Relying on the platform of Jiawo Group, the leading company in the supply chain of high-quality protein seafood is mainly engaged in the breeding, processing and sales of high-quality protein seafood, mainly through the overseas Chilean holding subsidiary AustralisSeafoods S.A. Carry out the breeding, processing and marketing of salmon; through the domestic holding subsidiary Qingdao Guoxing to carry out narrow cod, Arctic sweet shrimp and other products processing and marketing. With the gradual recovery of overseas demand, the prosperity of the salmon industry continues to improve, the company's revenue continues to grow, and its profitability increases significantly: 2022Q1 achieved an operating income of 1.223 billion yuan (+ 6.16%) and a net profit of 110 million yuan (+ 170.48%).
Salmon industry supply and demand analysis: supply and demand is tight, prices are expected to remain high 1. 5% in the next 2 years. Supply side: due to license and resource restrictions, it is becoming more and more tight: because salmon have extremely high requirements for the growing environment, and aquaculture waters are relatively scarce, Norway and Chile, as the two major producing areas in the world, account for 80% of the total supply. the relevant governments have implemented a strict licensing system. Due to resource constraints and the epidemic disrupting the seedling plan (reduction in the number of seedlings), the supply side continues to be tight. According to the Kontali forecast, the global supply CAGR is expected to be 4 per cent in 2020-2024, of which the growth rate of global salmon supply is less than 1 per cent in 2022, while the average annual growth rate of global salmon demand is 8 per cent (2010-2020).
two。 Demand side: salmon is the largest single item in global fish trade, and demand continues to grow: salmon has always been the most important commodity in global trade in fish products, accounting for about 19% of global trade in 2018. The global salmon market demand continues to grow, with the global demand CAGR of 8% in 2010-2020. We believe that the average demand growth rate is expected to remain at 8% after the epidemic control is gradually restored. There is still a lot of room for growth in overseas per capita consumption (6-8kg) and salmon consumption (0.06kg) in China.
3. Price: the supply and demand is tight, and the price gradually recovers after the epidemic control is alleviated: the supply of salmon is limited, the demand is rigid, and the output growth rate is negatively correlated with the price. In the past year, with the gradual mitigation of the impact of the global COVID-19 epidemic, the terminal demand and price of salmon showed a good growth trend.
Jiawo's core competitiveness: control license scarce resources, integrated whole industry chain operation company through the acquisition of salmon leader Australis, cut into the high-value link of the industrial chain, relying on the license and other scarce resources, the company is expected to further strengthen industry barriers and benefit from the tight balance between supply and demand in the salmon market for a long time. At the same time, the company has realized the integrated whole industry chain operation of salmon business from egg incubation, fresh water breeding, mariculture, harvesting and processing to brand sales, and built an ecological closed loop of the industrial chain. and has unique advantages in each process link, "overseas + domestic", "offline + online" double-end force. In addition, the company's aquaculture technology is ahead of the industry, and various indicators continue to perform well.
Investment advice: we believe that as the mainstream consumer fish products in Europe and the United States, the demand for salmon is relatively rigid, while the culture license and harvest have become a scarce resource in the world. The corresponding market value of the company's salmon is much lower than that of the major overseas leading enterprises (the average market value of the overseas leading enterprises is about 2.1 billion RMB / 10,000 tons, and the company's 21-year harvest is 84000 tons). The company has a scarce salmon culture license and the layout of the industrial chain, is expected to benefit from overseas and domestic consumption recovery trend, seafood sales revenue is expected to increase rapidly. We expect the company's revenue in 2022-24 to be $64.8 million, with a net profit of $3.855 billion and a corresponding EPS of $2.16 million. The current share price corresponds to a PE of $13.6, 9.4 and 7.2X, with a 2023 target PE of 20 times the target market capitalization of 11 billion and a target price of 63 yuan.
Risk tips: natural disaster risk, market price fluctuation risk of raw materials and products, trading environment and exchange rate risk, lower-than-expected sales risk, recurrent epidemic risk, consumption recovery and consumption escalation risk.
