Incident: On May 7, 2024, the company released a pig sales report. In April 2024, it sold a total of 1.476 million pigs, -3.2% month-on-month and -6.2%; achieved revenue of 2.34 billion yuan, +1.4% month-on-month, and -1.1% year-on-year; the average sales price of commercial pigs was 15.1 yuan/kg, +5.5% month-on-month and +6.6% year-on-year. From January to April 2024, a total of 6.035 million pigs were sold, -4.0% year on year, achieving revenue of 8.64 billion yuan, or -9.4% year on year; the average sales price of commercial pigs was 14.2 yuan/kg, -3.1% year over year.
The number of pigs released is growing steadily, and breeding efficiency is gradually improving. In 2023, the company released a total of 17.683 million pigs, +21.0% year over year, achieving revenue of 26.91 billion yuan, -0.05% year over year, and average sales price of 14.6 yuan/kg, -17.0% year over year. The company's breeding costs dropped significantly. The average cost of fat pigs in 2023 was 16.7 yuan/kg, a year-on-year decrease of 1.2 yuan/kg. Based on an average shipping weight of 120 kg, the company's average loss in 2023 was about 252 yuan. The company's production capacity is growing steadily. By the end of 2023, it will be able to breed about 800,000 sows, with a reserve of close to 500,000, and plans to release more than 23.5 million in 2024. Production efficiency continued to improve. By the end of 2023, the average PSY of sows produced by the company had reached 23.5 heads, the average weaning cost had risen to 10.8, the weaning cost had reached 340 yuan/head, the survival rate during the fattening stage had reached 90%, the meat ratio had dropped below 2.7, and the sow conversion cost had dropped to about 2,700 yuan/head. The company's average fattening cost target in 2024 is 15.5 yuan/kg.
Strategic cooperation in the poultry business was successfully implemented, and the return on investment led to reverse losses in 2023. In order to further optimize the company's industrial development strategy and focus on its core business, the company plans to introduce a strategic partner, Zhongmu Group, into the Baiyu Meat and Poultry business. China Animal Husbandry Group plans to acquire 51% of the shares of the company's poultry industry chain operator through cash acquisitions and become the controlling shareholder of Sino-Singapore Foods. The investment income from this equity transfer was nearly 5.3 billion yuan, driving the company's net profit to the mother in 2023 to turn a loss into a profit.
The feed business has significant advantages, and overseas business is further developed. In 2023, the feed business achieved revenue of 81.28 billion yuan, +2.7% year-on-year; domestic and foreign feed sales totaled 28.76 million tons, +1.2% year-on-year, accounting for 8.9% of the country's total output.
Among them, there were 15.22 million tons of poultry feed, -0.3% year on year, 11.13 million tons of pig feed, +4.0% year on year, and 1.71 million tons of aquatic food, the same as year on year. 500,000 tons of ruminant feed, +16.3% year over year, all of which are among the highest in the industry. The overseas business has a lot of room for future growth. The company's feed business made an overseas profit of about 300 million yuan in 2021. It has reached 600 million to 700 million yuan in the past two years, and the annual sales volume is about 4.5 million tons. In 2026, the company expects export feed sales to grow from 4.5 million tons to more than 6 million tons.
Investment advice: We expect the company's net profit to be 4.59, 19.98, and 3.09 billion yuan respectively from 2024 to 2026, EPS of 0.10, 0.44, and 0.66 yuan respectively, corresponding PE is 89, 20, and 14 times, respectively. The pig cycle is expected to usher in an important reversal in the second half of 2024. The company's breeding and management level will gradually improve, and the overall competitive advantage of the entire industry chain is obvious. Considering the company's leading position and financial strength, the scale of the pig and poultry farming and food business is expected to continue to expand, and the future development space is considerable and will continue to be maintained.” “Recommended” rating.
Risk warning: animal diseases and natural disasters, risk of fluctuations in raw material prices, risk of fluctuations in livestock and poultry prices.