Xiaoming Co., Ltd., the leader of domestic egg and chicken industry and the leader of biosafety and animal welfare, is an integrated egg breeding enterprise. The company started in 2006, the business covers 10 areas related to laying hen breeding, the main business is grandparents, parents breeding; parental generation, commercial generation chicks (eggs) sales; commercial chickens, breeding and sales; commercial egg sales. The company is committed to building China's "China layer industry biosafety first brand", is China's highest level of biosafety, the most complete generation, one of the most competitive laying hen breeding enterprises. We estimate that the return net profit of the company from 2021 to 2023 will be RMB 1.05 billion, the corresponding EPS will be RMB 0.58, and the current PE will be 24.8 times the current PE. Since 2021Q2, the price of eggs has been booming, and the price of commercial egg chicks has also shown an upward trend. As the first listed laying hen company in China, the company has benefited from the rebound in egg prices. For the first time, coverage gives a "buy" rating.
Listing financing helps the company release the production capacity of commodity generation chicks, and the market share is accelerated in advance. The company's main business is the sale of commodity generation chicks. In 2020, the company sold 143 million commodity generation chicks, accounting for about 12.5% of the total sales of commodity generation chicks in the country. The company sold 82.0063 million commercial chicks in the first half of 2021, an increase of 15.21% over the same period last year. In the first half of 2021, the company achieved an overall revenue of 354 million yuan, an increase of 26.12% over the same period last year, and a net profit of 51.9513 million yuan, an increase of 61.23% over the same period last year. The company's listing financing will be mainly used for capacity expansion, and strive to maintain the sales of commodity chicks at 20% from 2020 to 2022, and achieve the goal of doubling the short-term market share (the market share of commodity chicks will increase to 25.0% from 12.5% in 2020).
The company pays attention to animal welfare and biosafety, and its anti-epidemic risk ability is significantly better than the business model of "centralized breeding and decentralized incubation" adopted by industry companies. the company's breeding and breeding are mainly concentrated in Minning, Qingtong Gorge and Alashan at the eastern and western foothills of Helan Mountain, with natural geographical isolation barriers. The breeding company transports the breeding eggs to Ningxia, Henan, Xinjiang, Jilin, Shaanxi and other places for hatching. The company strictly controls the entry and exit of vehicles and carries out strict eliminate virus to create a high standard biosafety system. In addition, the company attaches great importance to animal welfare and is increasingly favored by international food buyers.
Risk tips: egg price fluctuations, the impact of bird flu and other diseases, raw material price fluctuations and so on.