Event: the company released a semi-annual report for 2023: revenue of 1.78 billion yuan, year-on-year + 9.35%; net profit of-84 million yuan, year-on-year-1812.66%; net profit of non-return to mother was-89 million yuan, year-on-year-2490.50%.
Affected by the overall market downturn of Yellow Chicken, the performance of H1 company is under pressure. The decline in 2023H1's performance is mainly due to the downturn in the industry as a whole. According to the data of the association, the average price of 23H1 commodity hairy chicken is 15.65 yuan / kg, which is-1.97% compared with the same period last year. In the same period, the average cost of various types of commodity hairy chicken is about 16.14 yuan / kg.
H1 company's comprehensive gross profit margin is 11.74%, year-on-year-4.23pct; period expense rate is 14.70%, year-on-year-0.92pct. Q2 single-quarter revenue of 871 million yuan, year-on-year + 3.16%; net profit of-55 million yuan, year-on-year-710.59%; deduction of non-return net profit of-55 million yuan, year-on-year-414.57%; comprehensive gross profit margin of 12.67%, year-on-year-0.30pct; period expense rate of 14.95%, year-on-year + 1.35pct.
The income of chilled and live poultry has risen, and the gross profit margin has declined slightly. 23H1's chilled business achieved revenue of 1.023 billion yuan, + 4.42% year-on-year, and gross profit margin of 23.27%, year-on-year-3.25pct. The sales volume of live poultry business is 21.7456 million, year-on-year + 15.35%; revenue is 473 million yuan, + 15.39% year-on-year; estimated average sales price is 21.75 yuan per unit, year-on-year + 0.03%, basically flat; gross profit margin is-7.72%, year-on-year-2.71pct. We believe that the loss in the company's live poultry business is related to the low prices of hairy chickens and the high price volatility of raw materials such as soybean meal and corn upstream. Considering that the production capacity of yellow feather chicken is the lowest in 19 years (association data: there are about 22.0452 million sets of production plus reserve parents on July 30, 23, which is lower than the average of the year), and the profitability is slightly upward in late July, Association data: the weekly average price of yellow chicken on July 30, 23 is 15.98 yuan / kg, unit profit 0.04 yuan / kg), we suggest that we actively pay attention to the industry opportunities of yellow feather chicken.
The multi-network layout of the cold market will help the company's long-term development. 23H1's chilled business accounts for 57.51% of its revenue, which is the main contribution to the company's gross profit. Since 2007, the company began to distribute the chilled poultry market, and now it has formed a mature chilled products super-system marketing model. The company's sales network covers 28 provinces, cities and regions, including Beijing, Shanghai and Hunan. It has established chilled self-counter with Yonghui supermarket, Carrefour, Auchan, Datun Fat, Walmart Inc, China Resources Wanjia and other large supermarket groups, and established strategic cooperation with new retail chains such as Hema Xiansheng, 7FRESH, Sam, Costco, etc. It has formed the cold chain logistics and distribution system of large and medium-sized cities along the Yangtze River and the chilled network layout along the Beijing-Zhuhai Expressway. Based on the improvement of the sales network layout, the stability of capacity supply, and the trend of consumer transfer from live poultry to chilled products, the company's sales growth can be expected in the future. In addition, the company's 13.5 million high-quality chicken standardized breeding base project and 10,000 breeding pig breeding base project are under construction and are expected to be put into production by the end of 23, which will mark the company's entry into the pig breeding industry and further promote the company's yellow feather chicken production capacity expansion.
Investment suggestion: the company is the leader of yellow feather chicken breeding in central China, and is committed to the production and sales of chilled meat and poultry. There is a certain correlation between the price of yellow feather chicken and the price of pig. at the same time, considering that the production capacity of yellow feather chicken is low and the follow-up price has upward potential, the gross profit margin of the company's products will benefit from the price increase, and the overall performance can be expected. We estimate that the EPS from 2023 to 2024 will be 1.15,3.19 yuan respectively, corresponding to 28 times and 10 times of PE, maintaining the "recommended" rating.
Risk tips: the risk of animal diseases and natural disasters; the risk of raw material supply and price fluctuations; the risk of meat and poultry price fluctuations; the risk of food safety.