What happened: the company disclosed its annual report 2021 and quarterly report 2022. Over the past 21 years, the company has achieved a total revenue of 714 million yuan, yoy+32.29%, return net profit of 81.8456 million yuan, yoy+62.88%. In the first quarter of 22, the revenue was 188 million yuan, and the net profit of yoy+27.41%, was 13.6439 million yuan, yoy-21.23%.

The quantity and price of commodity generation chicks have risen together, and the performance is expected to continue to grow in the past 22 years. Benefit from the rising price of eggs, laying hens make up the bar actively, the company's commodity prices rise on behalf of chicks, leading to a high increase in the performance of the company. In 21 years, the company sold a total of 173 million commercial generation chicks, and the average price of yoy+20.10%; was 3.42 yuan per feather, up 0.47 yuan per feather compared with the same period last year. The gross profit margin of chicken products rose 1.05pcts to 21.61 percent over the same period last year. The company's commodity generation chicks have reached 14.95% of the national market share, an increase of 2.43pcts over the same period last year, ranking in the forefront of the industry. In 22 years, Q1 was affected by the traffic congestion caused by COVID-19 's epidemic, the company's transportation costs for breeding eggs have risen, and profits have declined, but we believe that at present, the stock of laying hens is still low, and the demand for supplementary hurdles for laying hens is still relatively positive. it is expected to form a strong support for the price of 22-year commodity generation chicks, and the company's annual performance is still expected to continue to grow.

The construction of production capacity is advancing steadily, and the scale of business continues to expand. The company steadily promotes the construction of breeding and incubation capacity. In 21 years, the company expanded the Minning aquaculture department, and the second phase of the Zuoqi project was also completed and put into production. The superposition company introduced 50,000 ancestral breeding hens from the United States in June 21, and the new breeding capacity is expected to be released gradually. In terms of production capacity, the company's Alashan chicken breeding project, Hongsibao intelligent agricultural industry demonstration park project and Changde incubation project have all been built, and the company's production capacity is expected to grow rapidly after it is completed and put into production in the future. the scale of the business is expected to continue to expand.

Further expand the channels of major customers and speed up the distribution of the national market. The company conforms to the large-scale development trend of laying hen breeding and further expands the channels of major customers. In 21 years, the company's direct sales accounted for 64.33% of customer sales, an increase of 23.47pcts over the same period last year, of which sales to CP Group reached 37.4983 million yuan, a sharp increase of 197.98% over the same period last year, accounting for 5.25%. The gross profit margin of the company's direct sales channel is 24.04%, which is higher than that of the same period last year (0.65pcts). The gross profit margin is higher than that of the distribution model (4.45pcts), which reflects the company's excellent bargaining power in major customer channels. Based on the advantages of traditional farming in the north, the company will further expand the southern market and speed up the national market layout. In 21 years, the company's sales revenue in southwest China was 26.4381 million yuan, a substantial increase of 233.91% over the same period last year. At present, the Hyland pink shell laying hens introduced by the company have been successfully approved by the Ministry of Agriculture and Village, and will be used as the main breed to be promoted in the southern market in the future, and the steady progress of the company's Changde incubation project will be superimposed on the steady progress of the company's Changde incubation project. it is expected to achieve the basic improvement of the company's national sales layout. In the long run, under the background of the continuous promotion of the scale of layer breeding in the lower reaches, the company, as the leading enterprise in the egg breeding industry, is expected to fully benefit from its own stable and high-quality chicken seedling supply advantages and outstanding sales channel advantages. continue to increase market share.

Company profit forecast and investment rating: we expect the company's net profit from 2022 to 2024 to be 1.10,1.23 and 175 million yuan respectively, corresponding to EPS 0.59,0.66 and 0.93 yuan respectively. The current stock price corresponds to the PE value of 28.22,25.26,17.85 times for 22-24 years respectively. It is optimistic that the company's breeding and incubation capacity will continue to expand and the national sales channel will continue to improve, and the market share is expected to increase gradually. Maintain the recommended rating.

Risk tips: animal disease risk, commodity chicken price fluctuations, the company's capacity expansion is not as expected.