1. Since 2017, the production capacity of environmental protection has been reduced by more than 20%, and the meat and duck industry has entered a prosperous stage!
In 2017, environmental protection has brought obvious capacity removal to meat and poultry farming, especially waterfowl farming. According to the statistics of the Chinese White-feathered Meat Duck Association, the production capacity of white-feathered meat ducks is expected to have been reduced by more than 20% since the second half of 2017 due to the impact of environmental protection, and the output of white-feathered meat ducks is expected to drop from 25-3 billion to 20-2.5 billion in 2018. The tightening of environmental protection, coupled with the withdrawal of farmers from the round of industrial losses, the production capacity of this cycle has declined significantly.
Recently, the price of meat duck industry chain has risen rapidly, and the right side of the cycle has come! According to the statistics of Wind and Waterfowl net, in May 2018, the price of duck seedlings in the main producing areas reached 4.50 yuan per feather, an increase of 390 percent. (the average monthly price from January to May reached 2.80 yuan per feather, breaking the company's complete cost line). The price of divided duck products reached 8000 yuan per ton, an increase of 20 percent, and the price of duck by-products reached 15500 yuan per ton, an increase of 30 percent.
We think that this round of duck price rise is sustainable in the medium to long term! According to the statistics of the White-feathered Meat Duck Association, the price of parent generation duck seedlings has risen to about twice the cost, and it takes about 20 months to expand production from ancestral generation seedlings to meat ducks.
In the pattern of limited supply of capacity removal, the rise in duck prices in the medium and long term is still sustainable. And the company, as the only target of the A-share meat duck industry chain, will fully benefit from the rise in duck prices!
2. The future "duck king of the world" will benefit from the prosperity of the industry, and the high performance growth in 2018 is expected!
According to the company announcement, in the next 3-5 years, the company will continue to develop towards the strategic orientation of "duck king of the world". At present, the company is the only target of A shares in commercial duck breeding, slaughtering, deep processing and food. The scale of raising ducks in the company continues to expand and its market share continues to increase. According to the company's annual report in 2017, the company's headquarters, Xincai, Weishi and other breeding projects continued to advance, with the slaughtering volume from 61 million in 16 years and 87 million in 17 years to 122 million in 18 years (planned volume), while the scale of white-feathered ducks in the industry decreased significantly due to the impact of environmental protection. the company's market share is expected to increase rapidly.
We expect the company's 18-year performance of 200 million yuan, performance greatly improved! Among them 1) breeding: it is estimated that the company will produce about 200 million ducks in 18 years, of which 100 million will be exported and 90 million will be slaughtered. It is estimated that the complete cost of raising duck seedlings is about 2.7 yuan per feather. 2) Frozen products: in 18 years, it is estimated to be about 270000 tons, of which 210000 tons are frozen ducks, and the complete cost of frozen ducks is estimated to be about 9750 yuan / ton. at present, the profit per ton is about 9750 yuan, and the profit of frozen chickens is 60,000 tons. 3) Down: it is estimated that the income of 2 billion yuan (Xintang Down) in 18 years, the profit is 110 million yuan, and the table is 51%. The net profit of down last year was 88.5 million yuan, and it is expected to grow by 20% a year in the future.
3. The continuous progress of the reform of state-owned enterprises and the continuous increase of management holdings demonstrate the confidence of the company.
According to the company announcement, since 2017, the company has implemented a margin system internally, a performance-to-bet business model has been implemented externally, the management team of subsidiaries has participated in performance binding, and 30% of the excess performance has been allocated to management. Flexible incentive mechanisms are adopted under the state-owned system to promote the improvement of the company's management capacity. On March 27, 2018, the company issued an announcement that managers plan to increase their holdings by not less than 100 million yuan from March 27 to September 26, which further demonstrates the management's confidence in the future development.
4. Investment suggestion: we expect the forecast net profit from 2018 to 2020 to be 2.02 million RMB, EPS0.38/0.49/0.61 RMB, with a target price of 13 RMB, with a "buy" investment rating.
Risk hints: duck price rises below expectations, performance bets fall short of expectations, and trust plans force positions to be closed.