Event: set up wholly-owned subsidiaries in Shanghai and Beijing respectively. The company announced that it intends to invest 5 million yuan to set up wholly-owned subsidiaries Beijing Eagle Agriculture and Animal Husbandry Group Beijing Trading Co., Ltd. and Eagle Agriculture and Animal Husbandry Group Shanghai Trading Co., Ltd., and to appoint Mr. Hou Wuqun as the head of the company's Beijing subsidiary. Mr. District Ruiqiang is the person in charge of the company's Shanghai subsidiary. The two subsidiaries will serve as the main local operation platform for young Muxiang, and now draw up business scope for: chilled meat, primary agricultural products (fresh meat and eggs, vegetables, etc.), meat products sales.
Young Muxiang management is on the right track, brand terminal construction began to speed up. The first batch of 50 stores in Zhengzhou began to attract investment in April this year and officially opened on September 28th. Now they are gradually on the right track and some stores are beginning to make a profit. After that, the company began to speed up its expansion plan to Ji Muxiang, attracting 300 stores to 17 municipalities in Henan Province at the end of October, and held a large-scale Chamber of Commerce in Shanghai again on November 25. The construction of Muxiang stores started from 50 stores in Zhengzhou, and began a comprehensive expansion to Henan Province and the whole country. The concept of safety traceability of the whole industry chain from the source of feed to the table will help young mu Xiang to become a star brand in the domestic market where food safety problems occur frequently. The multi-level and diversified product structure, including ecological meat, ecological vegetables and meat products, forms an effective support for store management.
The proportion of terminal sales has increased to ensure performance growth next year. According to our previous research, when the market is poor this year, the retail end of the pig industry chain can still achieve an average profit of more than 100 yuan. As the company speeds up the pace of terminal construction, the product structure may reduce the proportion of piglets next year, increase the proportion of fattening pigs and chilled meat, avoid the risk of downward prices of piglets next year, and ensure steady profit growth.
Valuation and investment advice. We maintain the profit forecast for the company for the time being. it is estimated that the EPS of the company in 12-14 years will be 0.64 yuan, 0.71 yuan and 1.98 yuan respectively, and the target price will be 20 yuan, corresponding to the PE of 31x, 28x and 10x in 12-14 years.
Key issues of concern
Stock price catalyst (positive): the rapid expansion of young animal husbandry incense stores; the successful operation of the retail terminal eagle model; the upward inflection point in the pig price cycle.
Risk tips (negative): industry capacity expansion is too fast; ecological pork promotion is lower than expected; breeding epidemic.