Performance is expected to recover as the pig cycle reverses. High dividends highlight investment value and maintain a “buy” rating
The company released its 2023 annual report and 2024 quarterly report, with 2023 revenue of 1,253 million yuan (+1.84%) and net profit of 175 million yuan (+3.99%), including single Q4 revenue of 324 million yuan (-19.53%) and net profit to mother of 0.5 billion yuan (-111.58%). 2024Q1's revenue was 235 million yuan (-23.27%), and net profit attributable to mother was 0.27 million yuan (-57.36%).
2024Q1 is affected by the downturn in the downstream aquaculture market and the upward transmission of operating pressure, putting pressure on the company's performance. Looking ahead to the future market, along with the gradual reversal of the pig cycle, the company's performance is expected to recover. We lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 1.94/2.52/3.08 (the original forecast for 2024-2025 was 3.40/4.63 billion yuan, respectively) billion yuan, corresponding EPS was 0.56/0.73/0.89 yuan, respectively, and the PE corresponding to the current stock price is 30.7/23.6/19.3 times. The company's performance is expected to recover as the pig cycle reverses, new products blossom more, high dividends highlight investment value, and maintain a “buy” rating.
The company's new products have blossomed and continue to grow, and its performance is expected to reverse the pig cycle and fix the pig vaccine: in 2023, it achieved revenue of 434 million yuan (-5.92%) and a gross profit margin of 83.89% (+2.39pct).
2024Q1 was affected by the downturn in downstream farming, and pig breeding revenue declined. Looking at the whole year, it is expected that new products such as Pseudoclassic Piggy Vaccine and Yuanzhi Dual Seedling will be marketed and released, and emergency evaluation and anti-drug tests for non-plague subunit vaccines are progressing in an orderly manner. Pet vaccine: Revenue of about 20 million yuan in 2023. 2024Q1 revenue continues to grow. The company's triple inactivated cat vaccine has passed emergency evaluation. The dog dual and quadruple vaccines have entered the registration stage for new veterinary drugs, and new products are growing strongly. Revenue from poultry vaccines has been growing steadily, and the short-term performance of the chemical sector is under pressure. Overall, the company's performance is expected to continue to grow as the 2024H2 pig cycle reverses and repairs.
The company has sufficient capital to maintain high dividends. The long-term investment value showed the company's balance ratio of 16.50% (-0.86pct), book capital of 317 million yuan (+12.87%), and net operating cash flow of 283 million yuan at the end of 2023. The company's 2023 profit distribution plan anticipates a cash dividend of 138 million yuan (already a cash dividend of 103 million yuan for the half year of 2023). Considering share repurchases, the annual cumulative cash dividend of 250 million yuan is 250 million yuan, and the dividend payment rate is 143.10%. The company has sufficient capital, invested 101 million yuan in R&D throughout 2023 (accounting for 8.07% of revenue) while maintaining a high dividend ratio, showing long-term investment value.
Risk warning: pig storage recovery falls short of expectations, industry competition intensifies, and new product launches fall short of expectations.