Main points of investment
Event: the company releases its 2023 half-yearly report.
The loss of H1 narrowed in 2023: the company's revenue of H1 in 2023 was 1.121 billion yuan, an increase of 75.18 percent over the same period last year; the net profit of its parent was 39.9 million yuan, compared with a loss of 297 million yuan in the same period last year, which was lower than that in the same period last year. Of this total, 2023Q2 achieved a revenue of 543 million yuan, an increase of 38.3% over the same period last year, and a net profit loss of 96.75 million yuan, reducing losses over the same period last year.
The quantity and price of chicken seedlings have increased, and the gross profit margin of chicken has returned to normal. A total of 140 million young chickens were sold in the first half of 2023, an increase of 4.8% over the same period last year, and the average sales price was 3.48 yuan per feather, an increase of 107.3% over the same period last year. Chicken sales reached 35929 tons, an increase of 18.14% over the same period last year, with an average sales price of 14501 yuan per ton, an increase of 40.1% over the same period last year, a gross profit margin of 4.64%, an increase of 21.82pcts over the same period last year, and a positive gross profit margin of the chicken business.
Raise the price of chicken seedlings to improve performance, and continue to promote production capacity construction. The price of chicken seedlings rose first and then fell in the first half of 2023, but the overall price was better than that of the same period last year. The average sales price of 23H1 chicken seedlings was 3.48 yuan per feather, an increase of 107.3% over the same period last year. In addition, at the end of June, because the price was lower than the cost, the company's 23H1 increased the provision for impairment of expendable biological assets by 31.96 million yuan, which lowered the profit level of the chicken seedling business. The company continues to promote 800000 sets of parent breeding projects, and will be able to increase the production capacity of some commercial chicken seedlings in 2023, and chicken seedling sales are expected to increase month-on-month in the second half of the year. The new construction of Linyi incubator can hatch 100 million plants a year. At present, the construction progress is more than half, and the increase is expected to be obvious next year.
Continue to develop the chicken food business. The company continues to improve the production and sales capacity of chicken food. 23H1 sells 359.29 million tons of chicken products, an increase of 18.14% over the same period last year. Through the combination of traditional sales and e-commerce online and offline channels, continue to expand online C-end customers and B-end food processing, catering chain and supply chain and other offline customers, vigorously expand the food business led to a significant increase in the company's sales expenses, 23H1 sales expenses of 91.48 million yuan, an increase of 69.33 million yuan last year. The average sales price of 23H1 chicken products reached 14501 yuan / ton, an increase of 40.1% over the same period last year. 23H1 chicken products business gross profit margin of 4.64%, a year-on-year increase in 21.82pcts, food business development has achieved initial results.
Looking forward to the future, the prosperity cycle of Baiyu chicken is approaching in the second half of the year. The introduction of overseas ancestral chicken is limited in 2022, and the stock of ancestral chicken continues to decline, which will be gradually transmitted to the commercial generation, affecting the supply of chicken seedlings and chicken meat, and the upward cycle of white feather chicken is approaching.
Profit forecast and valuation: we believe that the business cycle of Baiyu chicken is approaching, the gap between supply and demand of chicken seedlings is expected to be realized in Q4, and seedling prices begin to rise. In 2023-24-25, the company is expected to achieve earnings per share of 1.07 yuan per share and 2.62 yuan per share, respectively, with a corresponding PE of 14.43, 5.91 and 8.84X, respectively, maintaining a "buy" rating.
Risk hint
(1) the risk of animal disease, (2) the risk of large fluctuation of chicken seedling price, (3) the risk of price fluctuation of feed raw materials.