China Animal Husbandry Industry Co.Ltd(600195) (600195)
Key investment points
Investment logic: 1)] the cost of pig breeding returns to the pre plague level, the profitability of the breeding end is significantly improved, the proportion of large-scale farms is nearly 60%, the importance of epidemic prevention is increased, and the demand for animal protection is increased; 2) The company’s main profit rose against the trend in the third quarter, with a year-on-year increase of 38%. The market recognition of foot-and-mouth disease vaccine is high, and the market share will be further increased in the future; 3) Referring to the experience of the European Union, the market demand for therapeutic antibiotics has doubled after the prohibition of resistance, the new GMP standards have promoted the concentration of the chemical drug market, and the backward production capacity has been phased out, benefiting the leaders.
The restoration of downstream aquaculture profitability will increase the demand for animal protection products. In the process of continuous recovery of pig stocks from the end of 2019 to 2020, the market takes animal protection as the post pig breeding cycle, judges the future performance improvement from the perspective of demand growth, so as to improve the industry valuation. The main target has ushered in an increase of nearly 50%. The post animal protection enterprises have achieved rapid profit growth year-on-year in 2020, which confirms the logic. At present, it is no longer just the upcoming adjustment of the number of pigs that will affect the performance, and the profitability of breeding enterprises must also be taken into account. We believe that the core influencing factors of the demand of the animal protection industry are affected by African swine fever at one time, but are transformed into the restoration of the profitability of breeding enterprises in the short term, including pig price, piglet cost, feed cost Dead Amoy rate is a factor affecting profitability. All four show a marginal improvement trend, and the demand for animal insurance products will increase in the future.
The company’s production capacity of foot-and-mouth disease and macrolides will be gradually put into operation, the market share will be further improved, and the customer structure will be continuously optimized. The policy of “first to fight the back” has been steadily promoted. In 2025, the market vaccine of compulsory immunization against epidemic diseases will fully replace the vaccine collected by the government. The company has high market recognition of foot-and-mouth disease, and the proportion of its structure will continue to increase in the future. Its core product Oubeijia is type O and type a bivalent inactivated vaccine of foot-and-mouth disease, which has many advantages, such as wide antigen spectrum, international leading technology, international leading production process, high antigen purity and low side effects, The market feedback is good. In the future, with the continuous improvement of capacity utilization, the new capacity will be released after the construction of phase II project of Lanzhou new plant, and the sales volume will increase. In addition, the penetration improvement of large single products drives the comprehensive layout of multiple products, including vaccines and combined vaccines for swine fever, pig ring, pseudorabies and other diseases, and the product combination improves the competitive advantage. At present, large-scale farms account for more than 60% of pig farmers in China, and their awareness of epidemic prevention is stronger. The company has made clear the importance of group customers, focused on marketing, continuously increased the proportion, formed a normalized tracking service scheme, and timely studied and judged the impact of breeding market on vaccine demand.
As a leading enterprise, the company will benefit from the market increment brought by the “Prohibition of resistance” and the continuous improvement of the concentration of the chemical drug market. Referring to the experience of the EU’s prohibition of feed resistance, the effective ingredients of therapeutic antibiotics in Denmark increased from 48 tons in 1996 to 94 tons in 2001. After the “Prohibition of resistance”, the immunity of livestock and poultry may decline, and the demand for antibiotics in case of diseases will increase accordingly. The foundation of the company’s Nanjing veterinary biomedical industrial park project has been laid smoothly, Inner Mongolia Zhongmu macrolide innovation driven industrial upgrading project was launched and implemented. Shengli biology obtained the export certification of the U.S. FDA, indicating that the product quality of the company’s taiwanmycin is recognized by the world. In the future, macrolide pharmaceutical preparations will usher in production and marketing growth, and the advantages of upstream and downstream integration will be more obvious. Compared with the past, the new version of GMP is more stringent, backward production capacity is eliminated, and the industry is centralized. The leading enterprises have competitive advantages. More than 1600 veterinary drug enterprises have passed the new version of GMP by the third quarter of 21. As a high-quality leader of chemical drugs, the company will quickly seize the market share and meet the improvement of performance.
New progress may be made in African classical swine fever vaccine. The science and technology development center of the Ministry of agriculture and rural areas publicized the research and development related projects of African classical swine fever vaccine as the key special project of the key research and development plan “research and development and application of key technologies for comprehensive prevention and control of animal diseases”. At present, the research and development related to subunit vaccine has attracted high attention. With the variation of classical swine fever virus, its toxicity gradually weakened and its infectivity increased, Subunit inactivated vaccine is weaker than virus vaccine. Although it is less effective, it has higher safety, so it is more likely to be popularized. If it is successfully marketed in the future, the industry’s attention and growth will be further improved.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.56 yuan, 0.7 yuan and 0.86 yuan respectively, the corresponding dynamic PE will be 23 / 19 / 15 times respectively, and the PE of comparable companies in the same industry will be 20 times in 2022. Considering the company’s rich product matrix, stable leading position, strong growth and reasonable premium, it will be given 27 times PE in 22 years, maintain the “buy” rating, and the target price will be 18.9 yuan.
Risk warning: epidemic situation in downstream aquaculture; The product sales were not as good as expected.
