Performance summary: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 110.861 billion yuan in 2023, -11.19% year on year; net profit to mother was -4263 billion yuan, which changed from profit to loss year on year; net profit after deduction was -4 026 billion yuan, which changed from profit to loss year on year. Among them, 23Q4 achieved revenue of 27.892 billion yuan, or -36.68% year-on-year; net profit to mother of 2,421 billion yuan, which changed from profit to loss year-on-year. 24Q1 achieved revenue of 26.272 billion yuan, +8.57% year-on-year; net profit to mother was 2.379 billion yuan, an increase in year-on-year losses.
Comment: Due to the low overall farming climate in 2023, the company's revenue declined, and net profit turned into a year-on-year loss.
In 2023, the company sold a total of 63.82 million pigs, +4.3% year-on-year; the average sales price was 14.5 yuan/kg, -17.6% year-on-year. The company slaughtered 13.26 million pigs in 2023, an increase of 80% over the previous year. Due to the impact of the winter epidemic and Spring Festival sales, the 24Q1 performance was under short-term pressure. The complete cost of pig farming gradually increased to 15.8 yuan/kg in January-January 2024, and the cost in March dropped to 15.1 yuan/kg.
By firmly forging the cost advantage of production capacity, the sales volume is expected to expand further. The company continues to make progress in pig health management and disease purification. Breeding production performance continues to improve, pig breeding costs have generally declined, and all major production indicators have improved compared to 2022. The company's average total cost of commercial pigs for the full year of 2023 was around 15 yuan/kg, a significant decrease from 15.7 yuan/kg in 2022. 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. Based on the current production and operation plan, the company expects to release 66-72 million pigs for the whole year of 2024.
The utilization rate of slaughter production capacity has been further improved. The company continued to improve its business layout. In 2023, the company slaughtered 13.26 million pigs, an increase of 80% over the previous year, and sold 1.405 million tons of fresh and frozen pork products, achieving revenue of 21.862 billion yuan, an increase of 48.54% over the same period last year. In 2023, the company's slaughter capacity utilization rate increased to 46%, and the average loss dropped to around 70 yuan. The company is actively expanding slaughter sales channels, and the slaughter sector in the farming business is expected to gradually become profitable as production capacity utilization increases.
Profit forecasting and investment advice. EPS is expected to be 2.31 yuan, 2.81 yuan, and 3.06 yuan respectively in 2024-2026, and the corresponding dynamic PE will be 19/16/14 times, respectively, maintaining the “buy” rating.
Risk warning: Risks such as capacity expansion falling short of expectations, product sales falling short of expectations, and outbreaks of the epidemic in the aquaculture industry.