Guotai Junan predicts that the full cost of COFCO Jiajiakang (01610) farming is expected to be lower than 16 yuan/kg, and subsequent performance is expected to improve.
The Zhitong Finance app learned that Guotai Junan released a research report stating that it maintains the “increase in holdings” rating of COFCO Jiajiakang (01610), and the 2023-2025 EPS forecast is 0.14/0.31/0.42 yuan. The number of pigs raised by the company in November 2023 is in line with expectations; the breeding system has been fully upgraded and production capacity is sufficient, which is expected to deliver results, while the share of fresh pork business continues to increase.
Guotai Junan's main views are as follows:
In November, the number of pigs sold by the company increased significantly from month to month, and pig prices declined.
The company sold a total of 421,000 pigs in November 2023, an increase of 10.2% over the previous year and 24.92% over the previous year. From January to November 2023, a total of 4.447 million pigs were listed, an increase of 20.32% over the previous year; in terms of pig prices, the average sales price of the company's fat pigs in November was 14.12 yuan/kg, -6.6% over the previous month.
The inflection point of the cycle is getting closer, and the company's breeding system has been fully upgraded, which is expected to deliver results.
At present, the bottom characteristics of the pig industry are obvious. It is expected that the inflection point will rise in the future. At the same time, the company's breeding system has been fully upgraded to gradually increase the proportion of high-performing pig breeding. As of mid-2023, the company will be able to breed and reserve 326,000 pigs, providing a guarantee for future release. At the same time, in the face of a sluggish market, the company continues to optimize feed formulations, continuously optimize management, strengthen field range benchmarking, and narrow the internal breeding performance gap. The cost aspect has been further reduced. It is estimated that the full cost of the company's farming is expected to be below 16 yuan/kg, and subsequent performance is expected to improve.
The company's brand fresh pork business continues to increase in revenue, and brand building has achieved remarkable results.
In November, the company sold 19,800 tons of fresh pork, an increase of 13.37% over the previous month. Brand revenue in the fresh pork business accounted for 29.05%, 1.24pcts over the previous month. The company continues to promote brand building in the fresh pork business. With the commissioning of two slaughtering and processing bases in Jilin and Inner Mongolia, the upstream and downstream compatibility between North China and Northeast China has increased dramatically. The company's fresh pork internal procurement ratio continues to increase. The commissioning of the Guangdong division center has accelerated the company's local market response speed, and the South China regional business is also expanding rapidly.
Risk warning: Market demand reduction risk, raw material price increase risk, risk of falling short of expectations, risk of swine disease, etc.