Incidents:
The company released its 2023 mid-year report, achieving operating income of 1,121 million yuan, an increase of 75.18% over the previous year, and a net loss of 398.955 million yuan (net loss of 297 million yuan for the same period last year). The price of chicken seedlings rose sharply year on year in the first half of the year, and the company's performance improved sharply year on year.
Comment: The price of chicken seedlings rose sharply year on year in the first half of the year. Improved company performance and the year-on-year increase in chicken fry prices led to a narrowing of the company's losses. In the first half of the year, the company sold 140 million chicken seedlings, a slight increase of 4.8% over the previous year. In terms of price, the average sales price of the company's chicken seedlings in the first half of the year was 3.43 yuan/feather, up 1.7 yuan/feather from last year. In the first half of the year, the price of commercial chicken seedlings first rose and then fell. In the first quarter, the tight supply of chicken seedlings and the centralized filling after the holiday season caused the price of commercial chicken seedlings to continue to rise; in the second quarter, the supply of chicken seedlings in the market continued to increase, but the recovery on the consumer side fell short of expectations, and due to seasonal factors, the price of seedlings gradually fell back into a loss range.
Continue to release the amount of chicken products. The company continues to promote the extension of the industrial chain, and the production and sales capacity of the two cooked food factories continues to improve. In the first half of the year, the company's chicken products business revenue reached 521 million, an increase of 65.55% over the previous year. The company sold 35,900 tons of chicken products, an increase of 18.14% over the previous year.
Ancestral breeding is insufficient for downward transmission, and the price of chicken seedlings is expected to continue to be high in the second half of the year. The amount of overseas introduction of Chinese ancestral generations was 0 in May-May and October-November 2022. Although the amount introduced has recovered since this year, it will mainly affect the supply of chicken seedlings one year from now, and the 2023 gap is a foregone conclusion. Also, although domestic varieties have made up for part of the supply gap, the downstream farming side is still in a run-in period, and the industry still shows obvious structural shortage characteristics. Currently, the industry has entered a performance realization period, and it is expected that the price of chicken seedlings will remain relatively high in the second half of the year.
Optimistic about the company and maintain the “buy” rating
The company's performance in the first half of the year fell short of expectations. At the same time, judging from the introduction situation in that year, the supply of chicken seedlings may have improved after 24 years. Therefore, we lowered our profit forecast. We expect the company's EPS to be 0.64 yuan, 0.48 yuan, and 0.53 yuan respectively in 23-25. The price of chicken seedlings is expected to continue to improve in the second half of the year. We are optimistic about the company's performance and maintain the “buy” rating.
Risk warning: Chicken fry prices have risen less than expected, and production capacity expansion is slow