Event: the company issued a 2020 performance forecast, as of December 31, 2020, compared with the net profit of 8.34 yuan in 2019, the profit in 2020 is expected to decrease to about 160 million to 200 million yuan, a decrease of about 76% to 81%. On the same day, the company issued an announcement and the board of directors decided to initiate the relevant preparations for the proposed initial public offering of A shares.
The price of chicken seedlings fluctuates violently, and the company's profits are under short-term pressure. The main reasons for the decline in the company's profit in 2020 are: 1) due to the sharp decline in the price of chicken seedlings and the company's initiative to significantly reduce the production and sales of chicken seedlings, the profit of the chicken seedling business has decreased significantly; 2) the average price of the company's raw chicken products has decreased and the gross profit of chicken products has decreased; 3) sales, marketing, promotion and R & D expenses have increased as a result of the company's increased resource investment in its new retail business.
C-end channels continue to make efforts, ploughing the lower reaches of the value chain to quickly seize the market. At present, the company is mainly based on B2B channels, but since 2016, the company has begun to seek a transition to C-end, and began to vigorously invest in sales fees in 2019 to expand C-end channels through online and offline convenience stores. C-end accounts for 20% of H1 in 2020, increasing from 2% in 2016, and gradually transforming to the food industry. The company's new retail channel is mainly arranged through Liaocheng mode + excellent shape mode + online mode, and different channel sales models are adopted for different series of products. Under the dual advantages of R & D + brand, it is expected to drive the C-end channel to achieve rapid penetration.
Short-term pressure does not change the long-term trend, BathC two-wheel drive can be expected. At present, the level of per capita chicken consumption in China is relatively low. With the improvement of residents' consumption level and consumption structure, there is more room for industry improvement in the future. As an integrated enterprise of the whole industrial chain, the company extends the industrial chain to the deep processing and sales of chicken products, gradually reduces the business proportion of chicken seedlings, greatly reduces the cyclical impact, and improves the ability to resist market risks. can better tap the value of chicken, improve profitability. At present, the B-end business of the company is sound, and with capacity expansion in the future, it is expected to grow steadily; C-side business is developing rapidly, the penetration is gradually increasing, and it is expected that there will be a significant recovery next year.
The proposed initial public offering of A shares will promote the sustained and stable development of the company. The board of directors of the company decided to initiate the relevant preparations for the initial public offering of A shares of the proposed company. If the return to An is successful, dual financing channels may better help the company's industrial development. The company may continue to expand the production capacity of White Feather Broiler and enhance its vertically integrated business model; continue to expand its sales and distribution network and enter new markets; and continue to expand and diversify its product portfolio; seek to establish appropriate strategic alliances, joint ventures or other acquisition opportunities.
Profit forecast: as the company's performance is in line with expectations, maintain the original profit forecast. It is estimated that the company's revenue from 2020-2022 will be 39.38 million yuan, an increase of 0.21 percent, an increase of 0.21 percent, a year-on-year increase of 0.21 percent, a net profit of 5.41 percent, and a year-on-year increase of-80 percent, 221 percent, 67 percent and 0.64 yuan, respectively, to maintain the "buy" rating of the company.
Risk hints: macroeconomic downside risks, food safety risks, persistent risks of COVID-19 epidemic, lower-than-expected sales, high valuation risks, and performance forecasts are preliminary measurement results, subject to annual report data.