\u3000\u3 China Vanke Co.Ltd(000002) 311 Guangdong Haid Group Co.Limited(002311) )
The company disclosed the 2021 performance express. The annual revenue was 86.74 billion yuan (YoY + 43.8%), and the net profit attributable to the parent company was 1.601 billion yuan (yoy-36.5%); Q4 achieved a revenue of 22.43 billion yuan (YoY + 35.8%), and a net profit attributable to the parent company of – 146 million yuan (yoy-132.4%).
The feed industry is under pressure at both ends, and the company maintains steady growth. Affected by the decline of protein prices and the rise of bulk Shenzhen Agricultural Products Group Co.Ltd(000061) prices, both ends of the feed industry are under pressure. The company increased the research on the market situation of raw materials and the research and development of feed formula technology. On the basis of maintaining the leading cost of raw materials and the differentiation of subdivided products, the company integrated the advantages of the industrial chain, improved the service system, and improved the profitability of farmers and customer stickiness. In 2021, the company sold 18.77 million tons of feed externally (excluding 860000 tons of internal breeding consumption), a year-on-year increase of 28%.
The impact of the downturn in pig prices has led to a significant loss in pig breeding. In the whole year, the company sold about 2 million pigs, including about 1.3 million purchased piglets; Q4 sold 650000 pigs, including 450000 purchased piglets. The purchased piglets sold in Q4 correspond to Q2 in 21 years, and the cost of piglets is about 1200 yuan / head, which increases the overall breeding cost of the company. At the same time, the price of Q4 pigs fell sharply, and the average selling price of pigs was 15.5 yuan / kg, a year-on-year decrease of 50.4%. The downturn in pig prices led to a loss of 900-1 billion in the net profit of the parent company of pig breeding in the whole year.
The competition in the industry is fierce, and the personnel cost has increased. In order to achieve the goal of 40 million tons of feed sales in 2025 and further expand talent recruitment and incentive, the company increased more than 7000 employees in the whole year, with a year-on-year increase of 28%, and the related expenses such as employee salary increased by more than 40% year-on-year; In addition, due to the expansion of the company’s scale, the increase of loan amount and the rise of loan interest rate in China, the company’s financial expenses increased by about 70%.
Profit forecast and investment suggestions
According to the company’s performance express, we raised the company’s pig slaughter volume, feed sales volume and financial expenses in 2021, and slightly reduced the gross profit margin of the feed sector in consideration of high raw material prices, overseas business and low pig prices. Therefore, it is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 1.601/35.06/5.036 billion (originally predicted to be RMB 1.911/35.27/5.106 billion), with a year-on-year increase of – 36.5% / 119.0% / 43.6% respectively. Although the company’s performance was impacted by the downturn of the breeding market in the short term, the main business maintained a stable and good growth trend, and the long-term business objectives remained unchanged. We used the FCFF valuation with a target price of 96.06 yuan and maintained the “buy” rating.
Risk tips
The risk of decline in feed demand, the risk of fluctuations in pig prices, the decline in consumer demand exceeding expectations, overseas business less than expected, etc.
