Financial pressure remains, pay attention to the progress of pre-restructuring
The company achieved net profit of 2.88 billion yuan in 2023, including deep losses in the pig breeding business, losses in the pork products business due to a decline in gross margin of frozen meat, and a period of rising production capacity in food processing. Net profit attributable to mother was 604 million yuan in 24Q1, reversing losses year-on-year. Net profit after deducting non-return to mother was -455 million yuan. The difference between the two may be due to the company's disposal of equity income of 1.04 billion yuan due to the company's disposal of the participating company Shiji Biotech. As of 24Q1, the company's balance ratio was 80.7%, and capital pressure still exists. In the future, we need to pay attention to the progress of the company's application to the court for pre-restructuring matters. The company is expected to achieve net profit of 8.44/0.06/0.03 billion yuan in 2024/25/26. Referring to the comparable company's 2024 4.30X PB valuation, the company is given a 4.30XPB valuation, corresponding to the target price of 2.67 yuan, maintaining the “holding” rating.
In 2023, it achieved net profit of 2.88 billion yuan, and the pig breeding deep loss company achieved operating income of 10.2 billion yuan in 2023, an increase of 6.9% over the previous year, or driven by the increase in the number of pigs released by the company. The company released a total of 7.119 million pigs in 2023, an increase of 61% over the previous year. The company achieved net profit to mother of 2.88 billion yuan in 2023, an increase in losses over the previous year. Among them, pig farming lost 2.43 billion yuan, and pork products lost 143 million yuan due to falling gross margins of frozen meat and food processing while production capacity is still climbing. As of the end of 2023, the company's balance ratio reached 86.7%, and the current ratio was 70.8%:
Current assets of 8.787 billion yuan and current liabilities reached 12.412 billion yuan. There are certain risks in the company's solvency.
24Q1 achieved net profit of 604 million yuan, year-on-year reversal/month-on-month loss. The company achieved revenue of 2.05 billion yuan, or -5.7% year-on-year; realized net profit to mother of 604 million yuan, with year-on-month losses of -455 million yuan after deducting net profit from non-return to mother, a year-on-year loss reduction. The difference between the two may be due to the company's disposal of equity income of 1.04 billion yuan due to the company's disposal of the participating company Shi Ji Biotech. As of 2024Q1, the company had monetary capital of 287 million yuan, a significant decrease from 1.25 billion yuan at the end of 2023. It may also indicate that the company is still under strong pressure to repay its debts. As of 2024Q1, the company's balance ratio was 80.7%. Although there is some relief from 86.7% at the end of 2023, it is still high.
The target price is 2.67 yuan, maintaining the “hold” rating
We have basically maintained the company's 2024/25 profit forecast - 844 million yuan/06 million yuan, and added a profit forecast of 2023 million yuan. The corresponding 2024 BVPS is 0.62 yuan. Refer to the comparable company's 2024 4.30X PB valuation and give the company a 4.30X PB valuation. The corresponding target price is 2.67 yuan (previous value of 3.11 yuan), maintaining the “holding” rating.
Risk warning: the number of pigs released falls short of expectations, pig prices fall short of expectations, repeated non-plague outbreaks, large-scale animal disease outbreaks, the pace of expansion does not match market demand, etc.