Haida Group released its 24-year report: The company achieved operating income of 52.3 billion yuan (-0.84% YoY) and net profit of 2.13 billion yuan (YoY +93.15%) in the first half of '24. Basic earnings per share were $1.28, and the weighted ROE was 10.56%. 24Q2 achieved operating income of 29.12 billion yuan (-0.87% YoY) and net profit to mother of 1.26 billion yuan (+82.64% YoY).

The aquafeed industry was under pressure in the first half of the year, but the company achieved contrarian growth with its strong advantages. Affected by the loss of production capacity in the aquaculture industry, the aquaculture market as a whole shrinks, and the overall aquaculture market is under pressure. According to data from the China Feed Industry Association, the country's aquatic feed production in the first half of the year was 9.67 million tons, -2.4% year-on-year. However, Haida Group's aquatic feed bucked the trend. Sales increased by about 10% year on year in the first half of the year. Among them, general water ingredients increased 15% to 20% year on year, and high-grade puffed fish remained flat year on year; shrimp and crab ingredients increased 20% year on year, but due to crayfish ingredients, shrimp and crab ingredients overall increased 8% year on year. Overall, the industry was under pressure in the first half of the year, and with its excellent product strength, complete aquaculture service system, and rich and complete product portfolio configuration capabilities, Haida Group still achieved double-digit growth in aquatic feed, and its market share further increased.

As the second half of the year enters the peak season for aquatic feed, the pressure on the industry is expected to ease, and the company is expected to perform better in terms of profit.

In '24, the prices of major aquatic products all showed good performance. For example, prices of raw fish and California perch rose by about 30% year on year, while grass carp, etc. also increased by more than 10%. We believe that the upward trend in fishery prices will continue in the second half of the year. At the same time, as Q3 enters the peak season for aquatic feed, high aquatic product prices will also drive feed consumption, and the pressure on the aquatic feed industry is expected to ease. At the same time, the company leveraged its advantages in the face of industry adversity, adjusted sales strategies, and vigorously supported high-quality customers and farmers, thus achieving contrarian growth. As the industry recovers in the second half of the year, the company's advantages will also be further amplified, and we expect the company's market share to increase further. Overall, the company is expected to perform better on both quantitative and profit sides of aquatic feed in the second half of the year.

Poultry feed is growing steadily, and pig feed is under heavy pressure. The company's pig sales volume in the first half of the year was -7%, mainly due to the rapid withdrawal of small and medium-sized farmers and a decline in storage space. Although the company achieved a rapid increase in market share through active layout and customer structure adjustments in the previous two years, overall sales still showed negative growth. In the future, with improvements in breeding profits and an increase in supplementary columns, the company's pig feed sales are expected to pick up in the second half of the year. In the first half of the year, the company's poultry export sales volume was +14%. The company gave full play to its professional advantages and actively cooperated with large-scale breeding plants and one-stop breeding companies to seize market share. Haida Group released its 24-year report: The company achieved operating income of 52.3 billion yuan (-0.84% YoY) and net profit of 2.13 billion yuan (YoY +93.15%) in the first half of '24. Basic earnings per share were $1.28, and the weighted ROE was 10.56%. 24Q2 achieved operating income of 29.12 billion yuan (-0.87% YoY) and net profit to mother of 1.26 billion yuan (+82.64% YoY).

The aquafeed industry was under pressure in the first half of the year, but the company achieved contrarian growth with its strong advantages. Affected by the loss of production capacity in the aquaculture industry, the aquaculture market as a whole shrinks, and the overall aquaculture market is under pressure. According to data from the China Feed Industry Association, the country's aquatic feed production in the first half of the year was 9.67 million tons, -2.4% year-on-year. However, Haida Group's aquatic feed bucked the trend. Sales increased by about 10% year on year in the first half of the year. Among them, general water ingredients increased 15% to 20% year on year, and high-grade puffed fish remained flat year on year; shrimp and crab ingredients increased 20% year on year, but due to crayfish ingredients, shrimp and crab ingredients overall increased 8% year on year. Overall, the industry was under pressure in the first half of the year, and with its excellent product strength, complete aquaculture service system, and rich and complete product portfolio configuration capabilities, Haida Group still achieved double-digit growth in aquatic feed, and its market share further increased.

