At present, the overall pressure of epidemic prevention in the north is increasing, and the coming Spring Festival is the time when southern enterprises need to focus on prevention and control, the national breeding sows are still facing some uncertainty. In this context, the company promotes partners to invest in projects and amplifies the enthusiasm of employees, which is expected to help the company seize the current epic pig cycle.
What happened: recently, the company issued a notice on the reply to the inquiry letter of the Shenzhen Stock Exchange, which explained that Dong Dong voted against the motion on the company's investment in setting up a holding subsidiary in Nanchang, Jiangxi Province.
At the same time, it explains in detail the specific progress of the business partner project carried out by the company. We think that the business partner project of the company has a good starting point. If it can proceed smoothly, it will help the company to seize the current epic pig cycle.
Vigorously promote the partner follow-up project, grasp the operation of the pig cycle after the launch of the business partner follow-up project, up to now, six subsidiaries have been set up in Jiangxi, Anhui and other places through leasing and light-asset operation. five of them are set up by the company's holding subsidiary Wuhan Tianzi Animal Husbandry Co., Ltd. (99.97% of the company's shares) in cooperation with company employees to set up Sun Company. The company will assign the main management personnel to be specifically responsible for the daily management and decision-making of the new company, and the cooperative employees will actively participate in the daily production and operation activities of the new company. It is estimated that the six subsidiaries will be able to keep 71500 sows in the future. We believe that through cooperation and investment, the company can fully enlarge the enthusiasm of its employees, and if it can proceed smoothly, it will help the company to seize the current epic pig cycle.
Recently, the epidemic situation in the north has risen somewhat, and the epidemic situation in the south still needs to be prevented and controlled after the Spring Festival. Recently, with the continuous spread of African classical swine fever, the overall pressure on epidemic prevention in the north has increased. after the third quarter of mending and recurrence, the stockpile in Heilongjiang has been impacted again. At the same time, several other provinces, such as Liaoning and Jilin, are repeating the mistakes of Heilongjiang, and the whole winter is the biggest test of the epidemic. As far as the industry is concerned, a new round of capacity removal has really begun. Especially the mass flow of population during the Spring Festival is a test for all enterprises, especially in the southern region, prevention and control should be strengthened. From this point of view, the national pig breeding is still facing a certain degree of uncertainty.
Profit forecast and valuation: we estimate that the company's homing net profit from 2019 to 2021 will be 2.06 million 4.63max 546 million, corresponding to 0.46 million 1.03 PE 1.22, giving 10-12 times PE in 2020 to get a target price of 10.3-12.36 yuan, which is 16% higher than the current price. Considering the uncertainty caused by the Classical Swine Fever epidemic in Africa, we will give it a "prudent recommendation-A" rating.
Risk tips: pig price fluctuations, sudden large-scale uncontrollable diseases, major food safety events, macroeconomic systemic risks, extreme weather disasters lead to large-scale reduction of crop production and push up food prices, and listed companies are infected with African classical swine fever. the amount of production is not up to expectations, the state controls pig prices, and the promotion of partner investment projects falls short of expectations.