国内：据公告和我们估算：1）肉制品：1Q24 销量同比近-5%、有所承压，吨利近5 千元/吨保持稳健。2）屠宰：1Q24 屠宰量同比-21%，头均利润约37.5 元/头，我们预估相比于去年同期来看需求偏弱，鲜品和冻品价格均偏低。3）养殖：养殖业务主要计入在其他分部中，1Q24 其他分部亏损2.1 亿元，同比亏损扩大，我们预估主要与禽肉养殖亏损扩大有关（毛鸡价格下降）。1Q24 profit exceeded market expectations.
1Q24 revenue of $6.181 billion, -8.3% year over year; operating profit of 501 million US dollars, +37.3% year over year; core net profit to mother (excluding changes in the value of biological assets) of $301 million, +73.0% year over year. Among them, the operating profit of China/US/Europe was 2.51/1.91/59 billion, respectively, -10.4/+208.1/ +156.5% year-on-year. The US pork business dropped significantly, and 1Q24 profit exceeded market expectations.
Development trends
Domestic: According to the announcement and our estimates: 1) Meat products: 1Q24 sales volume was nearly -5% year-on-year, under pressure, and the profit per ton remained steady at nearly 5,000 yuan/ton. 2) Slaughter: The slaughter volume in 1Q24 was -21%, and the average profit was about 37.5 yuan/head. We estimate that demand is weak compared to the same period last year, and the prices of both fresh and frozen products are low. 3) Breeding: The breeding business is mainly included in other divisions. 1Q24 lost 210 million yuan in other divisions, increasing losses over the same period last year. Our estimates are mainly related to increased losses in poultry farming (falling chicken prices).
US: According to the announcement and our estimates: 1) Meat products: 1Q24 operating profit -4%, sales volume of about -4%, tonne profit of 894 US dollars/ton (maintaining a high level). We believe that 1Q24 sales of meat products in the US were under pressure due to lower ham sales than last year, but overall performance was still strong. We believe that the consumer demand environment in the US may be under some pressure this year, but the company's perfect product structure (OEM products+private brand portfolio) is expected to have steady sales throughout the year. 2) US pork business: Currently, US pig prices are rebounding, and the company expects to enter a normal seasonal cycle. According to current pig prices and feed prices, it is expected to reduce losses by about 400 million US dollars this year.
Looking ahead to 2024:1) Domestic business: We believe that the profitability of meat products is expected to remain at a high level, and sales will need to monitor terminal demand and the implementation of the company's 2024 “network multiplication” channel intensive farming plan. We believe that the slaughter business is dominated by volume growth, and overall profits are expected to remain stable; if pig prices and chicken prices recover, the breeding business is expected to reduce losses. 2) US business: The company plans to keep the profit of meat products above 750 US dollars/ton and sales are expected to remain relatively stable. We believe that meat products are expected to maintain an operating profit of 1 billion dollars + for the whole year; in addition, we recommend continuing to pay attention to pig prices and breeding costs. Based on current pig prices and breeding costs, we estimate that the breeding business will lose 400 million+ dollars in 24 years.
Profit forecasting and valuation
Considering the recent rise in US pig prices, we raised the profit of the US pork business and raised Wanzhou's 24/25 profit by 10.2%/14.6% to US$12.15/1.358 billion. The current stock price corresponds to 7.8/7.0 times 2024/25 P/E. Maintaining an outperforming industry rating, we raised our target price by 10.2% to HKD/share by 10.2% to 6.5 HKD/share, corresponding to about 8.9/8.0 times the 2024/25 P/E, with about 13.8% upside compared to the current stock price.
risks
US pig prices and breeding costs fluctuate greatly, domestic demand for meat products is relatively weak; food safety risks.
