\u3000\u3000 Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) (000048)
Event overview
The company released the annual performance forecast for 2021. During the reporting period, it is expected to realize the net profit attributable to the parent company of 370-400 million yuan, a year-on-year decrease of 53.84% – 57.30%. The company expects to make a preliminary provision for the biological assets on hand, and the impairment provision is about 50 million yuan.
Analysis and judgment:
With the rapid release of production capacity and full production in succession, the road of transformation is solid and firm
In 2021, the pig market sentiment was depressed throughout the year, and the pig price was at a historically low level. Due to the rise of feed raw materials and the large depreciation expenses and labor costs of fixed assets caused by capacity expansion, the company’s pig breeding business suffered a loss in 2021. As of the end of 2026, the company had a record of about 27095000 sows, of which about 270000 sows were kept by the company. In addition, the four projects in Xuwen, Gaozhou, Wenchang and Hezhou have been introduced and put into operation successively (under full production). The company’s marketing volume is expected to exceed 1 million in 2022, and the annual marketing scale of the above-mentioned projects is expected to exceed 2 million after full production. In addition, with the continuous operation of the feed plants to be built next year, the company can gradually realize the self production and self supply of feed, so as to reduce the breeding cost. The target cost of the company in 2022 is about 16.3 yuan / kg. In the future, with the gradual release of production capacity, the improvement of marketing scale and the completion of the production of supporting feed plants, the complete cost is expected to be further reduced. With the increase of this decline and the recovery of the prosperity of the industry, the company’s pig breeding business will also usher in a period of performance explosion.
The real estate project is gradually de commercialized, and the business transformation is at the right time
In 2021, the carry forward income of the company’s real estate projects decreased compared with the previous year. At the same time, affected by the covid-19 pneumonia epidemic, the rise of housing loan interest rate, the upgrading of new rules of Shenzhen real estate market, the government’s crackdown on holding on behalf of the government, and the strict investigation of business loans, the company’s new real estate residential projects slowed down. Specifically: the overall delivery of shanhaishangyuan phase II residential project has been completed, with a cumulative carry over sales area of 33000 square meters during the year; Shanhai royal garden was opened for pre-sale in July 2021. By the end of the year, the accumulated sales construction area of commercial houses was 112100 square meters, the sales amount was 7.795 billion yuan, and the accumulated advance payment was 6.616 billion yuan. However, the project has not met the conditions for revenue recognition, and the company will recognize the sales revenue one by one in the future. During the reporting period, the company mainly focused on the development and operation of the stock land, i.e. phase III and IV projects of shanhaiyuan. Although the current main source of revenue is the real estate business, the company is currently in the period of business transformation, and the real estate project is in the stage of stock elimination. In addition, the operation of feed business is stable and the revenue is stable. In the next two years, the production capacity of pig breeding projects will be gradually released, and the proportion of modern agricultural revenue dominated by pig breeding will gradually increase.
Orderly expansion of feed business and synergy to help the development of pigs
Feed business is the second largest business of the company in 2020, with a revenue of 690 million yuan. In addition, the feed plants built around the company’s pig breeding project are in the process of promotion. According to the records of investor relations activities announced by the company, the company further expanded the feed capacity in 2021: the feed plant with an annual output of 180000 tons in Gaozhou has been completed and officially put into operation at the end of November 2021; The annual output of 360000 tons of pig feed and 60000 tons of premix in Hezhou will be capped in December 2021; Xuwen (360000 tons) and Wenchang (120000 tons) feed plants are also in steady progress and construction. After completion, they will give priority to the supply of the company’s pig breeding projects. At present, the pig production capacity is rapidly recovering, which drives the recovery of feed demand. However, the company has been deeply engaged in the feed industry for many years, and the feed sales volume is expected to show a rapid growth trend.
Investment advice
Considering that the pig price fell more than expected in 2021, we lowered the company’s operating revenue to 3.348 billion yuan in 2021 (the previous value was 3.768 billion yuan) and the net profit attributable to the parent to 384 million yuan (the previous value was 995 million yuan), and maintained the expectation that the company’s operating revenue and net profit attributable to the parent were 15.764/14.666 billion yuan and 3.985/2.339 billion yuan respectively from 2022 to 2023. To sum up, we expect that from 2021 to 2023, the company’s EPS will be 0.73/7.62/4.47 yuan respectively, corresponding to the closing price of 22.83 yuan / share on February 10, 2022, and PE will be 31.14/3.00/5.11 times respectively, maintaining the “buy” rating.
Risk tips
Pig market prices fell sharply, the release process of pig production capacity was less than expected, and the progress of real estate projects did not meet expectations.
