Core views:

The company plans to use its own funds to repurchase shares, demonstrating confidence in future development. The company issued an announcement that it intends to use its own funds to repurchase the company's shares through centralized bidding transactions. The total repurchase capital shall not be less than RMB 150 million, not more than RMB 300 million, the price of the repurchased shares shall not exceed RMB 10.0 yuan/share, and the number of shares to be repurchased shall not exceed 3.26% of the total share capital. The repurchase period shall not exceed 3 months from the date the board of directors deliberates and approves the share repurchase plan. The purpose of the company's share repurchase is to maintain the company's value and shareholders' rights, highlight the company's confidence in future development and recognition of its own intrinsic value, enhance investor confidence, and promote the company's future healthy and sustainable development.

Feed sales are growing steadily, which is expected to benefit from improved downstream farming profits. Facing a period of sluggish losses on the downstream farming side, the company has steadily promoted a business model transformation of “equal emphasis on channels and large-scale farm direct sales”, and feed sales have maintained steady growth in 23 years. In '23, the company's feed export sales volume was 4.30.5 million tons (yoy +7.9%); of these, the sales volume of pig feed/ poultry feed/ ruminant/ other feed was 155.7/185.0/74.2/157,000 tons, respectively, -0.1%/+22.7%/+0.9%/-17.3% year-on-year.

According to the 2013 annual report, the company plans to increase feed export sales by more than 10% in '24.

In addition, the company actively promotes cost reduction and efficiency in terms of operation, technology, production and marketing. As downstream farming profits improve, profits per ton of feed are expected to gradually increase.

Livestock and poultry farming has maintained steady development, and the second half of the year is expected to usher in a recovery in industry sentiment. The company is steadily expanding its meat and poultry production capacity. According to the 23 annual report, it slaughtered a total of 81 million white feather broilers in 23 years (yoy +13%), and the total annual slaughter production capacity exceeded 1.1 billion birds; production performance is improving steadily, and the profit level of broiler slaughter and breeding is leading the industry. In terms of pig business, the company continues to optimize the internal breeding structure and actively improve the level of breeding management, and pig costs are expected to continue to improve.

Profit forecasting and investment advice. The company's 24-26 EPS is expected to be 0.66, 0.94, and 1.16 yuan/share, respectively. Refer to comparable companies and give a “buy” rating of 12 times PE in 24 years, corresponding to a reasonable value of 7.94 yuan/share.

Risk warning. Agricultural product price fluctuation risk, disease risk, livestock and poultry price fluctuation risk, etc.