Overview of events
The company released the 2020 mid-term report, during the reporting period, the company achieved operating income of 314 million yuan, yoy+149.68%; to achieve a net profit of 64 million yuan, yoy+63.21%.
In the second quarter alone, the company achieved operating income of 123 million yuan, yoy+286.76%; achieved a net profit of 15 million yuan, yoy+105.85%.
Analysis and judgment:
Deep ploughing meat products for many years, characteristic and brand meat products showed bright performance during the reporting period, the company faced the external environment of uncertain epidemic situation and actively developed online e-commerce channels; at the same time, the company continued to upgrade and innovate its products, expanding its product structure from relatively single ham products to characteristic meat products such as ham, sausage, soy sauce, light bacon, bacon and sausage. 2020H1, the company's characteristic meat products achieved revenue of 63.52 million yuan, an increase of 123.90% over the same period last year; brand meat achieved revenue of 160 million yuan, a substantial increase over the same period last year, accounting for 51.03% of revenue, an eye-catching performance. In terms of gross profit margin, affected by the increase in revenue from specialty meat products and brand meat corresponding to the increase in costs, during the reporting period, the company's gross profit margin was 29.71%, down 16.23pct from the same period last year.
Power e-commerce channel, high growth can be expected in the future
During the epidemic, the company actively innovated in order to meet the household consumption needs of consumers, and achieved good performance: on the one hand, the company adjusted the product structure to increase characteristic meat products with small packaging, standardization and suitable for family consumption to meet consumers' home consumption needs in a specific period of time. On the other hand, in addition to continuing to cultivate third-party platforms such as Tmall, JD.com and Taobao, the company also made efforts to promote live e-commerce, content e-commerce, social e-commerce and fresh e-commerce through all channels. During the reporting period, the company's online sales were 92.7256 million yuan, an increase of 112.78% year-on-year, accounting for 65.69% of sales revenue (excluding brand meat business). In the future, the company will continue to connect various institutions and platforms to promote the rapid growth of the company's revenue.
The contradiction between supply and demand of live pigs is gradually alleviated, and the company's gross profit margin may rise in 2019. Affected by the classical swine fever epidemic in Africa, the elimination range of pig production capacity once exceeded 40%, far exceeding the all-time high. Under the background of relatively rigid pork demand, the contradiction between supply and demand of live pigs has repeatedly supported pig prices to hit record highs. Under the stimulation of high profits in breeding, the industry capacity has accelerated its expansion, which has led to the first month-on-month positive growth in the stock of fertile sows in October 2019 and the first year-on-year positive growth in June 2020. With the rapid release of pig production capacity, the contradiction between supply and demand of live pigs is expected to be alleviated, driving pig prices into a downward cycle.
The company's main products are the procurement of fresh pork as the main raw materials, pig prices will drive the company ham, specialty meat products, brand meat and other product costs down, thickening the company's profit margins.
Investment suggestion
We estimate that from 2020 to 2022, the company's operating income will be 650 Universe 904 Universe 1,249 million Yuan respectively, the net profit from its parent will be 1.40 Universe 2.21 Plus 298 million, the EPS will be 0.14 Plus 0.23 Plus 0.31, and the current share price will correspond to 5032 Placement 24X, giving it an "overweight" rating for the first time.
Risk hint
Food safety risk, epidemic uncertainty risk, pig price downward risk is lower than expected risk.