Event

The company disclosed that its revenue in the first quarter of 2022 was 784 million yuan, an increase of 8.00 percent over the same period last year, and its net profit was 11.693 million yuan, an increase of 42.89 percent over the same period last year.

Brief comment

1. Revenue increased compared with the same period last year, and the performance was basically in line with expectations.

2022Q1 achieved revenue of 784 million yuan (year-on-year + 8.00%, month-on-month-4.43%) and net profit of 11.693 million yuan (year-on-year + 42.89%, month-on-month-67.33%).

In terms of profit margin, 2022Q1 has a gross profit margin of 19.21% (year-on-year-0.16pcts, month-on-month + 2.16pcts) and net sales margin of 1.31% (year-on-year + 0.28pcts, month-on-month-3.31pcts).

In terms of expenses, 2022Q1's sales expenses are 107 million yuan (year-on-year-2.85%); management expenses are 22.0248 million yuan (year-on-year + 10.81%); R & D expenses are 6.0023 million yuan (year-on-year + 50.05%); financial expenses are 4.4185 million yuan (year-on-year + 203.91%). The substantial increase in financial expenses is mainly due to the increase in interest expenses of the company.

2. Rising costs may lead to losses in the live poultry business, and chilled and other businesses have performed well.

2022Q1 sells 8.7492 million live birds (year-on-year + 4.77%, month-on-month-23.14%) and sales revenue of 192 million yuan (year-on-year + 1.42%, month-on-month-25.90%). From January to March in 2022, the company's live poultry sales price was 11.35 RMB 12.23 pound 11.64 yuan / kg (compared with the same period last year). Due to the increase in feed prices, the company's breeding costs have increased, and we expect the company's live poultry business sector or loss in the first quarter.

The company continues to promote the development of the chilled business: due to the increase in production capacity of ①, we expect the sales of chilled products to continue to grow, and the sales of chilled products are expected to increase by 20% in the first quarter compared with the same period last year; ② is expected to have a decline in the gross profit margin of the chilled plate due to the rise in raw material prices and the short-term epidemic; due to the outbreak of ③, the over-end profits of the company's chilled products have been slightly affected, and the overall online business performance has maintained a stable development trend. Taken together, we believe that the company's chilled business sector as a whole made a good profit in the first quarter, and the plate is expected to contribute better performance with the stability of the epidemic.

The company's 10,000 breeding pig breeding project, 200000 commercial pig farm project and annual slaughtering 1 million live pigs and meat products deep processing project have been put into production one after another, and pork products are expected to be listed in the second half of the year. In addition, the company's cooked food and prefabricated food products are currently in the stage of new product research and development and trial sales, optimistically assuming that the company's related products will be listed in the second half of the year, the business development will lay the foundation for the company's next transformation and upgrading.

3. The production capacity of the industry continues to be eliminated, and the prospect of the company is good.

The high price of feed raw materials increases the breeding cost, and the downstream demand is suppressed by the epidemic. In the short term, the yellow feather chicken breeding industry will continue the trend of capacity removal, and with the gradual decline in supply and the recovery of demand, the price of yellow chicken will pick up. The company is expected to benefit. The epidemic continues to catalyze the chilling of live poultry consumption, the company's channel layout in this sector is perfect, the variety of products is rich and brand awareness is gradually improved, and it is expected to maintain rapid growth in the future.

4, profit forecast and rating: the price of feed raw materials is high, the short-term performance of the company's yellow chicken breeding business is under pressure; with the continuous popularity of chilled consumption, the impact of the epidemic is gradually reduced, and the company's product sales are expected to increase; pig breeding, slaughtering and processing and other businesses are also expected to become new growth points of the company in the future. Taken together, we believe that the company's performance is expected to show high growth this year. It is expected that the company will achieve operating income of RMB 3784max in 2022-2024, net profit of RMB 1.57max, RMB297m, EPS of RMB1.54, and PE of 23.0x/15.4x/12.2x, respectively, maintaining a "buy" rating.

Risk hints: the risk of large fluctuations in feed raw material prices, the risk of outbreaks of animal diseases such as bird flu, the risk that the company's scale expansion is not up to expectations, and the risk of depressed terminal demand caused by the outbreak.