Benefiting from improved costs and a recovery in livestock and poultry prices, the 24Q1 loss margin narrowed markedly. The company disclosed its annual report for the year 23 and the quarterly report for '24, and achieved revenue of 89.921 billion yuan (yoy +7.4%); net profit to mother was -6.39 billion yuan (yoy -220.81%). The decline in the company's 23 performance was mainly due to factors such as low livestock and poultry prices, asset impairment, and changes in fair value; net profit after deduction was -6.452 billion yuan (yoy -229.9%). 24Q1 achieved revenue of 21,848 billion yuan (yoy +9.4%) and net profit to mother of -1,236 billion yuan (yoy +55.04%). Affected by factors such as the recovery in livestock and poultry prices and the decline in breeding costs, the loss margin narrowed markedly in the first quarter. Annual dividend plan: 1 yuan (tax included) for every 10 shares.
Pigs: The number of pigs released continued to grow in 24Q1, and the cost drop exceeded expectations. In 23 years, the company sold a total of 26.262 million pigs (yoy +46.7%), exceeding the annual release target; the average sales price of pigs was 14.81 yuan/kg (yoy -22.3%); the annual breeding cost was about 16.6-16.8 yuan/kg. In 24Q1, the company sold 7.18 million pigs (yoy +28.3%); the estimated breeding cost for the first quarter was about 15.2-15.4 yuan/kg, and the cost drop exceeded expectations. The company continues to consolidate breeding management, and the cost advantage is gradually becoming prominent; sow production capacity remains stable. By the end of February, 1.55 million sows could be raised, and the number of pigs released is expected to reach 30-33 million in '24.
Broiler: Production and operation maintained a high level of stability, and contrarian profits were achieved in the first quarter. In 23 years, the company sold 1,183 million broilers (yoy +9.5%), accounting for 9.1% of the country's broiler sales.
In 24Q1, the company sold 270 million broilers (yoy +0.2%); the average sales price of chicken was 13.02 yuan/kg. The company's broiler production remained stable at a high level, and its cost control advantage continued to be maintained. Under the slump in chicken prices in the first quarter, the broiler business still bucked the trend.
Profit forecasting and investment advice. We expect the company's net profit to be 69.98, 125.47, and 17.027 billion yuan respectively in 2024-26, corresponding EPS of 1.05, 1.89, and 2.56 yuan/share, respectively, maintaining a reasonable value of about 22.92 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of fluctuations in livestock and poultry prices, risk of fluctuations in raw material prices, risk of epidemic diseases, etc.