Event

According to the company's report for the third quarter of 2022, the revenue in the first three quarters was 1.826 billion yuan, an increase of 16.97 percent over the same period last year, and the net profit was 77.798 million yuan, an increase of 14.03 percent over the same period last year. 2022Q3 realized revenue of 702 million yuan, an increase of 22.90 percent over the same period last year, an increase of 10.20 percent over the previous year, and a net profit of 35.1002 million yuan, an increase of 15.85 percent and 13.52 percent, respectively.

Brief comment

1. Revenue maintained growth in the first three quarters, while profitability declined slightly.

The company achieved revenue of 1.826 billion yuan (+ 16.97% compared with the same period last year) in the first three quarters of 2022. From the perspective of ① business, in the first three quarters of 2022, the company's revenue from conditioning products was 873 million yuan, accounting for 47.82% of revenue; fresh income was 496 million yuan, accounting for 27.18% of revenue; and income from commercial broilers was 442 million yuan, accounting for 24.19% of revenue. ② sub-regional point of view, the company's revenue in Shandong Province 862 million yuan, accounting for 47.23% of revenue; non-provincial income of 466 million yuan, accounting for 25.51% of revenue; export revenue of 414 million yuan, accounting for 22.66% of revenue; online sales revenue of 83.9583 million yuan, accounting for 4.60% of revenue. ③ 's net profit in the first three quarters of 2022 was 77.798 million yuan, an increase of 14.03 percent over the same period last year.

In terms of profit margin, the company's gross sales margin in the first three quarters was 9.90% (year-0.60pcts) and net sales margin was 4.26% (year-0.11pcts).

In terms of expenses, in the first three quarters of 2022, the company's sales expenses were 40.073 million yuan (year-on-year + 41.91%), and management expenses were 42.7401 million yuan (year-on-year + 60.68%). This is mainly due to the increase in the salary and social security payment base of managers and the service fees of audit, financial customs and other institutions. The financial expenses were-7.2179 million yuan (year-on-year-174.57%), mainly due to the financial income of the funds raised, the decline in loan interest rates and the increase in exchange earnings, while the R & D expenses were 4.8795 million yuan (year-on-year + 58.37%).

2. The price of hairy chicken fluctuated at a high level, and the company's performance increased steadily in the third quarter compared with the previous quarter.

The company's 2022Q3 achieved revenue of 702 million yuan (year-on-year + 22.90%, month-on-month + 10.20%).

From a business point of view, the company's income from 2022Q3 conditioning products is 337 million yuan (month-on-month ratio + 20.64%), fresh income is 160 million yuan (month-on-month ratio + 4.55%), and commodity generation broiler income is 201 million yuan (month-on-month ratio + 1.21%). 2022Q3 achieved a net profit of 35.1002 million yuan (+ 15.85% compared with the same period last year, + 13.52% compared with the previous year), mainly due to the increase in the price of hairy chicken. In terms of profit margin, 2022Q3's gross sales margin is 10.83% (month-on-month + 1.20pcts) and net sales margin is 5.00% (month-on-month + 0.15pcts).

Looking forward to 2022Q4, on the one hand, due to the overall tight supply of commodity generation hairy chickens in the fourth quarter due to the lack of seedlings in the previous hatchery, and the peak season of superimposed consumption is approaching, the price of hairy chickens is expected to remain high; on the other hand, pig prices remain high, and white chicken prices are also supported under the chicken-pig substitution effect. Taking all things into consideration, we believe that the price of 2022Q4 hairy chicken is expected to maintain the boom, and the company is still expected to fully benefit from its operation in the fourth quarter.

3. The field of prefabricated food continues to make efforts, and the bright performance is expected to continue in the fourth quarter.

The company continues to make efforts in the field of chicken condiments (prefabricated vegetables), actively adjust the product structure, and continue to increase the R & D and sales of high-margin products. In terms of product building, following the online release of 12 new Chinese and Western food products in May, 12 new products such as non-fried prefabricated vegetables, double protein chicken energy burger, refrigerated dumbbell chicken breast and plant base points have been launched one after another, resulting in production capacity and sales volume. In terms of channel construction, Shangxiang, a chicken brand jointly built by the company and JD.com, has ranked first in fresh chicken sales for five years in a row. Shangxiang JD.com 's self-operated flagship store currently has more than 19 million fans and continues to lead the industry. In 2022Q4 double 11, double 12 and other promotion activities, as well as New Year's Day, Christmas and other festivals boost, the company's chicken condiments are expected to perform brightly.

4. Profit forecast and rating: chicken prices continue to be booming, and the company's performance is expected to benefit. The company's revenue in 2022-2024 is expected to be 25.78, 32.27, 4.018 billion yuan, return to the mother, net profit is 1.10, 1.61, and EPS is 0.55, respectively, 0.81 and 1.11, respectively, corresponding to 25.4x/17.4x/12.6x, respectively, to maintain "increase".

Rating.

Risk hint: the risk of ① epidemic: diseases such as Newcastle disease and H7N9 may appear in the feeding process of commissioned commercial broilers, which will to a certain extent lead to insufficient supply of raw materials for the company's main products, reduce the market demand for chicken products, affect business performance, and increase expenditure or cost. ② raw material supply risk: if the supply of corn, soybean meal and other raw materials decreases, resulting in unable to meet the company's production demand, it will have a negative impact on the company's performance. Risk of price fluctuation of ③ chicks: if the market price of chicks changes sharply and the company fails to offset the rising price of chicks, it may have a certain impact on the operating performance of the company. ④ other risks: commissioned breeding risk, environmental protection risk, food safety risk, market competition risk, exchange rate change risk.