Performance summary: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 89.921 billion yuan in 2023, +7.4% year on year, and net profit loss to mother of 6.39 billion yuan, or -220.81% year over year. In 2024Q1, we achieved revenue of RMB 21.848 billion, +9.38% year-on-year, and net profit loss to mother of RMB 1,236 billion, a year-on-year decrease of 55.03%.
Comment: The scale bucked the trend, and farming performance continued to improve, and competitiveness increased. The main reason for the sharp year-on-year decline in the company's profit is that yellow feather chicken prices were generally relatively low during the reporting period, and pig prices continued to be sluggish. In 2023, the company sold 26.26 million pork heads, up 46.65% year on year, revenue 46.256 billion yuan, up 12.67% year on year, average sales price of hairy pigs was 1,481 yuan/kg, down 22.26% year on year; sold 1,183 million broilers, up 9.51% year on year, and revenue of 34.695 billion yuan, up 2.21% year on year. Looking at the business segment in the first quarter of 2024, the company's pig farming business lost about 900 million yuan. Despite the sluggish market, the chicken farming business still achieved marginal profit in the first quarter. The 2024Q1 pig market is still at a low point. The company's pig and broiler breeding performance continues to improve, driving the company's losses to narrow.
The company's pig production capacity is developing steadily, and breeding performance continues to improve. The company sold 26.26 million pork heads in 2023, a year-on-year increase of 46.65%. By the end of March, the company had been able to breed about 1.55 million sows, and the reserve sows were sufficient.
In March, the company's pig farming business PSY increased to around 23; the production cost of pig seedlings was about 370 yuan/head; and the marketing rate of pork pigs was 92%. In the first quarter, the company's pig farming cost control was ideal. The overall cost of pig breeding fell to about 7.6 yuan/kg in the first quarter, and decreased by about 0.5 yuan/kg from quarter to quarter. Among them, the comprehensive cost of pig breeding dropped to around 7.4 yuan/kg in March. The company aims to sell 30-33 million pigs in 2024, an increase of 4 to 7 million heads compared to 2023. At present, the company's effective breeding capacity for pork pigs has increased to more than 35 million heads.
Yellow chicken farming is developing steadily, and its high prosperity is sustainable. In 2023, the company sold 1,183 million broilers, a year-on-year increase of 9.51%. The total cost of selling chicken in the first quarter was reduced to around 6.4 yuan/kg, of which it dropped to around 6.3 yuan/kg in March. The yellow chicken industry currently has a low production capacity, and its high prosperity is sustainable. Looking at the full cycle, the company can make a profit of 2-3 yuan per chicken.
Profit forecasting and investment advice. EPS is expected to be 1.09 yuan, 1.69 yuan, and 1.35 yuan respectively in 2024-2026, and the corresponding dynamic PE will be 18/11/14 times, respectively, maintaining the “buy” rating.
Risk warning: Risks such as production capacity releases falling short of expectations, downstream demand falling short of expectations, and outbreaks of the epidemic on the aquaculture side.