The sales volume of commodity generation chicks increased steadily, and the ancestral generation introduced to strengthen the population, maintaining the "buy" rating Xiaoming shares released the 2021 annual report and the 2022 quarterly report: the company achieved revenue of 714 million yuan (+ 32.29%) in 2021 and net profit of 81.8456 million yuan (+ 62.88%). 2022Q1 achieved a revenue of 188 million yuan (+ 27.41%) and a net profit of 13.6439 million yuan (- 21.23%). In 2021, the sales volume of the company's main commodity generation chicks increased steadily, with annual sales of 173 million chicks (+ 21.0%). The national market share of commodity generation chicks was 12.52%, an increase of 2.48 pct over the same period last year. The average sales price of commodity generation chicks was 3.42 yuan per feather, up 0.47 yuan per feather compared with 2021; the gross profit margin of the main business was 22.46%, an increase of 1.15pct over 2021. Based on the steady growth of the sales volume of the company's commodity surrogate chicks, maintaining the profit forecast of 2022-2023, and adding the forecast for 2024, the company is expected to achieve a net profit of 1.1527pm in 2022-2024, corresponding to an EPS of 0.61 million, and the current stock price corresponds to a PE of 27.524.9, 19.7 times, maintaining the "buy" rating.

The company introduced a large number of ancestral laying hens in 2021, and the population stability and production capacity were strengthened in June 2021. In June 2021, the company introduced a total of 50,000 hens from the United States. After China lifted restrictions on American poultry and poultry products, the company introduced customs breeder hens directly from the United States for the first time, accounting for 31.83% of the total number of ancestral egg breeders imported overseas in 2021. With a high incidence of bird flu in the United States in 2022, restrictions on imports of American poultry and poultry products are expected to continue to strengthen. The introduction of large-scale ancestral laying hens in 2021 has effectively strengthened the population stability and production capacity of parental laying hens in the next two years.

The company actively promotes capacity expansion and maintains a steady growth momentum in breeding capacity. During the 2021 reporting period, the company expanded its Minning business department, built 16 new chicken sheds, and could store 240000 sets of breeding eggs a year. It is estimated that the production capacity of commercial generation chicks will be increased by 1920 million feathers per year. The company's South seed Industry Center (Phase I) project is located in Changde with an investment of 150 million yuan and is expected to cover an area of 100mu. It will mainly build two matching automatic incubation production lines to help the company realize the production capacity layout based on Central and South China and radiating the whole country. The parent seed industry base project of Hongsibao Intelligent Agricultural Industry demonstration Park is located in Wuzhong City, Ningxia, with an investment of 300 million yuan. it is expected that 1 million sets of parent breeding hens will be added after completion. With the continuous release of new production capacity and the full implementation of the company's standardized production management model, it is expected that the company's main business will continue to maintain a good growth momentum in the next few years.

Risk tips: the decline in the price of feed raw materials, the length of loss cycle in pig breeding industry, and so on.