The release of pigs in May maintained a year-on-year increase, and the decline in costs continued to exceed expectations. The company issued a monthly operating announcement. It sold 2.3789 million pigs in May '24, a decrease of 4.2% over the previous year and an increase of 13.6%; achieved revenue of 4.66 billion yuan, an increase of 27.2% over the previous year; the average sales price was 15.83 yuan/kg; the estimated average weight was 123.75 kg, a decrease of 0.24% over the previous month. From January to May, the company sold a total of 1.04 million pigs, an increase of 22.9% over the previous year. The company's pig production remains high quality and stable, and the cost decline continues to exceed expectations. According to the investor relations activity record table, the company's comprehensive breeding cost in April was 14.4 yuan/kg. In terms of sow production capacity, as of the end of April, the company was able to breed 1.57 million sows, an increase of 20,000 over the end of March.
The broiler business continues to operate steadily, and the cost advantage continues to be prominent. In April '24, the company sold 94 million broilers, up 0.61% month-on-month, up 2.17%; achieved revenue of 2,719 billion yuan, up 2.6% year-on-year; the average sales price was 13.83 yuan/kg, and the estimated profit for a single feather exceeded 3.5 yuan/feather. From January to May, the company sold a total of 455 million broilers, a year-on-year decrease of 0.8%. The company's meat and poultry production has maintained a high level of stability, and the cost advantage is obvious. According to the investor relations activity record table, the full cost of chicken was reduced to 12.2 yuan/kg in April '24.
Currently, the industry has returned to a profitable state, and pig prices are expected to exceed expectations in the future. Benefiting from early production capacity removal and high enthusiasm for secondary fattening in some regions, pig prices have risen rapidly recently, and the industry as a whole has returned to a profitable state. Currently, the overall balance ratio of the industry is high, and it is expected that the recovery rate of production capacity in the industry may be slow. According to data from the Ministry of Agriculture and Rural Affairs, the number of breeding sows in the country decreased by 0.1% month-on-month in April '24. As supply declines and demand rises seasonally, it is expected that future pig price increases and corporate profits will exceed market expectations.
Profit forecasting and investment advice. We expect the company's EPS in 2024-26 to be 1.27, 1.90, and 2.55 yuan/share, respectively. Referring to comparable company valuations, the company will be given a 24-year PE valuation of 21 times, corresponding to a reasonable value of 26.73 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of fluctuations in pig prices, risk of fluctuations in raw material prices, risk of epidemic diseases, food safety, etc.