Event
On July 14, 2023, Longda Food issued a half-year performance forecast for 2023.
Main points of investment
Low pig prices put pressure on performance, and significant pressure on the cost side.
According to the performance forecast, 2023H1 returns a net profit loss of 5.8-70 million yuan, deducting a non-net profit loss of 3.4-460 million yuan. Among them, the net profit loss of 2023Q2 is 6.01-721 million yuan, and the non-net profit loss is 3.63-483 million yuan. Performance short-term pressure, mainly: 1) pig prices remain depressed and biological assets disposal losses, breeding sector losses; 2) the stock of biological assets and inventory meat inventory price reduction preparation.
With continuous prefabricated dishes, B-end is expected to recover.
Prepared dishes: the company will continue to promote the prefabricated vegetables as the core food main strategy, this year will focus on fat sausage category, in the large B, small and medium B, C end of the overall system building. The barbecue sausage series, as the second echelon single product, has launched a series of volcanic stone barbecue sausage, fried sausage and 0 added sausage, as well as a series of pure sausage products aimed at both B and C, mainly to adjust the income structure in the short term, continue to increase the proportion of the food sector, and expand the income scale of prefabricated dishes. Adhere to B-side-based, C-side as a supplement, full-channel coverage. As the support of food business, the breeding and slaughtering plate provides a stable supply of raw materials for the downstream food sector. Channel end: through solidifying the old and opening the new, we will extend horizontally and vertically to the big B channel, which has advantages; for small and medium-sized B channels, we will continue to cultivate core dealers, dominated by fat intestines, mainly based on the advantages of raw materials, the development of process formula advantages accumulated by major customers, and strong product power. C-end around the new retail, with JD.com, Dingdong (Cayman) Limited, Meituan and other platforms continue to volume.
Profit forecast
We are optimistic about the transformation of the company to cut into the prefabricated food track, and the depressed pig prices are expected to improve in the third quarter. According to the performance forecast, we slightly adjust the EPS for 2023-2025 to 0.02, 0.22, 0.38 yuan respectively (the previous value is 0.24, 0.41, 0.70 respectively), and the current stock price corresponding to PE is 473-35-21 times, maintaining the "buy".
Investment rating.
Risk hint
Macroeconomic downside risk, pig price fluctuation risk, the progress of prefabricated food is not as expected, the recovery of pig production capacity is not as expected, and so on.