Event: the company issued the 2020 annual report and 20Q1 performance report, with revenue of 1.682 billion yuan in 2020, down 48.66% from the same period last year, and net profit of 67 million yuan, down 95.86% from the same period last year.
21Q1 achieved revenue of 506 million yuan, an increase of 14.44% over the same period last year, and a net profit of 134 million yuan, down 8.30% from the same period last year.
Comments:
The prosperity of the industry is in the doldrums, and the company's profits fell sharply in 2020. In 2020, the company's net profit fell to 67 million yuan,-95.86% compared with the same period last year. This is mainly due to the sharp decline in the selling price of the company's main products, the generation of chicken seedlings, the decrease in income and the decline in gross profit, which led to a serious drop in the company's profit during the reporting period. At the beginning of 2020, the epidemic situation of COVID-19 was serious, farmers in many places across the country could not fill the fence, and the price of chicken seedlings fell all the way. In the follow-up, due to the delay in the start of the school year, stagnant tourism, slow recovery of catering, a cliff drop in chicken consumption, and a low price of chicken products, the increase in the introduction of white feather ancestors in 2019 led to the release of production capacity in 20Q3, and the downturn in the chicken market and the growth of chicken seedling supply contributed to the continued decline in chicken seedling prices. 20Q4 with the production capacity of small-scale chicken farms, the supply of chicken seedlings appeared an inflection point, and the price of chicken seedlings began to pick up. Throughout the year, the demeanor of the poultry industry chain was in the doldrums, and the company's main business income was seriously frustrated, of which the chicken gross profit margin fell from 73.15 to 36.36%, and the overall profit dropped sharply.
The supply of Q1 poultry chain is tight, and the company's profit has improved obviously. The company's 21Q1 realized revenue of 506 million yuan, an increase of 14.44% over the same period last year, and a net profit of 169 million yuan, a decrease of 8.30% over the same period last year. The company turned from loss to profit in the first quarter, mainly due to the short-term upward demeanor of the meat and poultry industry chain, which led to a substantial improvement in the company's meat and poultry business income. Since the first quarter, the supply of the whole meat and poultry industry chain has been tight. On the one hand, the Feed Industry Association reported that the meat and poultry feed output in the first quarter was 19.11 million tons, a decrease of 9.7% compared with the same period last year. On the other hand, the poultry vaccine batch issuance data disclosed by veterinary drug enterprises in the first quarter was also relatively low, so it can be speculated that the whole poultry industry chain is in a state of contraction in 21Q1. The supply of broiler was lower than market expectations, and the price of feather chicken reached a high level after the Spring Festival, and gradually recovered in March, while the price of broiler seedlings benefited from the tight supply and the continuous rise driven by the price of hairy chicken, which remained at a high level after breaking through 5 yuan per feather in an all-round way. The company ushered in the upward boom of the poultry chain in the first quarter, with a significant increase in meat and poultry business revenue and a significant improvement in gross profit.
As supply increases while demand is sluggish, watch out for a fall in meat and poultry prices in the short term. According to Burson and Hexun, the number of broilers increased by about 5% month-on-month in April, and the supply of broilers increased, and chicken prices are expected to drop somewhat compared with March. In the following May-June, there is still room for growth in the supply of hairy chickens. If the terminal demand continues to be depressed, feathered chicken Q2 may fall below 8.0 yuan / kg, and the price of chicken seedlings may be affected by this to accelerate the decline, and it is expected that the company's Q2 gross profit margin will be under pressure.
At the end of the month, the financing of new shares was smooth and the industrial chain was comprehensively distributed. At the end of April, the company issued new shares smoothly and raised 570 million yuan, which is used in the annual deposit column 800000 sets of parent broiler breeding park project, annual incubation 100 million commercial broiler incubator project, meat processing project and cooked food processing project. Among them, two cooked food projects in Penglai and Weifang are expected to be produced and operated by the end of the year.
Under the background that African classical swine fever has ushered in a new round of growth opportunities for meat and poultry farming, and there is a broad market space for downstream cooked food products, the company relies on its own advantages such as technology research and development and brands to seize the opportunities for the development of the industry. expand the production capacity of existing commercial broiler chickens, further enhance market share, extend the layout of the industrial chain, and give play to the synergy effect of vertical integration.
Investment suggestion
As a leading enterprise of caged breeder chickens raised by parents in China, the company has been committed to raising broiler breeders and producing commercial broiler seedlings for more than 30 years. It has industry-leading technology and mature experience in broiler breeding and promotion. "Minhe" brand commercial chicken seedlings enjoy a high reputation in the white-feathered broiler industry. The company has a comprehensive layout of the meat and poultry industry chain. If the project goes smoothly, the company is expected to usher in a new round of growth in the next 2-3 years. We believe that the estimated return net profit of the company for 21-23 years is 653, 775 and 6.87 million yuan, the EPS is 2.16, 2.56 and 2.27, respectively, and the corresponding PE is 7.0, 5.9 and 6.6.2 times, respectively, maintaining the "overweight" rating.
Risk hint: the progress of the project is not as expected and the prosperity of the industry continues to decline.