Incidents:
The company released its 2023 annual report and achieved annual revenue of 5.781 billion yuan, an increase of 13.31% over the previous year, and net profit to mother of 226 million yuan, an increase of 76% over the previous year. The number of products sold increased, while broiler prices rose, and the company's performance increased significantly.
In addition, the company released its 2024 quarterly report, achieving operating income of 1,078 billion yuan, a year-on-year decrease of 11.80%, and net profit to mother of 7.023 million yuan, a year-on-year decrease of 92.37%. Broiler prices have declined, putting pressure on short-term company profits.
Comment: Horizontal scale expansion, vertical chain extension
Volume increased and prices increased in '23, and prices declined somewhat in Q1 in '24. 1) Chicken products: The company achieved revenue of 5.319 billion yuan in 23 years, an increase of 13.31% year on year, of which sales volume was 562,200 tons, up 9.47% year on year; the average sales price was 9,461 yuan/ton, an increase of 3.51% year on year. However, in the Q1 industry in '24, the price of chicken dropped a lot. We estimate that the average price of chicken products in Q1 dropped to around 9,000 yuan/ton in '24. 2) In addition, the company's prepared food production capacity was gradually released. In '23, the company achieved revenue of 263 million yuan, an increase of 52.77% over the previous year, of which sales volume was 17,900 tons, an increase of 42.31% over the previous year.
The company's newly built production capacity continues to be released. In '23, the company sold 222 million broilers, an increase of 17.83% over the previous year. The increase in the release was mainly due to the Zhucheng Project, which released 47.8096 million broilers in '23. After the Zhucheng project is fully completed and put into operation in 2024, it will be fully equipped for parents and commercial generations. Xiantan Co., Ltd. will slaughter 25-270 million broilers, 700,000 tons of meat processing capacity, and double the company's production capacity.
Production capacity continues to increase, maintaining a “buy” rating
As the consumer side improves in the second half of the year, broiler prices are expected to improve. At the same time, the scale of the company's industry continues to grow, and performance is expected to continue to improve. We expect the company's 2024-2026 EPS to be 0.40 yuan, 0.58 yuan, and 0.44 yuan, respectively, maintaining a “buy” rating.
Risk warning: the risk that the price falls short of expectations, the risk of slow release of production capacity