战略聚焦生猪业务，推动出栏高质量、快速增长。据8 月23 日公司公告，1）生猪：量价齐升贡献收入增长。1H24 生猪营收同比+27.5%至74.5 亿元，生猪销量同比+17%至402.6 万头，其中商品猪/种猪/仔猪同比+26%/-24%/-71%至392.5/1.1/9.0 万头，分别占比97.5%/0.3%/2.2%，头均售价同比+7.9%/+5.2%/-6.5%。2）家禽：业务经营保持平稳。1H24 家禽营收同比+0.9%至15.4 亿元，黄羽肉鸡/鸡苗及蛋销量同比-5.5%/+0.5%至3984万羽/5163 万枚，售价分别同比+6.8%/持平至37.7 元/只、0.8 元/枚。3）辅助产品：1H24 辅助产品营收同比+211.5%至4.1 亿元。1H24 results are within the performance forecast range and are in line with our expectations
Dekang Agriculture and Animal Husbandry announced 1H24 results: 1H24 revenue +25.3% to 9.41 billion yuan, net profit due to changes in fair value of biological assets reversed the year-on-year loss to 1.77 billion yuan, and net profit without considering changes in biological asset value changed to 0.36 billion yuan year-on-year, which is within the performance forecast. The performance was in line with our expectations, and the sharp reversal of losses was mainly due to a recovery in livestock and poultry prices and a rapid decline in breeding costs.
Development trends
The strategy focuses on the pig business and promotes high-quality and rapid growth. According to the company's announcement on August 23, 1) Pigs: A sharp rise in volume and price contributed to revenue growth. 1H24 pig revenue was +27.5% to 7.45 billion yuan, and pig sales were +17% to 4.026 million heads, of which commercial pigs/breeders/piglets were +26%/-24%/-71% to 3.925/0.011/0.09 million heads, accounting for 97.5%/0.3%/2.2%, respectively, with average head sales price +7.9%/+5.2%/-6.5% YoY. 2) Poultry: Business operations remain stable. 1H24 poultry revenue was +0.9% to 1.54 billion yuan, and sales of yellow feather brooder/chicken seedlings and eggs were -5.5%/+0.5% to 39.84 million feathers/51.63 million pieces, and sales prices remained flat at 37.7 yuan/piece and 0.8 yuan/piece, respectively. 3) Auxiliary products: 1H24 auxiliary products revenue +211.5% YoY to 0.41 billion yuan.
The results of 1H24 cost reduction progressed rapidly, and the funding situation further improved. According to the company's announcement on August 23, 1) Low cost: Benefiting from continuous improvement in production management and breeding efficiency, the company's cost reduction effect is remarkable. On the cost side, we estimate that the total cost of the company's 1H24 pig breeding is about 14.2 yuan/kg, and in May, the total cost of the company's pig breeding was less than 13.8 yuan/kg, ranking among the highest in the industry. On the management side, the company carries out strict internal benchmarking and implementation of on-site management methods, such as optimizing management procedures and increasing investment in technology, etc., to help narrow the gap in production results. On the pig breeding side, 1H24 continues to widely promote self-developed Dekang E series breeding pigs, contributing about 100 yuan/head reduction in product costs. 2) Financial situation: The financial situation has improved, and I am optimistic that this year's balance sheet will be repaired more quickly. The company's balance ratio at the end of 1H24 was 74.1%, down 5.5ppt from the end of '23; cash and cash equivalents were +37% to $3.49 billion at the end of '23.
Excellent model and strong pig breeding help asset-light, low-cost, high-quality expansion, and are optimistic about high ROE potential.
1) Model: As explained in “Dismantling the “No. 2 Family Farm”: Asset Light, Strong Bonding, and High Efficiency, the company established the “No. 2 Farm” sow surrogacy model to strengthen ties with farmers, or develop a new model of asset-light and high-quality expansion for pig companies. 2) Breeding pigs: As explained in “Deconstructing Dekang Topic 2: How to Drive Cost Leadership”, the company has focused on breeding research and development for more than ten years, and has been increasing the promotion of self-developed Dekang E series boar to create the hard power of breeding pigs with leading performance and sufficient reserves. 3) ROE is expected to lead the industry: the company's asset-light model has built a foundation, the cost advantage contributes to excessive revenue, and the pig breeding advantage supports high yield growth, and is expected to continue to lead the industry.
Profit forecasting and valuation
Keep profit forecasts unchanged. The current stock price corresponds to 6.2/4.3 times P/E in 24/25, maintaining an outperforming industry rating and target price of 66 yuan, corresponding to 8.8/6.1 times P/E in 24/25, corresponding to 42% upward space.
risks
Pig prices and release volumes fell short of expectations; risk of the epidemic; raw material prices rose more than expected.
