Events:
The company released its quarterly report for 2020, with revenue of 616 million in the first quarter, an increase of 2.49% over the same period last year, and a net profit of 68 million, an increase of 723.36% over the same period last year.
1. The aquaculture business contributes most of the profits, and the single-head profit is expected to reach 1400 yuan.
The company sold a total of 70800 live pigs in the first quarter, with the price of Q1 single piglet 1735 yuan (average weight 10kg about), breeding pig price 6000 yuan (average weight 47kg about), and commercial pig price 2800 yuan (average weight 100kg about). It is expected that the company's 2020Q1 pig breeding plate will contribute nearly 98 million to the profit, and the profit per pig is about 1400 yuan.
2. Feed sector: high gross margin continues and sales are expected to pick up.
2020Q1 sells 128000 tons of feed and is expected to contribute nearly 10 million to its profit, with a net profit of about 90 yuan per ton and a 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, the company's feed business sales are expected to pick up.
3. Aquaculture sector: the volume and profits are expected to increase quarter by quarter, and the number of pigs produced by Q2 is expected to double that of Q1, and the number of pigs produced in 2020 is expected to increase significantly compared with the same period last year.
According to the production plan and sales target drawn up by the company at the beginning of the year, combined with the volume of Northeast Iron Power starting from April, Q1~Q4 is expected to account for 7%, 15%, 24% and 54% of the annual volume, respectively. The number of pigs produced by Q2 is expected to double that of Q1, and the number and profits of pigs will increase quarter by quarter.
The company's "five-year (2020-2024) Development Strategic Plan" plans to vigorously develop pig farming business in four key regions, including Northeast, Central, South and East China, and strive to achieve annual pig production of 5.6 million pigs and feed sales of 3 million tons in 2024. In 2020, Q1 launched a restricted stock incentive scheme aimed at stimulating the execution of the breeding team, covering all senior executives and core business backbones; in addition, the company's fixed increase plan, major shareholders and core executives committed to full subscription and fund-raising. These measures demonstrate 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:
According to the company's plan and Q1 performance, we adjust the production volume and the corresponding performance forecast. The estimated live pig production of the company is estimated to be 800000 / 1.6 million / 2.4 million in 2022, and the net profit in 2022 is expected to be 994 million / 1262 and 1.404 billion respectively.
Give the aquaculture, feed and animal protection sectors 7 times, 10 times and 20 times the PE,2020 annual target market value of 7.5 billion, the current market value space of 54.44%, and the target price of 17.33 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.