Incidents:
On April 26, 2024, Muyuan Co., Ltd. released its 2023 annual report and 2024 quarterly report: the company's total revenue in 2023 was RMB 110.861 billion, down 11.19% year on year; net profit loss to mother was RMB 4.263 billion, the first loss in listing; total operating revenue of 2024Q1 was RMB 26.272 billion, up 8.57% year on year, and net profit loss to mother was RMB 2,379 billion.
Investment highlights:
Pig prices were sluggish in 2023, and the company's performance fell into a loss. In 2023, the company's total revenue was 110.861 billion yuan, down 11.19% year on year, and net profit loss to mother was 4.263 billion yuan, the first loss in listing; 2024Q1's total revenue was 26.272 billion yuan, up 8.57% year on year, and net profit loss to mother was 2,379 billion yuan. In 2023, the company sold 63.816 million pigs, including 62.267 million commercial pigs (including total sales of 13.266 million heads to the wholly-owned subsidiary Makihara Meat Food and its subsidiaries), 1.367 million piglets, and 1801 million breeding pigs; in 2023, the company slaughtered 13.26 million pigs and sold 1.45 million tons of fresh and frozen pork products. In 2023, the company's main production indicators were improved compared to 2022. The average total cost of the company's commercial pigs for the whole of 2023 was about 15 yuan/kg.
2024Q1 production indicators are continuously optimized. In the first quarter of 2024, the company sold 16.011 million pigs, including 15.307 million commercial pigs, 597,000 piglets, and 107,000 breeding pigs. Due to the impact of the winter epidemic and Spring Festival sales, the complete cost of pig farming gradually increased to 15.8 yuan/kg in January-January 2024, and the cost has dropped to 15.1 yuan/kg in March.
In the future, as the health of the pig herd improves, various production indicators will gradually improve, and breeding costs are expected to drop further. Currently, the company's pig production capacity is around 80 million heads/year. By the end of March 2024, the number of sows that can be raised was 3.142 million. According to the research activity information publicly disclosed by the company (20240428), combined with the current production and operation plan, the company expects 66-72 million pigs to be released in 2024.
Profit forecast and investment ratings Recently, pig prices have shown a year-on-year upward trend. We expect the pig price center to continue to rise in the second half of this year, and the company's profitability is expected to continue to improve. Therefore, we are adjusting the company's performance. The company's revenue is expected to be 2024-2026
1356.71/1501.09/141,842 billion yuan, net profit attributable to mother was 130.12/242.92/14.444 billion yuan, corresponding to PE 18/10/17 times, respectively. As a leading enterprise in the industry, the company's sales volume grew steadily. We are optimistic about the year-on-year recovery of subsequent companies' performance and maintain a “buy” rating.
Risks indicate the risk of fluctuations in the price of feed ingredients; the risk of epidemics and price fluctuations in pig farming; the risk that pig prices will rise less than expected; the risk of consumption recovery falling short of expectations; the risk of breeding diseases; the risk of company performance falling short of expectations, etc.