\u3000\u3 China Vanke Co.Ltd(000002) 1 Shenzhen Kaifa Technology Co.Ltd(000021) 00)
Main points:
China’s leading breeding service enterprise with the layout of the whole industrial chain.
Tecon Biology Co.Ltd(002100) was founded in 1993, forming the whole industrial chain structure of animal vaccine, feed and feed plant protein, breeding pig breeding, pig breeding, slaughtering and processing and meat product sales. From 2016 to 2020, the company’s operating revenue increased from 4.44 billion yuan to 11.99 billion yuan, with a compound annual growth rate of 22.0%. In 2021, there was an advance loss of 630730 million yuan, which was mainly caused by the sharp drop in pig prices, which dragged down the pig breeding business.
The feed business has grown steadily, exploring the market and seeking new increment.
Since its establishment in 1993, the company has been continuously engaged in feed business, has become the largest feed production enterprise in Xinjiang, and has gradually expanded its market to the Central Plains and Northwest China. From 2018 to 2020, the company’s feed business revenue increased from 2.56 billion yuan to 4.22 billion yuan, with a compound annual growth rate of 28.4%; The feed revenue of 1h2021 company was 2.59 billion yuan, a year-on-year increase of 33.6%. The continuous and rapid growth of feed business is mainly due to the continuous acceleration of industrial integration and further expansion of market share. The active development of Northwest Shaanxi Gansu Ningxia Qinghai market has gradually become a new growth point of feed business.
Actively adjust the breeding business, and the number of live pigs is expected to reach 2.2 million in 2022.
In the face of the rapid decline of pig prices and the rise of feed raw material prices, the company timely adjusted the development plan, the feed Department returned to the main business, comprehensively stopped the outsourcing of piglets, and scientifically planned the pig breeding business. The company gives full play to the advantages of industrial chain integration, ensures that the whole process of breeding is controllable through reasonable planning of self-produced feed and veterinary medicine vaccine business, optimizes the structure of sows, strengthens non plague prevention and control measures, and reduces the cost of pig breeding. In 2022, the company is expected to sell 2.2 million pigs, including 1 million pigs in Xinjiang, 700000 ~ 800000 pigs in Henan and 500000 pigs in Gansu, steadily promoting the company’s new three-year plan.
Among the top 10 enterprises of veterinary biological products in China, R & D and innovation create core competitiveness.
The company is one of the enterprises with the most complete animal vaccine production varieties in China and the top 10 enterprises of animal biological products in China. The company’s sales of bird flu vaccine, brucellosis vaccine, small ruminant disease vaccine, foot-and-mouth disease products and other government compulsory immunization vaccines have ranked among the top three in China for many years. The company adheres to scientific and technological innovation, attaches importance to talent training, continues to increase R & D investment, and has obtained 18 national new veterinary drug certificates and more than 60 invention and utility model patents, forming a rich product and technical reserve.
Investment advice
We expect that from 2021 to 2023, the company’s main business income will reach 16.358 billion yuan, 21.742 billion yuan and 28.67 billion yuan, with a year-on-year increase of 36.5%, 32.9% and 31.9% respectively. The corresponding net profit attributable to the parent company will be -665 million yuan, – 146 million yuan and 1.165 billion yuan, and the corresponding EPS will be -0.62 yuan, – 0.14 yuan and 108 yuan respectively. We expect the price of pigs to rise in 2023. Now we give the average market value of pig heads to the company of 5000 yuan, corresponding to the market value of pig business of 11 billion yuan. Considering the feed, vaccine and corn storage business of 600 million yuan, the net profit corresponds to the market value of 12 billion yuan, the company’s target market value of 23 billion yuan, a reasonable valuation of 16.99 yuan, and a “buy (first)” rating.
Risk tips
Livestock and poultry disease risk, raw material price fluctuation risk, livestock and poultry product price fluctuation risk, food safety risk, etc.
