Core views

In 2023H1, the company achieved revenue of 1,377 billion yuan (+22.53% year on year) and net profit of 137.31 million yuan (YoY -67.84%). The decline in profit was mainly due to ① the average purchase price of chicken seedlings increased by 112.43% year-on-year, and costs increased; ② the slaughter of 50 million broilers in the smart factory year was at a stage where production capacity climbed; ③ the company's scale expansion led to an increase in costs. The company's 2023H1 condiment product revenue was 590 million yuan (+10% year on year), product sales volume was 29,000 tons (+11% year on year), and the unit sales price was 20,405 yuan/ton; the company's condiment export volume was 8,553 tons, which was basically the same as the previous year. The company's 2023H1 fresh food revenue was 4.4 billion yuan (+32% year on year), product sales volume was 66,000 tons (+35% year on year), and the unit sales price was 6,719 yuan/ton. The company 2023H1 launched 16 new prepared food products and continued to create popular products to help business development; at the same time, it increased in-depth cooperation with JD, Sina Weibo, etc. to enhance brand influence. Looking ahead to the second half of the year, the price of chicken seedlings will drop from previous highs or ease the company's cost pressure. Combined with the peak consumption season, product sales will increase, and the company's performance is expected to improve.

occurrences

The company disclosed the 2023 semi-annual report. 2023H1 achieved revenue of 1,377 billion yuan, an increase of 22.53% over the previous year, and net profit of 13.7301 million yuan, a year-on-year decrease of 67.84%.

Brief review

1. Revenue continued to grow, and current performance declined due to multiple factors.

In 2023H1, the company achieved revenue of 1,377 billion yuan (+22.53% year on year) and net profit of 137.31 million yuan (YoY -67.84%). The decline in profit was mainly due to ① the average purchase price of chicken seedlings increased by 112.43% year-on-year, and costs increased; ② the slaughter of 50 million broilers in the smart factory year was at a stage where production capacity climbed; ③ the company's scale expansion led to an increase in costs. The company's gross sales margin for 2023H1 was 7.22% (year-on-year -2.10pcts), and the net sales margin was 1.00% (year-over-year -2.80pcts).

In terms of expenses, the company's 2023H1 sales expenses were 32.4596 million yuan (+32.34%), mainly due to increased promotion fees, employee compensation, and postal and telecommunications expenses; management expenses were 30,4672 million yuan (YoY +16.22%); financial expenses were 3.8417 million yuan (+232.43% YoY), mainly due to the fact that the smart factory that slaughtered 50 million broilers during the reporting period was put into operation. Increased working capital demand and increased bank financing scale; R&D expenses were 3,3814 million yuan (+63.8% YoY), mainly Department employees This is due to an increase in pay.

2. Product sales have increased significantly, and the prepared food business has advanced with products+brands.

The company's 2023H1 condiment product revenue was 590 million yuan (+10% year on year), product sales volume was 29,000 tons (+11% year on year), and the unit sales price was 20,405 yuan/ton; during the reporting period, the company's condiment export volume was 8,553 tons, which was basically the same as the previous year. The company's 2023H1 fresh food revenue was 4.4 billion yuan (+32% year on year), product sales volume was 66,000 tons (+35% year on year), and the unit sales price was 6,719 yuan/ton. In 2023H1, the company exported 12.21 million furry chickens (+19% year on year); raised 36.51 million broilers for listed products (+27% year on year); supplied 154,000 tons of commercial substitute broiler feed (+24% year on year).

The company's prepared food business products and brands are advancing together. ① In terms of products, the company continues to launch new products and create explosive products to expand the market. Following the online launch of 12 new Chinese and Western food products in May last year, the spring product launch conference with the theme “Spring Snow Food, Simple Life, Easy Cooking” was successfully held simultaneously online and offline on May 19 this year, and 16 new products were launched. Following the successful creation of the “Fried Chicken Rice” popular item with monthly sales of over 1,000 tons last year, the company had formed 4 products that sold over 100 tons per month. ② On the brand side, the company seized the opportunity of JD to include Chunxue Foods in 20 strategic support categories with sales of over 100 million yuan, participated deeply in the JD 618 campaign, and continued to win first place. By the end of the reporting period, the “Fresh” and “Chunxue” brands had more than 27.33 million fans and more than 16.78 million members in JD. During the new product launch in 2023, the company cooperated deeply with Sina Weibo. During the cooperation period, the total number of readers reached more than 3 billion, topics related to the new product launch were read by more than 680 million people, and the number of discussions was over 600,000, and the brand image was further enhanced.

3. Profit forecast and rating: The company's revenue for 2023-2025 is expected to be 29.81/33.52/3.816 billion yuan, gross profit is 0.51/0.71/101 billion yuan, and EPS is 0.25/0.36/0.51 yuan respectively, maintaining the “increase in holdings” rating.

Risk analysis

1. Risk of the outbreak of the epidemic: The company's main production and operation process includes entrusting breeding products to replace broilers. Diseases such as Xincheng disease and H7N9 may occur during the breeding process. Contract farming is a common model adopted in the company's industry. Although there have been no outbreaks in the contract farming process since the establishment of the company, the company still faces the risk of live poultry raised by contract farmers being infected with the epidemic. To a certain extent, the epidemic will cause the supply of raw materials for the company's main products to be insufficient and affect the company's normal production; the spread of the epidemic will affect consumer mentality, reduce market demand for chicken products, and affect the company's business performance. In addition, during the epidemic, the main control measures include vaccination, quarantine, and even forced culling. All of these measures will increase the company's expenses or costs to varying degrees.

2. Business risk, tax policy risk, natural disaster risk, etc.