Key points of investment

Prices of chicken seedlings from overseas parents are expected to remain high

In the first half of 2024, the number of domestic ancestral chicken renewals reached 0.71 million sets (+18.46% year over year). According to Mysteel statistics, AA+/Roth 308 ancestral introductions accounted for 28.35%, and Li & Fung accounted for 10.14%. According to data from the Poultry Industry Branch of the China Animal Husbandry Association, the average sales price of chicken seedlings from January to June 2024 was about 38 yuan/set. The company's parent surrogate chicken seedlings business has quality advantages and scale advantages. In August, the company's parent surrogate price was 70 yuan/set. Looking ahead to the future market, overseas introduction is still in a relatively tight balance, and the price of parent surrogate seedlings of Anvijet varieties may be booming.

The company's chicken breeding business has significant advantages

Chicken breeding faucets have significant advantages. ① High market share: The company's ancestral white feather broiler market share is about 1/3 of the domestic market share, and the market share of commercial chicken seedlings accounts for about 1/10 of the domestic market share, and the leading position is stable.

② Strong competitiveness: The new Li Feng white feather broiler introduced by the company has obvious competitive advantages in terms of egg production rate and meat ratio, and there are premiums for parent generation and product generation. ③ The supply chain is relatively stable: Affected by US bird flu and flight traffic, China's ancestral broiler imports have declined compared to previous years; the company's breeding pace was relatively continuous during this period.

The company's pig breeding business is gradually expanding

In 2021, the company introduced 1,300 purebred pigs from Denmark to accelerate the pace of development of the company's pig breeding industry. The company will draw on the model of broiler breeding and expand the scale of breeding pigs from the top down, starting with the original breed. In June 2023, the company raised capital to accelerate the development of the pig breeding business. With the company's pig breeding farm put into use, the company's binary pig breeding farm has begun to be marketed and sold, and production capacity has been gradually released. The company's pig business achieved profit in a single quarter in the second quarter of 2024.

Chicken breeders have significant advantages and are rated as “gain weight”

We expect the company to achieve revenue of 3.042/3.232/3.432 billion yuan in 2024-2026, net profit of 0.407/0.462/0.501 billion yuan, and EPS of 0.37/0.42/0.45 yuan/share, respectively. The company is a leading white chicken breeder with significant core advantages, and the first coverage gives a “gain” rating.

Risk warning: foreign supplier dependency risk, breeding technology risk, biosafety risk