\u3000\u3000 Wellhope Foods Co.Ltd(603609) (603609)
The company announced that the annual performance express of 2021 achieved an operating revenue of 29.364 billion yuan, a year-on-year increase of 23.29%, a net profit attributable to the parent of 111 million yuan, a year-on-year decrease of 91%, and a net profit not attributable to the parent of 128 million yuan, a year-on-year decrease of 89.58%.
Livestock and poultry prices are low, and breeding is a drag on performance. In terms of the price of livestock and poultry products in the whole year, the average price of white feather broiler products in the whole year was 10.02 yuan / kg, a slight increase of 0.14% year-on-year. However, due to the rise in the price of feed raw materials, the breeding and slaughtering industries lost 0.18 yuan and 0.39 yuan / feather respectively, and the white feather broiler industry as a whole was relatively depressed; In addition, the annual average price of the pig industry was 19.76 yuan / kg, down 41.9% year-on-year. The downturn in pig and chicken prices led to a loss in the company’s pig breeding business and a significant decline in the performance of the white feather broiler sector.
Feed performance was stable and hedged breeding losses. In 2021, the company’s feed sales increased by 12.6% year-on-year. Under the negative contribution of breeding to the overall performance, the company’s feed performance was stable throughout the year, supporting the overall performance and achieving profitability. The company started with feed business and has been deeply engaged in feed business for many years. It has many advantages in technology, brand, region and layout. Guannei and Longji district have formed brand influence, and the market share is expected to continue to increase in the future.
The strategy is to expand the main feed industry and consolidate the internal strength of breeding. The company proposed a new strategic development goal at the end of 2021. It plans to go all out to expand and strengthen the feed business, steadily develop the integrated business of white feather broiler, and strictly control the volume and scale of pig breeding business in the next three years. Among them, the growth target of feed sales is to ensure a minimum annual growth of more than 20%, which impacts the goal of doubling in three years, far exceeding the historical growth rate. We believe that as a leading feed enterprise in Northeast China, the company has reserved technical and brand advantages for many years, and its strategic focus has returned from breeding to feed industry. It is expected to fully grasp the current integration opportunities of feed enterprises and achieve new growth.
According to the company’s performance express, strategic focus adjustment and future livestock and poultry price changes, we adjust the company’s profit forecast from 2021 to 2023. It is estimated that the net profit attributable to the parent company will be RMB 111 million, RMB 674 million and RMB 1078 million in 21-23 years, with a year-on-year increase of – 91%, + 506.3% and + 60% respectively (original forecast: RMB 326 million, RMB 900 million and RMB 1.175 billion).
In 2023, the total profit of feed, trade-related business and pig sector is expected to be 765 million yuan and the profit of poultry industry is 313 million yuan. Considering that the profit expectation of some companies in 22 years is negatively affected by the downturn of pig price, according to the 23-year level of feed, pig breeding and broiler comparable companies, 12x and 12xpe are given to the above two sectors respectively, with a target price of 14.04 yuan, Maintain the “buy” rating.
Risk tips
Raw material risk, epidemic risk and decline in consumer demand exceeded expectations.
