Event: Longda Food released the mid-2023 report, 1H23 achieved revenue of 6.7 billion yuan, year-on-year-1.3%, return to the mother net profit of-600 million yuan, the same period last year was 36.18 million yuan; of which 2Q23 achieved revenue of 3.3 billion yuan, year-on-year-6.5%; homing net profit-650 million yuan, compared with 12.75 million yuan in the same period last year.
The proportion of prepared vegetables has increased, and the income has increased strongly. The income of the 1H23 food industry is 1.1 billion yuan, which is + 59% compared with the same period last year. Among them, the revenue of prepared vegetables was 960 million yuan, which was + 89% compared with the same period last year. 1H23 prefabricated vegetables accounted for 14.3% of the company's revenue, an increase of 6.9pct over the same period in 2022.
The company continued to strengthen research and development in the first half of the year, including fat sausage chicken, sauce fried fat sausage, spicy small county liver, Longda fresh food sausage, selection of Four-Joy Meatballs and other prefabricated dishes. In marketing, the company strives to build a consumer market insight system, serve the majority of food processing and catering enterprises, coordinate marketing promotion, innovate marketing models, and actively create large items of 100 million yuan and 10 million yuan to serve the market quickly with a large single product strategy. At present, the company has established long-term and stable cooperative relations with customers such as a number of catering chain enterprises, food processing enterprises and large chain stores, and has grown into one of the excellent food and beverage suppliers in China.
Affected by the downturn in pig prices, revenue from the slaughtering business is under pressure. The revenue of 1H23's slaughtering business is 4.7 billion yuan,-8.5% year-on-year, and the gross profit margin of slaughtering business is 0.24%, compared with the same period last year-2.2pct. The sales volume outside the slaughtering business is about 350000 tons,-4.1% compared with the same period last year. According to the company's data, the average price of fresh frozen meat in 1H23 is 13.6 yuan / kg,-4.6% compared with the same period last year. 1H23 pig prices are low, resulting in a decline in revenue and gross profit margin of the slaughtering business.
The impairment of biological assets and asset disposal put pressure on the company's performance. 1H23 pig continued to operate at a low level, so the company impaired the biological assets of the breeding business by 190 million yuan, in addition, the loss caused by asset disposal was 170 million yuan, which had a negative impact on the company's profits.
Profit forecast and investment advice: according to the 2H23 pig price forecast, we adjusted the slaughtering business 2H23 volume and price forecast, so the company's performance has been downgraded. We estimate that the annual revenue of the company in 2023-24-25 will be $146x18,000,000 (the previous value is $184x204pm), and the net profit of return to the mother will be-2.9pm 370,000,000 yuan (the previous value is 41pm), respectively, and the corresponding PE is-28X/22X/23X. With reference to the historical valuation levels of comparable companies in the industry and Longda, as well as the fact that the future food processing business can increase the overall gross profit margin of the company for a long time, give the company 30 times PE in 2024 (consistent with the previous value), corresponding to the target price of 10.24 yuan (the previous value is 11.50 yuan), maintaining a "better than the market" rating.
Risk tips: pig prices fluctuate, new product promotion is not as expected, and catering demand is not as expected.