Net profit attributable to mother was 2.486 billion yuan - 2.736 billion yuan, turning loss into profit compared to the same period last month

The company announced its 2024 semi-annual performance forecast: net profit of 1.25 billion yuan - 1.5 billion yuan, net profit of 1.3 billion yuan - 1.55 billion yuan after deducting net profit from mother, turning a year-on-year loss into a profit. On a quarterly basis, Q1 and Q2 achieved net profit attributable to mother of 1.236 billion yuan and 2.486 billion yuan to 2.736 billion yuan respectively, while Q2 results turned a month-on-month loss into a profit.

The 24Q2 pig business is expected to make a profit of about 1.8 billion yuan, and the comprehensive cost of breeding fell significantly from Q1 to 1H2024. The company listed 14.3742 million pigs, an increase of 22.0% over the previous year, and has achieved the annual target of 30-33 million heads of 43.6%-47.9%. The average sales price of hairy pigs was 15.32 yuan/kg, up 5.1% year on year. On a quarterly basis, the number of pigs released by 2024Q1 and Q2 companies was 7.18 million and 7.19 million, up 28.3% and 16.2%, respectively, and achieved pig business revenue of 12.31 billion yuan and 14.5 billion yuan, up 24.4% and 33.9%, respectively. On a monthly basis, the average sales price of the company's pigs from April to April was 15.18 yuan/kg, 15.83 yuan/kg, and 18.1 yuan/kg, respectively; the company insisted on good basic production management, production remained stable, and production performance continued to improve. At the same time, the price of superimposed feed ingredients declined. In April-May, the company's comprehensive pig breeding costs fell to 14.4 yuan/kg and 14.2 yuan/kg respectively, which is a significant decrease from 15.2 yuan/kg in Q1. We estimate that the profit of the Q2 pig business is about 14.2 yuan/kg. 1.8 billion yuan. With the gradual improvement of production efficiency, the company's comprehensive pig cost still has room to decline.

The profit of the broiler business is expected to be about 0.9 billion yuan in 2024Q2. The total cost of broiler chickens will steadily fall by 0.548 billion in 1H2024, a decrease of 1.0% year on year. The average sales price of chicken is 13.29 yuan/kg, up 1.5% year on year. On a quarterly basis, the number of broilers sold by 2024Q1 and Q2 companies was 0.267 billion and 0.28 billion, with year-on-year increases of 0.2% and -1.1%, respectively, achieving broiler business revenue of 7.652 billion yuan and 8.021 billion yuan, with year-on-year increases of -1.0% and -1.2%, respectively. On a monthly basis, the average sales price of the company's broiler from April to April was 13.21 yuan/kg, 13.83 yuan/kg, and 13.68 yuan/kg, respectively. In April-May, the total cost of the company's broiler dropped to about 12.2 yuan/kg and 12 yuan/kg respectively. We estimate that the cost for June will be around 12 yuan/kg. From this, it is estimated that the profit of the Q2 broiler business was about 0.9 billion yuan.

The high price of pigs is worth looking forward to, and yellow feather chicken is expected to make a normal profit ① In this cycle, the cumulative removal of 9.2% was 9.2% from December 2022 to April 2024. Degradation has already surpassed 2021-2022, down 12.5% from the number of sows that can be bred in June 2021. Since March of this year, pig prices have continued to exceed market expectations. We judge that it is directly related to the supply and demand gap brought about by the severe 2023Q4 pig epidemic. Of course, secondary education and pressure have also given a certain boost to pig prices. As the effects of reduced production capacity continue to show, this round of high pig prices is worth looking forward to; in addition, due to factors such as a long loss period, high balance ratio for several years, preferences and secondary education, etc., the recovery of pig production capacity is slow; ② Week 24 of 2024 (6.10-6.16): Zuanzu Huang Yu 1.5106 million sets in storage, in High for the same period since 2018; Huang Yu's parents kept 13.341 million sets of chicken seedlings, which is the lowest level in the same period since 2018; Huang Yu's parents sold 1.313 million sets of chicken seedlings, which is higher than the same period in 2022 and 2023, and the yellow feather chicken industry chain is expected to make a normal profit in 2024.

Investment advice

We expect the company to release 33 million, 37 million, and 40 million pigs in 2024-2026, with year-on-year increases of 25.7%, 12.1%, and 8.1%, respectively. It is estimated that broilers will release 1.242 billion, 1.304 billion, and 1.369 billion feathers, with year-on-year increases of 5%, 5%, and 5%, respectively, corresponding to the net profit of the mother 10.257 billion yuan and 15.45 billion yuan. 12.955 billion yuan, up 260.5%, 50.6%, and -16.1%, respectively. Net profit to mother was 8.403 billion yuan in 2024, 17.53 billion yuan in 2025, and 15.362 billion yuan in 2026. The reason for this large adjustment is that pig prices, chicken price expectations, and comprehensive pig breeding costs were revised for 24-26. Pig prices are expected to usher in a new upward cycle in 2024. As the second largest pig breeding enterprise and the largest yellow feather chicken breeding enterprise in China, the company is expected to achieve a significant increase in net profit and maintain the company's “buy” rating.

Risk warning

The epidemic; chicken prices rose later than expected; pig prices continued to be sluggish.