Event
On October 20, the company released the third quarter report of 2022, with revenue of 5.312 billion yuan in the first three quarters of 2022, + 32.80% year-on-year, and net profit of 241 million yuan, + 187.26% compared with the same period last year.
Comment
Eel culture contributed to the profit elasticity, and the performance increased rapidly in the first three quarters of 2022. In the first three quarters of 2022, the company achieved revenue of 5.312 billion yuan (year-on-year + 32.80%), including 1.434 billion yuan for special aquatic feed, 3.034 billion yuan for livestock feed and 494 million yuan for eel culture. In the first three quarters of 2022, the company achieved a net profit of 241 million yuan (year-on-year + 186.90%), including 150 million yuan for eel farming, 83 million yuan for special aquatic feed and 25 million yuan for livestock and poultry feed. The food sector lost 20 million yuan (mainly due to the impact of capacity adjustment and transformation). From a quarterly point of view, 2022Q3 achieved operating income of 2.001 billion yuan, + 8.63% month-on-month, + 27.45% year-on-year; net profit of 90.8081 million yuan,-18.75%, + 295.65% compared with the same period last year.
The high performance of the company in the first three quarters is mainly due to: 1) the steady growth of feed business, the sales of special water feed and livestock feed reached a record high; 2) the eel released from the pond, and the high gross profit margin contributed to the profit elasticity.
The decline in Q3 net profit compared with Q2 is mainly due to the price of Q3 eel is 80,000 yuan / ton, month-on-month compared to-5000 yuan / ton.
Feed business is growing steadily, and its leading position is expected to be further consolidated. In the first three quarters of 2022, the company sold a total of 1.0568 million tons of feed, with a sales income of 4.468 billion yuan, accounting for more than 84 percent of the operating income. In terms of feed sales, in the first three quarters, the sales of special aquatic compound feed was 155000 tons (+ 21% compared with the same period last year), and the sales of livestock and poultry feed exceeded 900000 tons (+ 16.8% compared with the same period last year). The company focuses on the main feed industry, special water feed, the company currently has an actual production capacity of about 230000 tons, with the formal commissioning of the Fujian production line and the landing of the special aquatic high-tech industry project, the company will achieve a medium-and long-term production capacity of 500000 tons of special water feed; in terms of livestock feed, the company's current actual production capacity is about 1.5 million tons, and Hualong subsidiary production line is expected to be put into production in April 2023. The company's feed production capacity has expanded steadily, and it is expected that the future sales of special water feed and livestock feed are expected to maintain a growth rate of 20%, 30%, and the company's leading position in feed is expected to be further consolidated.
Eel production capacity gradually release superimposed fish prices to improve, Q4 culture performance is expected to continue to realize. In the first three quarters of 2022, the company realized sales income of 505 million yuan, export commodity eel of about 5819 tons (8000 tons of fish plan has been completed in 2022), sales revenue of 494 million yuan and gross profit margin of more than 41%. Affected by the epidemic and other factors, the price of Q2 eel in the industry has declined compared with Q1. Eel prices are expected to pick up as the stock of eels is hoarded and consumed in October and demand is boosted by the peak Q4 consumption season. At present, the company's two ten thousand mu breeding bases in Fujian and Guangdong have been officially put into production, and continue to increase the layout of intensive culture ponds. It is planned to expand the intensive aquaculture ponds to 1.5 million square meters next year, and complete the layout of 4 million square meters in 3-5 years. With the expansion of the intensive culture pond, the efficiency of eel culture is expected to improve, the space for cost reduction is expected to be further opened, the superimposed production capacity is gradually landed, the fish price is getting better, and the performance of the company's eel plate is expected to increase.
Investment suggestion
Considering the rapid development of the company's eel culture business, the company's off-season fish production in the third quarter still achieved the set target, the company's eel production capacity was released smoothly, and the superimposed fish price is expected to pick up in the fourth quarter, the eel culture business is expected to help the company's performance increase. We raise our profit forecast and estimate that the company's income from 2022 to 2024 will be 73.54 / 90.27 / 10.912 billion yuan respectively, and the net profit from ownership will be 3.80 yuan / 732 million yuan, respectively, and the EPS for 2022-2024 will be 0.87 / 1.68 million yuan respectively, maintaining the "recommended" rating.
Risk hint
The risk of price fluctuation of natural disasters, diseases and raw materials.