Comment:
The overall slump in the market throughout the year dragged down, and the chicken seedlings business lost money. As the overall market for the white feather chicken industry was relatively sluggish in 2022, the chicken seedlings market was also poor. According to the company announcement, the company released 259 million chicken seedlings in 2022. The average sales price of chicken seedlings was about 2.18 yuan/feather, and the operating cost of a single chicken seedling was about 2.48 yuan/feather, causing the company's chicken seedlings business to lose money. At the same time, due to the overall slump in the chicken seedlings market in 2022, the total asset impairment calculated by the company was about 86 million dollars.
The difficult situation in the chicken seedlings market has reversed, and it is expected that the boom will remain high. Since the new year 2023, the market for white feather chicken stock has reversed at the bottom. The overall price of chicken seedlings has continued to rise, and the price of chicken seedlings has remained at 6 yuan/feather in March. We believe that benefiting from the reduction in production capacity caused by the slump in the market last year, compounded by restrictions on the introduction of ancestral species in the early stages, the White Feather Chicken Seedling Market is expected to achieve a high boom this year, which will help the company's performance to be highly elastic.
The cooked food business is rapidly expanding, and it is expected that it will be burdened. In 2022, the company's chicken products business achieved sales of 71,700 tons throughout the year, achieving sales revenue of 841 million yuan, an increase of 25.78% over the previous year, accounting for 52.30% of total revenue. In 2022, the company's cooked food projects in Penglai and Weifang were officially put into production and operation, marking a further downstream extension of the company's industrial chain layout. At the same time, a Sun company, Hangzhou Minyuehe, was established, which is responsible for e-commerce platform sales of cooked food. Since it is in the early stages of channel construction, the capital investment required for business expansion is large. However, the company's cooked food business has already achieved certain results, and it is expected that it will be able to accumulate a lot of money.
In 2022, Minhe's five private live broadcasts were viewed 250 million times. The products were ranked TOP1 on Douyin's e-commerce chicken industry sales list, TOP2 premium meat stores on Douyin e-commerce, and TOP3 in the food and health industry self-broadcast rankings.
Profit forecasting and investment ratings: We expect the company to achieve operating income of 27.59, 31.07, and 3.166 billion yuan respectively in 2023-2025, and net profit of 469, 593, and 316 million yuan. The corresponding PE for 2023-2025 was 15.51, 12.27, and 23.05x, covering the “recommended” rating for the first time.
Risk warning: risk of fluctuations in the price of chicken seedlings; risk of epidemics in the breeding industry; risk of natural disasters; risk of cooked food business falling short of expectations.