Incidents:

On July 29, 2024, Haida Group released its 2024 mid-year report: in the first half of 2024, total revenue was 52.296 billion yuan, down 0.84% year on year, and net profit to mother was 2.125 billion yuan, up 93.15% year on year.

Investment highlights:

Feed sales grew steadily, and performance improved markedly. In the first half of 2024, total revenue was 52.296 billion yuan, down 0.84% year on year, and net profit to mother was 2.125 billion yuan, up 93.15% year on year. Profits increased significantly, mainly due to a good increase in market share and profit in the main feed business, while the farming business turned losses into profits.

Feed sales bucked the trend, and the market share further increased. According to data from the Feed Industry Association, 2024H1's total feed production fell 4.1%, and the company achieved feed sales of about 11.79 million tons (including 0.98 million tons of internal farming consumption), up about 8.5% year on year. Among them, export sales volume was 10.81 million tons, up 8% year on year, and market share further increased. Among them, export sales of aquatic feed increased by about 10% year on year, export sales of poultry feed increased by about 14% year on year, and pig feed fell 7% year on year.

Downstream aquaculture is developing steadily. In terms of pig breeding business, the company continues to focus on building pig breeding team capacity and building its own breeding system. Team management ability and professional ability have been further improved, and comprehensive breeding costs have improved markedly. Fat pigs sold about 2.7 million in the first half of the year, turning a year-on-year loss into a profit. In terms of aquaculture, the company's main aquaculture varieties are currently specialty aquatic products such as raw fish and prawns. Among them, raw fish prices picked up in the first half of the year, and the raw fish farming business lost money. In the future, the company will set a reasonable farming scale, improve the circulation and operation capacity of the raw fish market, and reduce farming risks. Through fine management and specialized operation, the cost of prawn farming has been reduced markedly. In the future, the company will appropriately expand the scale of prawn farming on the basis of building team expertise.

The profit forecast and investment rating take into account the impact of fluctuations in feed raw material prices, and we adjusted the 2024-2026 company revenue to 130.432/143.933/162.542 billion yuan, and net profit to mother of 3.889/4.506/5.335 billion yuan, corresponding to 18/16/13 times PE, respectively. The company has developed steadily over the years, and the growth rate of the main feed business has steadily increased, maintaining a “buy” rating.

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