Haida Group released its 23 annual report and 2014 quarterly report: the company achieved operating income of 116.12 billion yuan (+10.89% year over year) and net profit to mother of 2.74 billion yuan (-7.31% year over year). Earnings per share were $1.66, and the weighted ROE was 14.53%. 24Q1 achieved operating income of 23.17 billion yuan (-0.8% YoY), net profit to mother of 860 million yuan (+111% YoY), and gross margin of 10.75%. In terms of dividends, a cash dividend of 5.0 yuan (tax included) is distributed for every 10 shares.
The aquatic feed industry is particularly leading in its difficult situation. The aquaculture and aquaculture industry faced significant pressure in 2023. On the one hand, the price of aquatic products is mostly low, such as California perch. The annual price is almost the lowest in recent years; on the other hand, feed costs have continued to rise, especially the price of fishmeal. The average price for the whole of '23 has risen 23% compared to 22. The slump in the aquatic feed market has also put tremendous pressure on the entire aquafeed industry. National aquafeed sales were -4.9% year-on-year in '23, the biggest drop since 2003. Against the backdrop of pressure on the industry as a whole, Haida Group still showed excellent results. The annual sales volume of aquatic feed was 5.24 million tons, +2% year-on-year. Among them, sales of special water materials (high-grade puffed fish and shrimp and crab) increased 13% year on year, and general water materials fell 9%. Thanks to the increase in the share of specialty water materials with higher profit levels, the overall profitability of aquatic products has also greatly improved, which is one of the core drivers of the company's performance growth.
The aquaculture industry recovered in 24 years, and the company's aquaculture business is expected to take advantage of the wind. Looking ahead to 24 years, we believe that on the one hand, with the contraction of supply, the prices of aquatic products are expected to fully recover this year. Currently, the prices of most aquatic products have risen to varying degrees compared to last year, with a year-on-year increase of 21%; on the other hand, thanks to the decline in feed costs, breeding costs, and pond rental costs, farming costs for some aquatic products are expected to decline, and the aquaculture and aquaculture feed industry is expected to recover this year. At the same time, we believe that against the backdrop of the overall pressure on the aquatic feed industry in '23, the industry may clear up at an accelerated pace, and some small and medium-sized enterprises may gradually withdraw from the market. Haida Group's competitive advantage will become more prominent, and the leading market share is expected to continue to increase. Therefore, we believe that the company's core aquafeed business is expected to experience higher growth in 24 years. Looking at the first quarter of this year, the company's general water feed has also changed from negative growth last year to positive growth. The overall high profit increase in the first quarter may also have made an important contribution to the aquatic feed business.
Actively adjust and adapt to changes in the industry, and livestock and poultry feed have achieved steady growth. In '23, the company exported 5.79 million tons of pig feed, +17% year over year, 11.3 million tons of poultry feed, +13% year over year, and ruminant feed increased 70% year over year. Livestock and poultry farming as a whole also faced some pressure in '23. Pig prices were low throughout the year, and pig farming lost money almost throughout the year. White chicken prices were also mostly low throughout the year, and hairy chicken farming almost always lost money after 23Q2.
At the same time, the industry structure has also undergone major changes. Retail investors in the aquaculture industry continue to withdraw, and the company actively adjusts and cooperates with family farms with farming advantages, and the results are increasingly showing. Looking ahead to 24 years, livestock and poultry farming are also expected to recover, and the company's livestock and poultry feed will also benefit.
The aquaculture business dragged down 23 years of performance, and is expected to reverse in 24. Both pig farming and raw fish farming have dragged down the company's farming business for 23 years. 4.6 million pigs were released in '23, compared to +43.8%. The company's pig breeding costs improved in '23, but due to low prices, the annual loss was around 100 million yuan. The company as a whole implemented an asset-light and low-risk business philosophy. The fish farming business lost more than 300 million dollars, which is the biggest drag in the company's annual report. However, these adverse factors are expected to reverse in 24. On the one hand, with the continuous decline in sows that can breed in '23, this year's pig price center is expected to be better than last year; on the other hand, with the decline in raw fish production, raw fish prices are also expected to gradually fall out of the bottom this year. Overall, the aquaculture business is expected to contribute to profits in 24 years. Looking at the first quarter, pig prices rose and costs fell. We believe that the company's breeding business may also have improved significantly in the first quarter compared to the same period last year.
The Haida model is introduced to the international market, opening up overseas sales and profit margins. In '23, the company achieved 1.71 million tons of feed sales in overseas regions, +24% over the same period, and the profit growth rate was even higher. The company replicated the mature domestic “feed+seedling+animal protection” Golden Triangle sea model to overseas markets. The main regions include Vietnam and Indonesia in Southeast Asia, and Egypt in Africa.
In the future, the company combines its technical advantages and local characteristics, and overseas market sales are expected to continue to grow rapidly.
Profit forecasting and investment advice. Overall, we believe the company's performance will continue to grow rapidly for 24 years.
The core feed business will benefit from the recovery in aquatic products, livestock and poultry prices, and its own technical and model advantages will continue to be highlighted; fish farming is expected to drastically reduce losses, and pig farming will also contribute more profits. At the same time, the company's long-term development strategy goals are clear. Currently, it has completed a production capacity layout of 40 million tons of feed, and will further explore overseas markets in the future. EPS is estimated to be 2.46/2.83/3.38 yuan in 23-25, respectively. Considering that the company is a relatively scarce leading company in the industry, the company will be given 25-30 times PE in 24 years, with a corresponding reasonable value range of 61.5 to 73.8 yuan, maintaining the “superior to the market” rating.
Risk warning. Consumption of aquatic products, livestock and poultry fell far short of expectations, natural disasters that exceeded expectations, and large fluctuations in raw material prices had an adverse impact.