Event

Jiawo Foods publishes its 2022 semi-annual report. 2022H1 achieved a revenue of 2.386 billion yuan, an increase of 7.14% over the same period last year, and a net profit of 155 million yuan, an increase of 213.60% over the same period last year.

Main points of the report:

Under the tight balance between supply and demand, the price of salmon has risen to a new level

On the supply side, 2022H1's global supply of Atlantic salmon fell by about 6 per cent year-on-year. At present, the supply growth of salmon mainly comes from artificial culture, but due to the limited culture area and the scarcity of licenses, the global salmon market is becoming more and more tight in the future. On the demand side, with the gradual weakening of the impact of the global epidemic, salmon catering demand has gradually recovered, and retail demand continues to rise. Among them, China, as an emerging market for salmon consumption, has great consumption potential. Under the phased influence of the epidemic in the first half of the year, consumption is still growing compared with the same period last year. Affected by the shortage of supply and the recovery of demand, the sales price of salmon market has risen to a new level.

The company has mastered the upstream high-quality salmon resources, and the profitability of 2022H1 has been improved. As one of the top ten salmon enterprises in the world, Australis, a subsidiary of Jiawo Food, firmly controls the high-quality and scarce resources of the upstream aquaculture side with the highest value. The profit of Australis, a subsidiary of 2022H1, increased significantly, with revenue of 1.684 billion yuan, an increase of 9.64% over the same period last year; net profit of 317 million yuan, from loss to profit; and the average gross profit margin of 19.90%, compared with-1.02% in the same period last year, increasing 20.92pct over the same period last year. Due to the epidemic situation affecting the efficiency of examination and approval, the company's salmon fry plan was postponed at the beginning of 2021, and the weight of salmon fry increased, resulting in higher fry cost than in the past. In addition, the decline in harvests and the increase in labor and logistics costs caused by the impact of the epidemic have led to an increase in unit fixed operation and maintenance costs (labor, depreciation, operation, etc.), thus pushing up the cost level of 2022H1 and offsetting some of the increase in unit prices.

With the rising prices of cod and sweet shrimp products, Qingdao National Star, a subsidiary, is the largest Arctic sweet shrimp import distributor and narrow cod processing supplier in China. It has signed an exclusive agency with foreign companies with Arctic sweet shrimp fishing quotas. Due to the restrictions on supply-side fishing quotas in 2022 and the strict impact of customs import and epidemic prevention policies in the first half of the year, there was a shortage of domestic raw materials and limited production capacity of cod processing enterprises, while the demand for haddock products in Europe and the United States was strong, and the overall market supply fell short of demand. this has pushed up the price of newly signed contracts. In addition, the domestic market price of sweet shrimp continues to be high, and the gross profit has increased significantly compared with the same period.

Continue to launch new products rich product matrix, actively expand the market Australis overseas market retail brand "Mama Bear" for American consumers to launch hamburger fish pie, diced salmon, peeled salmon section and other products, has been stationed in the United States over 100 offline stores and rapid expansion, at the same time through various marketing activities to enhance brand awareness. In the Chinese market, 3R prefabricated vegetables and seafood retail brand "Jiawo Xiansheng" opened a new chilled product line with South China as a pilot, and the high-nutrition children's brand "Chanxiong classmate" enriched the product matrix and actively expanded offline mother and baby channels. the company's southwest subsidiary continues to open up new customers and add new products, the company's brand influence continues to improve, and its performance has achieved rapid growth.

Investment advice and profit Forecast

It is estimated that the return net profit of the company from 2022 to 2024 will be RMB 2.38 million and RMB 406 million respectively, and the current share price corresponding to PE will be 22.0 pm 12.9 pm 7.5 times, maintaining the "buy" rating.

Risk hint

The risk of market price fluctuation of raw materials and products, the risk of continuous fermentation of epidemic situation, the risk of new business development falling short of expectations, the risk of fair value change of consumable biological assets, and the risk of natural disasters.