Net profit for 24Q2 was 2.563 billion yuan, and the balance ratio fell to 58.95%. The company announced the 2024 semi-annual report: achieved revenue of 46.74 billion yuan, an increase of 13.5% over the previous year, net profit to mother of 1.327 billion yuan, net profit after deducting 1.358 billion yuan after deducting net profit from mother, all of which turned losses into profits year over year.

On a quarterly basis, Q1 and Q2 achieved net profit attributable to mother - 1.236 billion yuan and 2.563 billion yuan, respectively. The Q2 results turned losses into profits over the same period last month. At the end of June 2024, the company's balance ratio was 58.95%, down 4.42 percentage points from the end of the first quarter.

The 24Q2 pig business is expected to make a profit of about 1.8 billion yuan, and the comprehensive cost of breeding has steadily declined. 1H2024's pork sales volume is 14.3742 million heads, up 22.0% year on year, the average sales price of hairy pigs is 15.32 yuan/kg, up 5.1% year on year, and meat pig sales revenue is 26.845 billion yuan, up 29.4% year on year; in January-July, the company released 16.7 million pigs, an increase of 20% year on year. It has completed the annual listing target of 30-33 Million head: 50.6%-55.7% 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 raw materials 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 cost in June fell within 14 yuan/kg, and the profit of the Q2 pig business was about 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 0.8 billion yuan in 2024Q2, and the total cost will steadily fall back to 0.548 billion in 1H2024, down 1.0% year on year, and the average sales price of chicken is 13.29 yuan/kg, up 1.5% year on year; in January-July, the company's broiler sales volume is 0.645 billion yen, down 0.5% 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 profit of the Q2 broiler business was about 0.8 billion yuan. The company's chicken breeding business production continued to be stable, and the core production performance indicators remained high.

The high price of pigs is worth looking forward to. Yellow feather chicken is expected to make a normal profit ① From December 2022 to April 2024, the total elimination of 9.2% in the pig breeding industry has surpassed 2021-2022, and the number of sows that can be raised is 12.5% lower than in June 2021. Since March of this year, pig prices have continued to exceed market expectations, and the impact of loss of production capacity has continued to show. From December 2023 to June 2024, the number of newborn piglets in the country fell 7% year on year, and the country's pig storage fell 4.6% year on year at the end of the second quarter. Pig prices are expected to remain high in the second half of the year. In addition, due to factors such as a long loss period, a high balance ratio for several years, preference pressure, and secondary childbearing, etc., pig production capacity is slowly recovering; ② Week 30 of 2024 (7.22-7.28): Huang Yu kept 1.502 million sets in the same period since 2018; Huang Yu kept 13.378 million sets in the same period since 2018; Huang Yu's parents kept 13.378 million sets of chicken seedlings, the lowest in the same period since 2018; Huang Yu's parents sold 1.391 million sets of chicken seedlings, higher than the same period in 2020-2023 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 of 10.257 billion yuan and 15.45 billion yuan. 12.955 billion yuan, up 260.5%, 50.6%, and -16.1%, respectively. 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.