As the second half of the year enters the peak season for aquatic feed, the pressure on the industry is expected to ease, and the company is expected to perform better in terms of profit.

In '24, the prices of major aquatic products all showed good performance. For example, prices of raw fish and California perch rose by about 30% year on year, while grass carp, etc. also increased by more than 10%. We believe that the upward trend in fishery prices will continue in the second half of the year. At the same time, as Q3 enters the peak season for aquatic feed, high aquatic product prices will also drive feed consumption, and the pressure on the aquatic feed industry is expected to ease. At the same time, the company leveraged its advantages in the face of industry adversity, adjusted sales strategies, and vigorously supported high-quality customers and farmers, thus achieving contrarian growth. As the industry recovers in the second half of the year, the company's advantages will also be further amplified, and we expect the company's market share to increase further. Overall, the company is expected to perform better on both quantitative and profit sides of aquatic feed in the second half of the year.

Poultry feed is growing steadily, and pig feed is under heavy pressure. The company's pig sales volume in the first half of the year was -7%, mainly due to the rapid withdrawal of small and medium-sized farmers and a decline in storage space. Although the company achieved a rapid increase in market share through active layout and customer structure adjustments in the previous two years, overall sales still showed negative growth. In the future, with improvements in breeding profits and an increase in supplementary columns, the company's pig feed sales are expected to pick up in the second half of the year. In the first half of the year, the company's poultry export sales volume was +14%. The company gave full play to its professional advantages and actively cooperated with large-scale breeding plants and one-stop breeding companies to seize market share.

Prices have reversed, and profits in the company's farming business have improved markedly, and future development is mainly steady. Both pig prices and raw fish prices have seen a marked improvement this year. In the first half of the year, the company released 2.7 million pigs. Comprehensive breeding costs improved, turning losses into profits. Raw fish farming reduced losses in the first half of the year. In the future, the company will set a reasonable farming scale to control farming risks. The cost of prawn farming has dropped markedly, and in the future, the company will expand its scale appropriately based on team building capabilities. Overall, we believe that the company's farming business has reached maturity, the overall farming capacity is constantly improving, and the future will focus on steady development. With the improvement in pig and fish prices this year, the farming business may contribute to profits throughout the year.

The volume and profit of overseas business increased. The company replicated the mature domestic “feed+seedling+animal protection” model to overseas markets. The main regions include Southeast Asia, South America, Africa, etc. In the first half of the year, the company's export feed sales volume in overseas regions exceeded 1 million tons, an increase of more than 30% over the previous year, and profitability was further increased. In the future, the company combines its technical advantages and local characteristics, and overseas market sales are expected to continue to grow rapidly.

Profit forecasting and investment advice. Overall, we believe the company's performance will continue to grow rapidly in the second half of '24. The core feed business will benefit from the recovery of aquatic products, livestock and poultry prices, and its own technical and model advantages will continue to be highlighted; the farming business will contribute more profits. At the same time, the company's long-term development strategy goals are clear. Currently, it has completed a production capacity layout of 40 million tons of feed, and will further explore overseas markets in the future. EPS is estimated to be 2.75/3.24/3.50 yuan in 24-26, respectively. Considering that the company is a relatively scarce leading company in the industry, the company will be given 20 to 25 times PE in 24 years, with a corresponding reasonable value range of 55.0 to 68.8 yuan, maintaining the “superior to the market” rating.

Risk warning. Consumption of aquatic products, livestock and poultry fell far short of expectations, natural disasters that exceeded expectations, and large fluctuations in raw material prices had an adverse impact.