The company released its 2023 annual report. Throughout 2023, the company achieved operating income of 3.225 billion yuan, +52.7% year on year, and realized net profit of 541 million yuan, turning a year-on-year loss into a profit (loss of 367 million yuan for the same period in '22); it is estimated that in the fourth quarter of 2023, it achieved operating income of 566 million yuan, -17.8% year-on-year, and realized net profit to mother of -143 million yuan, a year-on-year loss.
At the same time, the company announced the 2023 profit distribution plan: a cash dividend of 2 yuan (tax included) will be distributed to all shareholders for every 10 shares, and a total cash dividend of 221 million yuan (tax included) will be distributed.
Benefiting from the improvement in the industry, the company's sales volume and price of chicken seedlings both increased throughout the year, and declined somewhat in Q4. Affected by the overseas bird flu epidemic starting in the second half of 2022, there was a marked decline in the introduction of domestic ancestral chicken breeding. In 2023, sales prices for parent breeding chickens and commercial chicken seedlings all rose markedly. Referring to the company's monthly sales report, throughout 2023, the company sold a total of 645 million chicken seedlings (including chicken breeding for parents and commercial chicken seedlings), +12.3%; sales revenue of chicken seedlings was 2.64 billion yuan, +65.8% year over year; the estimated average sales price was 4.09 yuan/feather, +47.7% year over year. Referring to the company's investor relations activity record table on March 7, the company's chicken seedlings business profit exceeds 600 million yuan. We expect the company's parents to make a profit of about 25-30 yuan for chicken breeding sets, and a profit of about 0.3-0.4 yuan for commercial chicken seedlings. In the fourth quarter of 2023, the company sold 142 million chicken seedlings, +2.8% year-on-year, -19.1% month-on-month. The average sales price was 2.96 yuan/feather, -23.5% year-on-year, and -20.0% month-on-month.
Probiotic 909 has been released steadily, and the pig breeding business continues to expand. The company independently cultivated a new breed of small white feather broiler “Prebiotic 909” and passed the National Livestock and Poultry New Breed Certification in December 2021, and the scale of sales and promotion has steadily increased. Throughout 2023, the company sold 76.82 million probiotic 909 chicken seedlings, +1% year-on-year, with an average sales price of 1.5 yuan/feather, or -3% year-on-year. In terms of pig breeding business, the company sold 33.6 million breeding pigs in 2023, +13.1% year-on-year, with an average sales price of 3,471 yuan, or -0.3% year-on-year. In 2023, the company completed a fixed capital increase of 1.16 billion yuan. The plan is to invest 64% of the capital raised in the expansion of pig breeding capacity. The pig breeding business will continue to expand in the future to help the company grow.
I am optimistic that the white feather broiler industry will continue to recover in 2024 and maintain the company's “increase” rating. At the end of 2022, ancestral chicken stocks declined at a high level, which was transmitted to parent-generation chicken breeding in mid-2023. It is expected that the national supply of commercial chicken seedlings will decline somewhat in 2024, catalyzing the continued upward trend in the industry. As a leading white feather broiler breeder, the company is expected to fully benefit. We have slightly adjusted the company's profit forecast for 2024-2025 and introduced a profit forecast for 2026. The company is expected to achieve operating income of 36.5/33.4/3.40 billion yuan in 2024-2026 and achieve net profit of 12.1/8.4 billion yuan to mother (the forecast value for 24-25 years before adjustment is 1,28/740 million yuan). The current stock price corresponds to the PE valuation level of 9X/13X/17X, maintaining the “Overweight” rating.
Risk warning: the price of chicken seedlings fluctuates greatly; the risk of an avian influenza epidemic; the price of raw materials fluctuates greatly.