\u3000\u3000 Muyuan Foods Co.Ltd(002714) (002714)
It is a leading pig breeding company with a market share of 6%
Muyuan Foods Co.Ltd(002714) it is mainly engaged in pig breeding and has established a complete closed pig industrial chain integrating feed processing, breeding pig breeding, breeding pig expansion, commercial pig breeding, pig slaughter and meat processing. In 2020, it will become the largest pig breeding enterprise in China. With the gradual release of production capacity in the future, we expect the number of pigs to reach 70 million in 2023, with a market share of more than 10%.
Building core competitive advantages in the whole industrial chain
At the feed end, the company has the advantages of R & D, procurement and production; At the breeding end, the company not only has a complete ternary breeding system, but also has a mature grasp of recurrent binary breeding technology. At the breeding end, the integrated mode of “all self-supporting, whole chain and intelligence” of the company takes into account the epidemic prevention and production capacity expansion. The whole industrial chain of the company creates a cost leading advantage. Through fine management, the cost is reduced and efficiency is increased. At the end of last year, the company’s complete cost has been reduced to less than 14.7 yuan / kg, and the cost of the whole industry is the lowest. This year, the target is 13 yuan / kg, and there is still much room for decline.
The pig cycle is expected to reverse in the second half of this year
At present, the situation of overcapacity is improving, and the stock of fertile sows and normal stock are in the process of convergence. We believe that under the background of downward fluctuations in pig prices, continuous losses in the industry, high feed costs and sluggish demand, the speed of industrial capacity clearing is expected to accelerate, and the pig cycle is expected to reverse in the second half of this year. As the industry leader, the company will fully benefit from the improvement of industry prosperity.
Industrial integration development helps the company grow from big to strong
With the deepening of standardization, scale and intensive development of pig breeding industry, the integrated development of pig industry chain will become a new development trend. Since 2019, the company has accelerated the layout of slaughtering business. At present, the slaughtering capacity has reached 22 million units / year. We believe that the company’s layout of downstream slaughtering meat business will better generate upstream and downstream synergy, smooth the impact of pig cycle on the company’s performance, and achieve a breakthrough from large to strong.
Investment advice and profit forecast
We estimate that the corresponding net profit attributable to the parent company from 2021 to 2023 will be 7.593 billion yuan, 8.534 billion yuan and 29.176 billion yuan respectively, EPS will be 1.45 yuan, 1.63 yuan and 5.56 yuan respectively, and the corresponding PE will be 42.7 times, 38 times and 11.1 times respectively. With reference to the company’s history, the improvement of industry prosperity and the strategy of integrated development of the company’s industrial chain, 7.5 times Pb in 22 years is given, corresponding to the target price of 84 yuan. “Buy” rating is given for the first time.
Risk tips
Epidemic risk, substantial decline in pig price, rising breeding cost and food safety risk
