\u3000\u3 Shengda Resources Co.Ltd(000603) 477 Leshan Giantstar Farming&Husbandry Corporation Limited(603477) )
The event company issued its annual report for 2021.
The scale of breeding business expanded, with high performance growth in 21 years. The operating revenue of the company in 21 years was 2.983 billion yuan, a year-on-year increase of + 107.26%, of which pigs, feed, leather and commercial chickens contributed 1.792 billion yuan, 519 million yuan, 495 million yuan and 167 million yuan respectively, a year-on-year increase of + 169%, + 143%, + 15% and + 93%. The net profit attributable to the parent company was 259 million yuan, a year-on-year increase of + 102.84%; The net profit attributable to the parent company after deduction was 308 million yuan, a year-on-year increase of + 18.72%. The company’s comprehensive gross profit margin was 18.99%, with a year-on-year increase of -11.66pct; The expense rate during the period was 7.52%, with a year-on-year increase of -3.98pct. 21q4, the company’s operating revenue was 899 million yuan, a year-on-year increase of + 43.17%; The net profit attributable to the parent company was 56 million yuan, a year-on-year increase of – 39.35%; The net profit attributable to the parent company after deduction was 102 million yuan, a year-on-year increase of + 1.15%. The gross profit margin of sales was 15.46%, with a year-on-year increase of -21.24pct; The expense rate during the period was 5.41%, with a year-on-year increase of -9.79pct. Dividend plan: cash dividend of 0.52 yuan (including tax) for every 10 shares.
The production capacity of the pig base has been expanded, and the cost has a comparative advantage. In 21 years, the company has sold 871000 pigs (year-on-year + 308.87%), realizing an income of 1.792 billion yuan. The company completed the merger of superstar Co., Ltd. in July 20. At the same time, it adhered to the development strategy of “based on Sichuan and going to the whole country”, and continued to expand the layout of pig breeding. At present, the company has arranged 11 pig breeding bases across the country, and has built 19 standardized pig breeding farms and 2200000 native broiler breeding farms. By the end of the year, the company’s fixed assets and construction in progress were 1.754 billion yuan and 847 million yuan respectively, with a year-on-year increase of + 23.26% and + 206.88%. In addition, compared with large-scale enterprises in the industry, the company has certain cost advantages. In the downward / bottom grinding process of pig cycle, cost advantage is one of the core concerns, and the company has significant comparative advantages.
The advantages of breeding pigs are obvious, and the cost of integrated operation is controllable. The company adopts the integrated operation mode to realize a complete pig industry chain integrating feed processing, pig breeding, breeding pig expansion, commercial pig breeding and other links, and the company’s self-produced piglets and breeding pigs fully meet the business needs. By the end of the year, the company’s productive biological assets were 231 million yuan, a year-on-year increase of + 6.45%. The company’s breeding pigs are of good quality and do not carry common pig infectious viruses such as blue ear, pseudorabies Ge, PED and non plague, and the prevalence rate is low in the subsequent breeding process. Superimposed with the company’s self-produced feed, self breeding and self raising piglets, it will bring higher gross profit margin to a certain extent.
During the bottoming process of pig prices, the aftermarket reversal can be expected. On March 11, the average price of pigs in 22 provinces and cities in China was 12.25 yuan / kg, down from – 2.62% last week. In the same period, the profit of self breeding and outsourcing piglet breeding was – 518 yuan / head and – 194 yuan / head, and the loss increased. We expect this trend to continue. In addition, due to the impact of the Russian Ukrainian war, the price of relevant products has accelerated since Shenzhen Agricultural Products Group Co.Ltd(000061) February, including corn, wheat, soybean and soybean meal. Reflected in the breeding industry chain, the pressure of feed price rise is significant, driving the breeding cost upward. Under the double attack of low pig prices and rising costs, the loss will only be more serious, and the loss will bring greater consumption of cash flow, accelerate the deregulation of production capacity and wait for the reversal of pig prices.
It is suggested that the company expand steadily in the low period of the industry, and the asset liability ratio is relatively low. With the arrival of the reversal of the pig cycle, it may realize the advantage of double increase in volume and price, and the performance elasticity is significant. We expect that the EPS from 2022 to 2023 will be -0.38 yuan and 2.81 yuan respectively, and the corresponding PE will be – 55 and 7 times.
Risk tips
1. Risks of animal diseases and natural disasters;
2. Risk of raw material supply and price fluctuation;
3. Risk of pig price fluctuation;
4. Risk of policy change;
5. Risks of food safety
