Incidents:
The company released its 2024 quarterly report, achieving operating income of 1,258 billion yuan, a year-on-year decrease of 81.12%, and net profit to mother of 54,1251 million yuan, a year-on-year decrease of 95.56%. The elimination of the company's real estate projects contributed to the main profit, and the low pig price dragged down serious losses in the pig farming business.
Comment: The real estate business contributed the main profit, and breeding costs dropped significantly, and the pig breeding business achieved revenue of 679 million yuan, an increase of about 13.8% over the previous year. Among them, the number of pigs released continued to grow, with a total of 464,400 pigs released in the first quarter, an increase of 11.56% over the previous year; at the same time, the company's breeding efficiency improved markedly, and the cost dropped significantly. The company's breeding cost in the first quarter was about 14.4 yuan/kg (full cost was about 15.6 yuan/kg), a significant decrease from 16 yuan/kg in 23. However, the average price of pigs sold fell 6.2% year on year to 13.76 yuan/kg. The cost of breeding was still higher than the price of pigs, and the pig breeding business dragged the company into losses. The company's aquaculture business lost 38.95 million yuan in the first quarter (actual operating loss of 86.84 million yuan, depreciation and resale, a total of 47.89 million yuan).
The real estate business contributes mainly to profits. The real estate business achieved revenue of 399 million yuan in the first quarter; realized net profit of 109 million yuan to mother. By the end of 2023, the company's Shanhai Imperial Garden project has basically been sold, and more than 32% of the Shanhai Mansion project has been eliminated. In 2024, the company will focus on continuing sales of the Shanhai Mansion project.
Other businesses: The feed business achieved revenue of 160 million yuan and realized a net profit of 3.97 million yuan; the poultry farming business achieved revenue of 16.65 million yuan and a loss of 1.7 million yuan.
Debt repayment capacity has increased. By the end of the first quarter of 2024, the company's balance ratio was 66%, down 2 percentage points from the end of the previous year. The asset structure will be further optimized with the elimination of the company's real estate projects and the improvement of pig breeding operation and management standards.
Profit forecasting and investment ratings
The company's listing volume is growing rapidly, and the planned listing volume in 2024 will further increase to 2.8 million heads. Combined with declining breeding costs, the profitability of the company's breeding business is expected to improve markedly in the second half of the year. We expect the company's net profit to be 890 million, 1,157 million, and 687 million yuan respectively in 2024-2026, corresponding EPS of 1.68 yuan, 2.18 yuan, and 1.30 yuan, respectively.
Continue to be optimistic about the company's development prospects and maintain a “buy” rating.
Risk warning: Production capacity release falls short of expected risk, demand falls short of expected risk