Incident: The company recently released its 2022 report and the first quarter report of 2023. In 2022, Guimu achieved revenue of 5.995 billion yuan, an increase of 86.12%; Guimu's net profit was 773 million yuan, an increase of 98.56%; in the first quarter of 2023, revenue was 6.663 billion yuan, an increase of 1347.36%; and Guimu's net profit was 1,219 billion yuan, an increase of 960.38%. The reviews are as follows:
The aquaculture business developed rapidly, and costs dropped significantly in '22. In 2022, the four major aquaculture bases, the Zhanjiang Xuwen Project, the Maoming Gaozhou Project, the Hainan Wenchang Project, and the Guangxi Hezhou Project, were all fully introduced and put into operation. The capacity utilization rate of the project increased rapidly, and the listing grew rapidly. A total of 1,264,400 pigs were sold throughout the year, an increase of 856.42% over the same period. In the first quarter of '23, a total of 412,800 pigs were sold, a significant increase over the same period last year. In terms of production efficiency and cost control, in 2022, the annual survival rate of the core Gaozhou project in conservation and fattening was about 93.5%, with an average survival rate of nearly 90% throughout the process. In the first quarter of '23, the average weight of the company's fattening pigs was about 112 kg-113 kg, PSY was about 24, and the market rate of fattening pigs was about 86%. According to estimates, in 2022, the production cost of fattening pigs was about 17.1 yuan/kg, a significant drop from the same period last year; in the first quarter of '23, the average production cost of fattening pigs was about 17.4 yuan/kg, and the production cost of weaned piglets was about 440 yuan/head. The increase in costs in the first quarter was mainly due to seasonal decline in productivity due to the impact of epidemics such as blue ear and influenza in winter and spring.
The company actively implements and continuously optimizes a high-standard building settlement farming model. There is room for further improvement in aquaculture production efficiency. As capacity utilization and production efficiency both increase, production costs are expected to decline on a trend.
The real estate business is expected to contribute most of the profits this year. In 2022, the company's main sales projects were the Shanhai Imperial Garden and Shanhai Mansion projects. Among them, the total value of the Shanhai Imperial Garden project was about 11 billion yuan. The total value of the Shanhai mansion project was processed in batches from the end of December 2022 to the beginning of January 2023. The carry-over sales area in 2022 was about 43,161 square meters, with carry-over revenue of 1,479 billion yuan, accounting for 73.16% of the total gross profit, and carry-over revenue for the first quarter of '23; the total value of the Shanhai mansion project was about 3.8 billion yuan. Currently, pre-sales of the Shanhai mansion project are about 3.8 billion yuan, and the current pre-sale is over 1 billion yuan 100 million yuan, which is expected to be delivered in the second half of 2023.
Other businesses are developing smoothly. In 2022, the feed business sold 215,700 tons of feed. The sales volume was basically the same as the previous year, achieving sales revenue of 886 million yuan, a slight increase over the previous year. The poultry business achieved revenue of 70.242 million yuan, an increase of about 11% over the same period.
Profit forecasts and investment recommendations. The company's pig breeding business has an advantage in its location and model is quite advanced. We are optimistic about the long-term development of its breeding business. It was covered for the first time and gave it a “buy” rating.
The company's net profit for 23/24 is estimated to be 167/592 million yuan, corresponding to PE 125/35 times.
Risk warning: The rise in the risk of the epidemic in the breeding business caused the listing to fall short of expectations, pig price trends fell short of expectations, etc.