\u3000\u3000 Fujian Sunner Development Co.Ltd(002299) (002299)
Core view
The company announced the performance forecast of 2021. It is estimated that the net profit attributable to the parent company will reach 437 ~ 487 million yuan in 2021, with a year-on-year decrease of 78.59% ~ 76.14%; Net profit deducted from non parent company was 350-400 million yuan, with a year-on-year decrease of 82.79% ~ 80.33%. We estimate that in the fourth quarter of 2021, the company expects to realize a net profit attributable to the parent company of 69 ~ 119 million yuan, a year-on-year decrease of 71% ~ 49%.
Profit against the trend and highlight the channel advantages of the whole industrial chain. Due to the downturn in the price of raw materials in the breeding industry, the average price of Shuangyu chicken increased by 35.0% year-on-year, which was slightly lower than that in other industries, but the average price of Baiyu chicken products increased by 20.0% year-on-year. In 2021, the company sold 1053000 tons of chicken (YoY + 7.6%), with an average price of 10620 yuan / ton (yoy-7.3%), a premium of 600 yuan / ton compared with the industry; 249000 tons of deep-processing products are sold (YoY + 29.9%), and the average price is 22514 yuan / ton (yoy-9.3%).
The high price of feed dragged down the performance, and the results of cost reduction and efficiency improvement of the company began to show. The prices of corn, soybean meal and other bulk raw materials continued to be high, resulting in the year-on-year increase of the company’s breeding cost. Affected by this, the company’s annual profit decreased by about 1.5 billion yuan compared with that in 2020. Under the background that the high price of raw materials is difficult to relieve, the company went deep into internal management. In the fourth quarter, the average sales price of chicken was 10100 yuan / ton (qoq-5.0%), but the net profit of the parent company was 94 million yuan, or the same as that in the third quarter. In winter, the cost of breeding is generally high due to factors such as thermal insulation and epidemic diseases. The company has maintained stable performance under the condition of declining average price, which shows that the company’s cost control has been effective.
Make concerted efforts at both ends to achieve new growth outside the cycle. In terms of breeding chickens, the company’s “Shengze 901” white feather broiler matching line officially obtained the certificate of new breed (matching line) of livestock and poultry in December 2021, which provides a new profit growth point for the company in the future; In terms of food deep processing, the performance of the company’s C-end channel has been significantly improved over the previous year. In the middle of 2021, the monthly sales of new “crispy fried chicken” and “Dudu wing” have exceeded 10 million yuan. The company’s C-end explosive product creation strategy has achieved remarkable results.
Profit forecast and investment suggestions
Considering the high price of raw materials in the industry and the fact that there is still no inflection point in the price cycle of white chicken, we lowered the profit forecast of the company from 2021 to 2023, and expected the net profit attributable to the parent company to be 460 / 1002 / 1655 million yuan (708 / 1775 / 2642 million yuan originally predicted), with a year-on-year increase of – 77.4% / + 117.7% / + 65.1% respectively. Using the segment valuation method and referring to the 22-year valuation level of comparable companies, 26x and 31xpe were given to breeding and food processing respectively, with the target price of 22.65 yuan, maintaining the “buy” rating.
Risk tips
Price fluctuation of chicken, price fluctuation of raw materials and occurrence of chicken diseases.
