Muyuan Co., Ltd. released its annual report for the year 23 and the quarterly report for 2014: the company achieved revenue of 110.861 billion yuan (-11.2% year over year), net profit to mother of 4.263 billion yuan (+13.266 billion yuan in the previous period), basic earnings per share of -0.79 billion yuan, net cash flow from operating activities of 9.893 billion yuan, and monetary capital of 19.429 billion yuan. 23Q4 achieved revenue of 27.892 billion yuan (-6.7% YoY) and net profit attributable to mother of 2,421 billion yuan. 24Q1 achieved revenue of 26.272 billion yuan (+8.57% YoY) and net profit attributable to mother of 2.379 billion yuan.
Net cash flow from operating activities was $5,067 billion, and monetary capital was $23.024 billion.
The scale of sales increased steadily in '23, and poor pig prices led to a loss in performance. The company released 63.816 million pigs in '23 (including 62.267 million commercial pigs, 1.367 million piglets, and 180,000 breeding pigs), an increase of 4.3% over the previous year. The company continued to improve its breeding performance while growing steadily in sales. The average total cost of commercial pigs in '23 was about 15 yuan/kg, down about 0.7 yuan/kg from '22. However, due to the sluggish market, the average sales price of the company's commercial pigs in '23 was about 14.5 yuan/kg, falling below the cost line, putting pressure on performance. The company sold 16.01 million pigs in 24Q1 (including 15.307 million commercial pigs, 597,000 piglets, and 107,000 breeding pigs). The average sales price of commercial pigs was about 14 yuan/kg, a year-on-year decrease of about 0.7 yuan/kg.
Affected by the winter pandemic, the full cost of the company's Q1 increased, and performance continued to be under pressure.
Slaughterhouse operation efficiency continues to improve. The company slaughtered 13.26 million pigs in '23, an increase of 80.1% year on year; slaughter revenue was 21.86 billion yuan, up 48.5% year on year. In '23, the capacity utilization rate of the company's slaughterhouse increased to 46% (+21pct year on year), and the average loss fell to -70 yuan/head. The company currently has a slaughter production capacity of 29 million for the first year. We expect that as the company continues to develop the meat sales market and build sales channels, the operating efficiency of slaughterhouses that have already been put into operation will continue to improve; as the company optimizes its product and customer structure, sales prices and revenue may also increase. Together, the two are driving improvements in the profitability of the slaughter business.
Shifting from rapid development to high-quality development. In terms of other major financial indicators, balance ratio: Affected by continued losses in the pig breeding business, the company's balance ratio for the first quarter of '24 was 63.59%, a slight increase of 1.48 pcts from the annual report in '23. Productive biological assets: The company's 2014 quarterly report on productive biological assets was 10.64 billion yuan, an increase of 1.32 billion yuan over the 23 annual report, or mainly due to an increase in the number of reserve sows for the company, longer time in the group, and increased renewal efforts. Capital expenditure: The company's capital expenditure for 2013/24Q1 was 170.2/4.81 billion yuan respectively, an increase of 1.28/750 million yuan, respectively, mainly to pay for completed and settled sites; the 24Q1 project under construction was 2.3 billion yuan, a decrease of 4.07 billion yuan over the previous year. The company continues to control capital expenditure, shifting from rapid development to high-quality development. The capital expenditure is expected to be 10 billion yuan for the full year of '24.
Profit forecasting and investment advice. The company has an existing farming capacity of 80 million heads. We expect the company to produce 66-72 million heads in 24, an increase of 3.4-12.8% over the previous year. At the same time, as the company continues to optimize disease prevention and control, raw grain technology, intelligent equipment, and talent training, farming efficiency and production performance are expected to improve further. The company's slaughter capacity utilization rate is expected to increase in '24, which is expected to drive rapid growth in sector performance. Combined with pig cycle reversal expectations, we forecast the company's 24-25 EPS of 1.12/2.81 yuan, respectively. Considering the company's low cost, the company was given 4-4.3 times PB for 24 years, with a corresponding reasonable value range of 50.4-54.2 yuan, giving it a “superior to the market” rating.
Risk warning: In the event of an epidemic that exceeded expectations, pig prices fell far short of expectations, and the company's sales volume fell short of expectations.