\u3000\u3000 Ningxia Xiaoming Agriculture & Animal Husbandry Co.Ltd(300967) (300967)
It is a leading enterprise of egg chicken breeding in Northwest China. Ningxia Xiaoming Agriculture & Animal Husbandry Co.Ltd(300967) is the first stock in China’s laying hens industry, mainly engaged in commercial laying hens. The company originates from the northwest and has significant advantages in breeding location. Since its establishment in 2011, the company has continued to expand its breeding and incubation capacity and egg chicken breeding varieties, forming a unique strategic layout of “centralized breeding, decentralized incubation and facing the whole country”. Now it has grown into one of the egg chicken seed production enterprises with the highest biosafety level, the most complete generation and the strongest competitiveness in China. In 2020, the company sold 143 million commercial generation chicks, accounting for 12.52% of the market in China. In the future, the company will strive to maintain an average annual growth rate of more than 20% in the sales of commodity generation chicks, so as to meet the company’s business strategy of continuously improving the market share and pursuing full cycle profitability.
The concentration of commercial laying hens industry continues to improve, and the head egg breeding enterprises are expected to fully benefit. At present, the market space of China’s laying hens industry has reached 10 billion. In the future, it is expected to drive the growth of egg consumption and the overall expansion of laying hens industry with the gradual in-depth development of the concept of national healthy diet and the continuous promotion of urbanization. With the continuous development of deep processing and branding of downstream eggs and the continuous promotion of the large-scale trend of commercial layer breeding, the concentration of commercial layer industry is expected to continue to improve. For downstream large-scale egg enterprises, it is very important to obtain high-quality and stable chicken seedling supply under the background of continuous expansion of production capacity and national layout. Therefore, the head egg breeder enterprises with national layout are expected to fully benefit from their dual competitive advantages in production and sales.
The production and sales advantages are prominent, and the leading egg breeder officially set sail. From the production side, the company adheres to the introduction of improved varieties from overseas and creates the business model of “centralized breeding and decentralized incubation”. Relying on the superior breeding location advantages, the company has formed a perfect biosafety system represented by the welfare breeding model of “full network, high bed and flat breeding”. In the incubation stage, the company adopts foreign advanced incubation equipment and “single-stage large box accurate incubation technology”, which effectively improves the hatching rate of breeding eggs and the quality of chicks. Benefiting from the company’s outstanding breeding and incubation advantages, the company has excellent breeding and incubation efficiency, and the product quality and business cost remain stable.
From the sales side, the company complies with the large-scale development trend of downstream layer breeding, adopts the sales method of combining distribution and direct sales, continues to deepen the cooperation with downstream major customers, and further improves the share of the company’s products in the head breeding enterprises. On the basis of “centralized breeding and decentralized incubation”, the company has established a sales network covering the whole country. At present, the company is actively accelerating the layout of the southern market, which is expected to further improve the national sales layout and further enhance the strong layout advantages of the company at the sales end. Superimposed on the company’s continuous and rapid expansion of breeding and incubation capacity, the company’s future growth can be expected.
Profit forecast and investment rating of the company: we expect the net profit of the company in 2021-23 to be RMB 87 million, RMB 111 million and RMB 121 million respectively, corresponding to EPS of RMB 0.47, RMB 0.59 and RMB 0.65 respectively. The current share price corresponds to the PE values of 21-23 years, which are 44.49, 35.03 and 32.05 times respectively. The “recommended” rating is given for the first time.
Risk tips: animal disease risk, commodity chick price fluctuation, the company’s capacity expansion is less than expected, etc.
