Key points:
The real estate business is steadily being eliminated, and the main position of pig breeding gradually highlights that the company's net profit to mother increased by 125.89% year-on-year in 2023. The real estate business, which lost inventory, is still the main source of the company's revenue and profit. In 2023, the company achieved total revenue of 12.417 billion yuan, +107.10% year-on-year, and realized net profit of 1,746 billion yuan, or +125.89% year-on-year. With 2024Q1, the company achieved total revenue of 1,258 billion yuan, -81.12% year-on-year; realized net profit of 54 million yuan, or -95.56% year-on-year. Among them, the pig breeding business achieved revenue of 679 million yuan, accounting for 54% of revenue. The main business position was prominent. The real estate business achieved revenue of 399 million yuan, accounting for 32% of revenue, and inventory elimination continued to advance; the feed and poultry business achieved revenue of 177 million yuan, accounting for 14% of revenue. In 2024Q1, the pig breeding business lost 39 million yuan, the real estate business made a profit of 109 million yuan, and the poultry and feed business made a profit of 102 million yuan. The real estate business, which has been stripped of stock, is still the main source of revenue and profit for the company, but the main position of the pig breeding business gradually became prominent in 2024Q1, becoming the biggest contributor to the company's revenue source.
Costs were reduced significantly. In April, Gaozhou's breeding costs dropped to 12.44 yuan/kg. The company's production volume of pigs in 2021-2023 was 13.22/126.44/1,845 million heads, respectively. As capacity utilization increased and the company's pig breeding business gradually got on the right track, the company's breeding costs dropped significantly. In 2021-2023, the average production cost of the company's fattening pigs was 17.7/16.9/16 yuan/kg, respectively. From January to April 2024, the average production cost of the company's fattening pigs dropped further to 13.5 yuan/kg, and the full cost was about 14.6 yuan/kg. With the complete cost reduction and pig prices rising, the company turned a loss into a profit in April 2024. According to investors' questions and answers, the average weight of commercial pigs sold by the company remained at 110-120 kg, and the average profit of the company's commercial pigs in April was 70.4-76.8 yuan/head. The total cost of pigs in all projects dropped significantly in 2023. When commercial pigs were released, the full cost of the Xuwen project was 17.41-17.63 yuan/kg, corresponding to 19.73-19.74 yuan/kg in 2022, with a cost reduction of about 2.2 yuan/kg; the full cost of the Gaozhou project was 15.24-15.27 yuan/kg, corresponding to 15.99-16.30 yuan/kg in 2022, with a cost reduction of 0.73-1.06 yuan per kilogram; Wenchang project The full cost is 19.02-19.39 yuan/kg, corresponding to 20.27-20.32 yuan/kg in 2022. The cost per kilogram was reduced by about 1 yuan. In April 2024, the average farming cost of the company's benchmark project in Gaozhou was reduced to 12.44 yuan/kg, a significant reduction in costs.
Multiple factors help reduce costs. Since 2019, the four-week high-turnover model is the key company's development strategy with “deepening the main agricultural business” as the core, and established a development strategy with modern agriculture as the main business, only stock development of the real estate business, to the construction of pig farms. Until now, in less than 5 years, the number of pigs released was close to 2 million, and during the period when pig prices continued to bottom out, the cost reduction was the result of many efforts. Explore what we believe are the main reasons for the company's cost reduction: (1) The production capacity utilization rate gradually increased, and the full batch input and exit production model was achieved in less than 5 years. benefits The highest and most economical state, high industrial turnover brought about high utilization of production capacity and improved pig herd health; (2) According to the company's customs investment activity record table, feed costs account for more than half of pig breeding costs, and the reduction in raw material and feed costs directly led to a significant reduction in costs; (3) refined management improved health, and various production indicators stabilized and improved; (4) Early procurement of high-priced breeding pigs was gradually eliminated. The expansion of the company's breeding farm added new backup sows, and depreciation of sows in the cost of weaned pigs led to a decrease in weaning pigs. Costs and farming costs have dropped significantly.
Investment advice
Our analysis: (1) The company's pig breeding business is progressing steadily. In 2023, the production capacity utilization rate is close to 80%, and the pig industry sector continues to contribute revenue to the company; (2) The real estate business is a strategically supported business for the company. Pre-sale projects are successively incorporated and delivered to confirm revenue, and will continue to contribute considerable revenue and profits to the company. (3) Pig prices continued to be sluggish in 2023, dragging down the performance of the pig breeding sector. Based on this, the company's 2024-2025 revenue was reduced from 111.69/13.922 billion yuan to 111.56/13.362 billion yuan, the company's 2026 operating income was lowered to 15.214 billion yuan, the company's net profit to mother for 2024-2025 was lowered to 8818/1,495 million yuan to 803/1.12 billion yuan, and the company's 2024-2025 net profit to mother was reduced to 619 million yuan, and the company's 2024-2025 EPS was reduced by 1.54/2.82 yuan to 1.51/ 2.28 yuan, with an additional forecast that the 2026 EPS will be 1.17 yuan, and the 2024/6/5 stock price will be 16.74 yuan corresponding to the 24-26 PE 11/7/14X, respectively, maintaining the “buy” rating.
Risk warning
The risk of fluctuating pig prices, the risk of repeated non-plague epidemics, the risk of fluctuating raw material prices, and environmental risks.