Introduction to this report:
In November, the number of pigs released by the company increased significantly from month to month, and pig prices and average weight declined, but the company's breeding costs are expected to decline steadily, and the reversal of the cycle will drive the company's performance to improve. Furthermore, the company's strategic layout for the large seed industry is expected to exceed expectations.
Key points of investment:
Maintain an “increase in holdings.” We maintain the 2023-2025 EPS forecast of -0.1 yuan, 0.2 yuan, and 0.31 yuan, respectively, and maintain the target price at 9.85 yuan, maintaining the “increased holding” rating.
Incidents: The company announced a briefing on pig sales in November 2023. In November, the company sold a total of 693,600 pigs, with a cumulative total of 5.3272 million heads in January-November; the total sales revenue for the month was 1,032 billion yuan, and the cumulative sales volume for January-November was 8.586 billion yuan; the average sales price of commercial fat pigs held and owned by the company was 13.78 yuan/kg in the same month.
The number of pigs released increased markedly month-on-month, and pig prices and average weight declined; the company sold a total of 693,600 pigs in November 2023, an increase of 47% over the previous month, of which the holding company sold 396,200 pigs, an increase of 36% over the previous month, and participating companies sold 297,400 pigs, an increase of 46.58% over the previous month, or were affected by low pig prices and swine diseases in certain industries; at the same time, the average weight of pigs released in November declined, and the average weight released by holding companies fell to 116.65 kg (1.19.55 kg last month), Equal weight for stock companies to be listed It dropped to 116.49 kg (124.89 kg last month); judging from pig prices, the company's average sales price of fat pigs in November was 13.78 yuan/kg, -7.4% over the previous month. At present, the bottom characteristics of the pig industry are obvious. It is expected that the inflection point will rise in the future. At the same time, the company's production efficiency will gradually increase, costs will gradually improve, and subsequent performance is expected to improve.
The commercialization of genetically-modified genes has begun, and the company's large-scale seed industry layout is expected to be improved at an accelerated pace; the company has a clear first-mover advantage in the field of genetically modified genes, with neutral conditions accounting for 60% and 36% of corn and soybean varieties respectively. At the same time, the company covers soybeans and corn, domestic and overseas dual-tier business, and is expected to fully benefit, relying on its characteristic advantages, and the strategic layout of the company's large seed industry is gradually improving.
Risk warning: swine disease risk, product price fluctuations, raw material price fluctuations.