The company released a pig sales briefing. In October 2023, the company sold 42,900 pigs, with sales revenue of 82 million yuan, -4.53%; the average sales price of commercial pigs was 17.85 yuan/kg, -2.10% month-on-month. From January to October 2023, the company sold a total of 547,700 pigs, +31.07% year-on-year, and sales revenue of 851 million yuan, -5.23% year-on-year.
Farming costs continue to be optimized, and there is still room for decline in the future. The full cost of the company's 23Q1/23Q2/23Q3 commercial pig breeding was 18.5/18.3/17.8 yuan/kg, respectively. Breeding costs showed a downward trend quarter by quarter, mainly reflected in: 1) Introducing a pig breeding system that meets the high quality needs of Hong Kong while establishing a competitive high-yield pig breeding system for the domestic market. The newly introduced high-yield pig PSY reached around 26, further reducing fixed cost sharing such as sow depreciation; 2) Through fully balanced production on the farm, fixed costs were further reduced to achieve economies of scale; 3) Disease prevention In terms of control and breeding management, we will strengthen the prevention and control of major diseases, improve the biosafety system, achieve fine management of the entire pig breeding process, and reduce production costs. Driven by a comprehensive series of cost reduction and efficiency measures, the company's full cost is expected to drop to 17 yuan/kg by the end of the year, and the full cost is expected to drop to 16 yuan/kg in 24 years.
It is expected that the pig market will continue to expand steadily. The number of pigs released by the company in 23Q1/23Q2/23Q3 was 20.99/15.65/137,900, respectively. The number of pigs released in the second and third quarters declined month-on-month, mainly due to the early elimination of backward production capacity in the first half of the year, and the number of pigs on the market decreased. In terms of production capacity, as of October '23, the company was able to breed more than 40,000 sows and 12,000 backup sows. By the end of the year, the number of sows kept is expected to reach around 65,000. The expansion of the company's production capacity has led to a steady increase in the number of pigs released. The number of pigs released in 23Q4 is expected to be over 150,000, the number of pigs released in the full year of 23 is expected to be around 650,000, and the number of pigs released in the year 24 and 25 is expected to reach 1 million and 1.6 million.
Investment suggestions: In 2023, 2024, and 2025, the company's net profit is expected to be -280 million yuan, 240 million yuan, and 590 million yuan respectively, up -742%, 186%, and 151% year-on-year respectively. The current stock price corresponding to PE is -17, 20, and 8 times, respectively. Maintain the buy rating.
Risk warning: risk of fluctuations in livestock and poultry prices, risk of a sudden outbreak of the epidemic.