\u3000\u3000 New Hope Liuhe Co.Ltd(000876) (000876)
National leading enterprise in feed pig breeding. The company is the largest feed enterprise in China. It is the largest supplier of parent generation duck seedlings, the second largest supplier of commercial generation chicken seedlings and duck seedlings in China. It has ranked first in the industry in the aspect of poultry slaughtering for many years. It is the fourth largest listed pig enterprise in China. The company’s food business has a certain influence in China. In 2021, the company lost 8.6 billion yuan to 9.6 billion yuan in advance, which was mainly caused by the sharp drop in pig prices, which dragged down the pig breeding business.
The feed output of the company ranks first in China, and the feed business has grown steadily.
The company’s sales volume of poultry materials ranks first in the country, pig materials and aquatic materials rank first in the country, and ruminant materials are also in the forefront of the country. From 2017 to 2019, the feed production capacity of the company was 32.8646 million tons / year, 35.7399 million tons / year and 36 million tons / year respectively, with a compound annual growth rate of 4.7%. The company continued to promote the optimization and adjustment of feed plant layout and production capacity, eliminate backward production capacity, transform and upgrade or build new large production capacity plants. The scale advantage of feed business determines that the company has the bargaining power of raw material procurement. The company also continuously enhances customer stickiness through technology precipitation, innovative organization and products, and all-round service to farmers.
Pig business practices hard and waits for the reversal of pig price.
In the face of the rapid decline of pig prices, the rise of feed raw material prices and the dilution of internal management capacity caused by rapid development, the company shifted its development focus from scale growth to improving pig breeding efficiency and reducing pig breeding costs. The company plans to maintain the existing population size, improve various production links in detail and pay attention to the cultivation of professionals. At present, the cost of breeding and fattening has been reduced to 17.9 yuan / kg. With the continuous repair of Psy and MSY indicators, 13-18 million pigs and 20 million pigs are expected to be sold from 2022 to 2023 respectively.
Investment advice
It is estimated that from 2021 to 2023, the company will realize a net profit attributable to the parent company of -9.186 billion yuan, – 5.497 billion yuan and 5.215 billion yuan, corresponding to EPS of -204 yuan, – 1.22 yuan and 1.16 yuan respectively. The price of live pigs is expected to rise in 2023. Now, the average market value of pig heads of the company is RMB 5000, corresponding to the market value of pig business of RMB 75 billion. Considering the market value of feed business of RMB 30 billion, the market value of poultry business of RMB 10 billion, the target market value of RMB 115 billion and a reasonable valuation of RMB 25.52, the company is given a “buy (first)” rating.
Risk tips
The epidemic situation of live pigs exceeded expectations; Pig prices fell more than expected.
