Events:
The company released its annual report in 2019, with revenue of 2.4 billion in 2019, a decrease of 14.3% compared with the same period last year, and a net profit of 141 million, turning a loss into profit compared with the same period last year. The profit distribution plan is to add 3 shares for every 10 shares to all shareholders and distribute a cash dividend of 0.2 yuan.
1. The performance turned from loss to profit, mainly benefiting from the profit of aquaculture business and the income of equity transfer.
In 2019, the company sold 393700 live pigs, an increase of 12.94 percent over the same period last year, contributing income of 727 million, an increase of 108.99 percent over the same period last year, and a contribution gross profit of 214 million, an increase of 668.36 percent over the same period last year, with an average profit of 544 yuan per head. During the reporting period, the company transferred 25% of the equity of Xinda Animal Husbandry, affecting the net profit after tax of 92.8953 million yuan, accounting for about 60% of the net profit of the current period.
2. Feed sector: thanks to the recovery of the industry, sales are expected to return to the growth lane
In 2019, the development of the company's feed business was affected to a certain extent due to the reduction of feed demand due to the decline in pig stocks across the country. Feed sales for the whole year were 598800 tons, down 22.15% from the same period last year. The gross profit margin was 14.3%, an increase of 2.53 percentage points over the same period last year. The main reason for the increase in gross profit margin is that the company has increased the development and promotion of other feed products with high gross profit margin. It is expected that in the next 2-3 years, with the rebound of the national pig stock, the industry demand will gradually recover, superimposing the impact of the expansion of the company's own breeding business, feed business is expected to return to growth.
3. Aquaculture sector: productive biological assets increased by 109% over the same period last year
At the end of the reporting period, the company's productive biological assets were 81.5109 million yuan, an increase of 15% month-on-month and 109% year-on-year. The growth of productive biological assets is mainly due to the commissioning of Tielijin new farmers. It is estimated that Tielijin Xinnong will produce 300000 commercial pigs in 2020, and the Fujian Yichun base will also contribute to the increase of commercial pigs with the commissioning of the expansion project. We expect the total number of commercial pigs to reach 800000 in the whole year, an increase of 100% over the same period last year.
During the reporting period, the company put forward the "five-year (2020-2024) Development Strategic Plan", which plans to vigorously develop pig farming business in four key areas, namely, Northeast, Central, South and East China, and strive to achieve 5.6 million pigs per year in 2024. feed sales of 3 million tons. In 2020, the company launched a restricted stock incentive scheme designed to stimulate the execution of the breeding team, covering all senior executives and core business backbones. In addition, the company issued a fixed increase plan, which intends to raise 859 million yuan. The company's major shareholders and core executives promise to subscribe in full to raise capital. These measures show the determination and confidence of the company to strategically promote the development of aquaculture business. Based on this, we are very optimistic about the future development of aquaculture business.
Profit Forecast:
It is estimated that the number of pigs produced by the company in 20202021 is expected to be 800000 / 150,000,000 pigs in 2022, and its net profit in 202021 is expected to be 903 million / 1.407 million, respectively, corresponding to an EPS of 1.60, 2.15, 2.50 (total share capital is the total share capital after a non-public offering), with a target price of 16.00 yuan.
Risk Tips:
1. The risk of a sudden major epidemic: large-scale diseases such as African classical swine fever or bird flu will occur in the process of livestock breeding, which will lead to the death of livestock and have a greater negative impact on the consumer psychology of the general public, resulting in a shrinking market demand. thus affecting the profitability of the industry and related enterprises.
2, the risk that the price is lower than expected: the price of livestock and meat falls sharply or rises less than the rising rate of cost, which affects the profitability of the industry and related companies, and there is a risk that it is difficult to sustain growth or even decline in future performance.
3. The risk of price fluctuation of raw materials: the output and prices of the main raw materials and agricultural products used in the company's production and operation are greatly affected by uncontrollable factors such as weather and market conditions. If the prices of major raw materials fluctuate sharply in the future, it will affect the profitability of the industry and related companies.
4. The listing of non-plague vaccine: the listing of effective non-plague vaccine will fundamentally block the spread of non-plague epidemic, the progress of capacity removal will be affected, and the increase of pig price may not meet expectations.
5. After the outbreak of COVID-19 epidemic, the opening time and operating rate of the slaughterhouse were lower than expected, the pig price was greatly affected, and the consumption was lower than expected.