\u3000\u3 China Vanke Co.Ltd(000002) 714 Muyuan Foods Co.Ltd(002714) )
Event: the company issued the performance forecast for 2021.
Key investment points:
The company’s performance forecast is in line with expectations. In 2021, it is expected to realize an operating revenue of 77-80 billion yuan, with a year-on-year increase of 36.82% – 42.15%; The net profit was 7-8.5 billion yuan, a year-on-year decrease of 73.66% – 76.95%; The net profit attributable to the parent company was 6.5-8 billion yuan, a year-on-year decrease of 70.86% – 76.32%; The net profit after deducting non-profit was 7-8.5 billion yuan, a year-on-year decrease of 71.90% – 76.86%; The basic earnings per share is expected to be 1.21 yuan / share – 1.50 yuan / share. In 2021, the company’s operating revenue continued to grow compared with the same period of the previous year, mainly benefiting from the rapid recovery of pig slaughter. However, the sharp decline of pig price damaged the company’s profitability and significantly reduced its net profit compared with the same period of the previous year.
Pay attention to the de industrialization of industry capacity and wait for the inflection point of the cycle. After the Spring Festival in 2022, the pig price accelerated to around 12.5 yuan / kg, and the specific price of pig grain fell below 5:1. At the same time, the feed price increased again. The pig breeding industry fell into a double-sided squeeze of falling pig prices and rising raw material prices. The first half of 2022 is destined to be a more difficult “winter” for the industry. Since July 2021, the number of fertile sows began to decline month on month. Up to now, the range of capacity reduction has reached 5% – 6%. It is expected that the pig supply in the market will reach the peak in April and may 2022, and the pig supply will change significantly in the second half of 2022. On the other hand, in early March 2022, the national development and Reform Commission launched the first round of collection and storage of frozen pork in 2022. This time, it is expected to collect and store 40000 tons of frozen pork. The central collection and storage is difficult to change the trend of pig price, but it can boost market confidence to a certain extent and form the bottom range of pig price. Pig prices essentially depend on the relationship between supply and demand in the market. It is suggested to continue to pay attention to the degree of capacity removal of the industry before the inflection point of the cycle.
The company’s market share increased and its profitability took the lead. In 2021, the company sold a total of 40.263 million pigs, including 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs, accounting for 91.62%, 7.69% and 0.7% respectively. Affected by the rapid recovery of pig production capacity and the periodicity of the industry, the proportion of sales of piglets and breeding pigs of the company in 2021 declined compared with that in 2020, which had a negative impact on the profit margin of the company. However, the breeding mode of “full autotrophy, full chain and intelligence” always made the profitability of the company in the leading position in the industry. According to the data of the National Bureau of statistics, the number of pigs sold in China reached 67.128 million in 2021, with a year-on-year increase of 27.4%. The market share of the company increased from 3.44% in 2020 to 6%. The leading position was consolidated at the bottom of the cycle. By the end of December 2021, the number of sows that the company can breed was 2.831 million, an increase of 156000 over the end of the third quarter of 2021, which is expected to pave the way for the company to further expand the pig production capacity and increase the market share in 2022.
Maintain the company’s “overweight” rating. The company is a leading enterprise in China’s pig breeding industry. In recent years, the market share continues to expand and the leading advantage is prominent. Considering the continuous improvement of industry concentration and the change of pig cycle in the future, it is estimated that the operating revenue of the company from 2021 to 2023 will be 78.507 billion yuan, 96.979 billion yuan and 129807 billion yuan respectively, and the net profit attributable to the parent company will be 8.037 billion yuan, 7.914 billion yuan and 28.552 billion yuan respectively, corresponding to EPS of 1.53, 1.50 and 5.42 yuan / share respectively; According to the closing price on March 3, 2022, the corresponding PE is 37.90x, 38.49x and 10.67x respectively. At present, the average p / E ratio of the industry in 2022 is 35.70x, and the company is still in a reasonable valuation range. Considering the periodicity of the industry and the leading position of the company, the company is given a certain valuation premium to maintain the “overweight” rating.
Risk warning: the price of raw materials fluctuates greatly; African swine fever reoccurred; The risk of sharp fluctuations in pig prices.
