The company discloses its 2023 annual report. The company achieved operating income of 18.487 billion yuan in 2023, up 9.93% year on year, and realized net profit of 664 million yuan, up 61.66% year on year, EPS of 0.54 yuan, weighted average ROE of 6.58%, up 2.43 percentage points year on year. The company discloses the 2023 profit distribution plan:
Based on the total share capital at the time of implementation of the share registration date after deducting the shares already repurchased in the company's special repurchase account, a cash dividend of 3 yuan (tax included) is distributed to all shareholders for every 10 shares, 0 bonus shares (tax included), and no share capital is transferred from the Provident Fund.
The poultry farming and processing sector explores potential efficiency gains. The company achieved operating income of 10.517 billion yuan in 2023, up 0.71% year on year, gross profit margin of 6.32%, up 1.07 percentage points year on year. Raw chicken sales volume was 1.22,800 tons, up 7.16% year on year. The company currently has a production capacity of over 700 million white feather chickens, and is actively promoting the fine management of all sectors and links to implement “cost reduction and efficiency”. On the one hand, broiler breeding costs have been further reduced through measures such as encrypted breeding, plumbing transformation, and personnel optimization; at the same time, production costs in the slaughter and processing process have also been reduced through measures such as equipment innovation and technical reform, personnel optimization, and energy consumption control.
The food processing sector has grown significantly. The company's deep food processing sector achieved revenue of 6.394 billion yuan in 2023, up 28.14% year on year, gross profit margin of 18.67%, up 1.6 percentage points year on year, and product sales volume of 2981,000 tons, up 27.30% year on year. The main reasons for the sharp increase in the company's food production and sales in 2023 are: (1) the production capacity of the nine food factories increased by 20,000 tons, and the total production capacity was increased by 20% in 23 years through production line optimization; (2) the company acquired Shengyue in Gansu, and production capacity and production volume increased. The company's 10th food factory will be completed and put into operation within 2024. The project covers production processes such as frying, cooking, steaming, and deep processing of beef and lamb, and will increase the company's food deep processing capacity by about 60,000 tons per year.
The chicken breeding business was iteratively upgraded. The company's own seed source “Shengze 901” successfully achieved the first batch supply of domestic seeds in 2022, and was selected into the national 2023 agricultural leading variety list. We sold 9.01 million sets of chicken brooders for the whole of 2023. Our customers covered many large domestic breeding companies, and our parent breeding chickens continued to occupy the first place in the market share among domestic breeding sources. At the same time, the company successfully iteratively developed the “Shengze 901 Plus” on the basis of the original “Shengze 901”. The performance was greatly improved, and the meat ratio index was significantly improved compared to the original combination.
Investment advice
The company's net profit for 2024-2026 is estimated to be 12.65/2,098/2,242 billion yuan, corresponding EPS of 1.02/1.69/1.80 yuan. The current stock price is 15 times PE in 2024, maintaining a “buy-B” rating.
Risk warning: risk of livestock and poultry epidemics, risk of natural disasters, risk of rising raw material prices, risk of poor transportation.