\u3000\u3 China Vanke Co.Ltd(000002) 714 Muyuan Foods Co.Ltd(002714) )
Core view
As a leading enterprise of integrated pig autotrophy in China, Muyuan Foods Co.Ltd(002714) has maintained a cost competitive advantage in the continuous high growth in the face of the impact of the epidemic or the low price, as evidenced by the excellent performance of the company in the past two cycles. At the turning point of the new and old cycle, we believe that the company still has three highlights.
Cost: continuously improve with the help of science and technology. Cost leadership is the core of the competitiveness of pig enterprises. In the past, some of the cost advantages of muyuan came from technical support, including 1) deep accumulation in the breeding field, and the mature “binary backcross” system ensured the stable production capacity of the company under the chaotic epidemic situation; 2) The company’s all self-supporting mode is standardized, intelligent and standardized to accurately manage the fattening link and improve the level of epidemic prevention. In the future, the cost optimization direction comes from the efficiency improvement brought by management optimization and team maturity. The complete cost of 21q3 company leads its peers at the level of 15 yuan / kg. We believe that through the optimization of various indicators in the future, the cost of 21q3 company still has room for decline of at least 2.5 yuan / kg.
Expansion: the quantity increases continuously, and the slaughter is extended. By the end of 2021, the company has built a production capacity of about 70 million, and has reserved more than 100 million land resources and 140000 human resources (about 80 million can be guaranteed). We believe that the company’s cash flow will be further improved after cost optimization and pig price reversal. It is expected to complete the construction of 100 million production capacity in the next two years. At the same time, in recent years, the company’s industrial chain has gradually extended to the slaughtering link. At present, the annual production capacity of the company’s slaughtering business is 22 million. It is expected that the production capacity will reach 37 million by the end of 2022, and the profit target is 20-30 yuan. The extension of slaughtering will effectively buffer the performance fluctuation caused by the cycle and become a new growth point of the company.
Cycle: in the darkest hour, the energy storage boom. Since the end of 2021, the price of pigs has remained low, and the industry has been in the loss range for 11 consecutive weeks. The largest loss since breeding and autotrophy once touched the line of 500 yuan / head. In March, the pig price fell below 12 yuan / kg again. Under the background of rising raw material prices, the specific price of pig and grain has dropped to about 4.5, the breeding loss is still gradually expanding, and the production capacity continues to be reduced. In January, the chain of fertile sows continues to decrease by 0.9%, and the cumulative chain of fertile sows has decreased by more than 8%. The reduction of supply and price reversal in the future are high probability events
Financial forecast and investment suggestions
It is estimated that the sales volume of 21-23 years will be 402.53 million, 55 million and 70 million respectively, and the net profit attributable to the parent company will be 7.67 billion, 7.45 billion and 34.63 billion, with a year-on-year increase of – 72.1%, – 2.9% and 364.9% respectively. Considering that the performance of some comparable companies in 22 years is consistent, the expectation is still abnormal, and the performance returns to normal with the recovery of the cycle in 23 years, 12xpe is given according to the 23-year level, and the target price is 78.96 yuan, The company has prominent cost advantages and maintained high growth in sales volume. It is given a “buy” rating for the first time.
Risk tips
Risk of major epidemic disease, fluctuation of pig price, fluctuation of raw material price, cash flow risk and food safety risk
