China Animal Husbandry Industry Co.Ltd(600195) (600195)
Company profile: the background of central enterprise, the all-round dynamic security leader, has been deeply engaged in the industry for more than 80 years. China Animal Husbandry Industry Co.Ltd(600195) is the only listing platform for the animal protection industry under China Agricultural Development Corporation, with rich products covering the animal protection industry chain. The company is mainly engaged in the R & D, production, sales and technical services of animal health products and animal nutrition products. It has been deeply engaged in the animal protection industry for more than 80 years. Its business covers four major sectors: animal biological products, animal chemicals, feed and feed additives and trade. At present, it has more than 800 varieties of products, which can provide services for the healthy development of the aquaculture industry, The market share of several sub circuits ranks among the top 3 in the industry. Since 2017, China's improvement process has gradually accelerated, and it is expected to fully release its operational vitality in the future. From Q1 to Q3 in 2020 / 2021, the revenue was 5 billion yuan / 3.91 billion yuan respectively, with a year-on-year increase of 20.9% / 7.0% respectively, and the net profit attributable to the parent company was 420 million yuan / 460 million yuan respectively, with a year-on-year increase of 68.9% / - 4.2% respectively. The decline was mainly affected by the 150 million investment income generated by the reduction of Xiamen Kingdomway Group Company(002626) shares in the same period of last year. Excluding this impact, the profit growth was about 36.6%, The CAGR of income and net profit attributable to parent company from 2011 to 2020 is 5.8% / - 1.0%.
The scale of breeding + prosperity has been improved, the market-oriented opportunities for the animal protection industry have emerged, and the standardized development is guided by policies. The development of China's veterinary drug industry began in the early 20th century and is currently in a rapid development stage. The sales scale in 2020 is about 62.1 billion yuan, a year-on-year increase of 22.0%, and the CAGR will reach 8.8% from 2010 to 2020. In terms of market segments: 1) veterinary biological products: the industry has high barriers to entry and dual path development of politics, mining and marketization. The sales scale of the industry is about 17.66 billion yuan in 2020 and CAGR is 8.6% from 2015 to 2020. The downstream epidemic prevention demand is active, and the market opportunities are broad driven by the policy of "fighting first and then making up"; 2) Veterinary chemical drugs: the industry's annual sales scale is 45.76 billion yuan in 2020, and the CAGR is 5.8% from 2015 to 2020. The "Prohibition of resistance" policy forces mixed feeding chemical drugs out. The development of non mixed feeding therapeutic chemical drugs is standardized, and the leader of R & D + process advantages is expected to gradually seize the share.
Veterinary biological products: the political collection of seedlings has maintained a leading position, and the market seedlings have gradually developed. The company's biological products include swine vaccine, avian vaccine and others, with rich products and comprehensive coverage. In 2020, the revenue will reach 1.43 billion yuan, with a year-on-year increase of 24.1%, corresponding to the sales volume of 13.12 billion ml / share. The company maintains an absolute leading position in the market share of pig foot-and-mouth disease and avian influenza vaccine. In order to take the initiative to gradually abolish political procurement in 2025, the company launched new market vaccine products such as European standard Jia in 2020 and began large-scale batch issuance in 2021. After listing, the company gradually made efforts, and the sales situation is good, which is expected to quickly seize the market-oriented development opportunity of the industry.
Veterinary chemicals: rapid growth of preparations, optimization of business structure, and acceleration of exploration of category layout. Feed additive products (WAN Muxin and mu lewang) account for a relatively low proportion in the chemical medicine business of the two companies, so they are subject to "Prohibition" Less impact. The main products are chemical raw materials and veterinary chemical preparations, such as tylosin and other therapeutic drugs, which are still in normal production and use. The preparation products are distributed in many fields such as pigs, cattle and poultry, strengthen the research and development of alternative anti products, and actively cater to market changes. New veterinary drugs continue to be approved, superimposed on the advantages of production technology, and the volume and price of chemical drugs can rise together. Benefiting from the optimization of product structure, the average price of the company's chemical products has increased significantly in recent three years. The average price of products in 2020 is nearly doubled compared with that in 2017. With the growth of scale, the improvement of profitability is expected to appear in the future.
The production process is leading the industry, and the upgrading of production capacity is advancing steadily. The company has set up 20 production bases in China. The manufacturers of biological products and veterinary chemicals have obtained GMP certification and production license for veterinary drugs. Some feed production plants have passed ISO quality management system and other international authoritative certification. Among them, Lanzhou plant is the suspension production workshop of foot-and-mouth disease vaccine with the largest production capacity and the most advanced technology in China, and the product quality is internationally leading, By December 2021, five of the company's production lines have passed the new GMP certification, and the upgrading and transformation of other production lines have been steadily promoted. After the strict implementation of the new GMP in 2022, the company's competitive advantage in production process is expected to be fully reflected.
Investment suggestion: as a leading enterprise in China's animal health insurance, the company releases its development vitality through national reform, promotes the development of vaccine business with the dual driving force of political and mining advantages and market-oriented layout, and optimizes the structure of chemical medicine business. It is estimated that the company's net profit attributable to the parent company from fy2021 to 2023 will be RMB 570 / 69 / 860 million, an increase of 34.3% / 22.7% / 23.4% at the same time, and the corresponding EPS will be RMB 0.56/0.68/0.84/share respectively. We believe that the company's reasonable market value is RMB 15.5 billion, the corresponding target price is RMB 15.26, and the corresponding fy2022 PE 22.4 X. it will be "bought" for the first time.
Risk warning: the progress of production line upgrading is less than expected; The promotion of market-oriented single products is less than expected; The downstream aquaculture industry fluctuates periodically.
