Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) the annual report of 2021 disclosed recently shows that the company’s feed production and breeding industry contributed nearly 1 billion yuan of revenue last year, accounting for more than 30% of the company’s total revenue, which shows that the company has achieved remarkable results in deepening the strategic transformation of the development of its main agricultural industry. On this basis, relying on modern agriculture, the company has also practiced its social responsibility in promoting rural revitalization. At the same time, in the current severe anti epidemic situation, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) overcame many difficulties, made great efforts to ensure the stability of pork volume and price, and gave full play to the role of “ballast stone”.
With the pig breeding projects and feed plants put into operation in 2022, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) is expected to further reduce costs and improve revenue scale and profitability while increasing production capacity. In the long run, the transformation of national policy orientation to high-quality development of animal husbandry is expected to further improve the market voice of large-scale breeding enterprises Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) the advantages of integrated breeding mode will be fully reflected, so as to create space for the sustainable growth of the company’s modern agriculture sector.
the proportion of revenue has increased significantly, and modern agriculture “plays the leading role”
In 2021, when the price of pigs continued to fall and the price of feed raw materials such as corn and soybean meal continued to run at a high level, the breeding industry encountered a profit dilemma. However, for Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) who is deepening the transformation of the main business of modern agriculture, the significant improvement of the performance contribution of modern agriculture can give investors a “reassurance”.
In the whole year of 2021, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) achieved an operating revenue of 3.221 billion yuan, of which feed production and aquaculture contributed 986 million yuan in total, accounting for 30.62% of the total revenue from 18.75% in 2020. Modern agriculture plays an increasingly core role in the company’s business territory.
It is worth noting that last year, the operating income of Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) aquaculture industry increased from only 73 million yuan in the previous year to 241 million yuan last year, an increase of 228.81%. On May 20, 2021, Xuwen company, the company’s first pig industry chain project put into operation, realized the marketing of the first batch of bred pigs, and the company’s pig marketing achieved a leap from 0 to 1. During the reporting period, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) sold 132200 pigs (including 47900 piglets). In the first two months of this year, the company has sold 151500 pigs, and the performance of pig breeding business is steadily improving. At the same time, by the end of 2021, the total number of sows on hand of the company had reached 89500, including about 66800 basic sows and about 22700 backup sows, which laid a solid foundation for the subsequent production capacity improvement.
In terms of feed production business, faced with multiple adverse factors such as soaring raw material prices, intensified competition and the impact of the epidemic, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) on the one hand, optimize and upgrade the product structure, develop new products and expand new markets; On the one hand, we strengthened the construction of procurement channels, technology guidance and full production cost control, and achieved a year-on-year increase in the net profit of the business segment by 19% in the reporting period.
The improvement of the performance contribution of modern agriculture sector shows that Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) is promoting the strategic transformation focusing on modern agriculture and has achieved remarkable results, which will also continue to optimize Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) overall business structure and enhance the company’s anti risk ability and sustainable profitability.
Moreover, on the basis of continuously consolidating modern agricultural business, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) combined with its own advantages, it has also explored a path for reference in helping rural revitalization. For example, with the help of the high-quality channels for Shenzhen supply to Guangdong, Hong Kong and Macao, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) selects the high-quality products in the project location, which drives the Shenzhen Agricultural Products Group Co.Ltd(000061) sales of Xuwen pineapple, Gaozhou litchi, Hezhou navel orange and other Shenzhen Agricultural Products Group Co.Ltd(000061) sales, and widens the channels for local farmers to increase their income. In addition, the company has also explored to apply with the local government for projects such as the demonstration park for the integrated development of primary, secondary and tertiary industries, the demonstration area for agricultural modernization, the construction of modern agricultural industrial park and the establishment of a strong agricultural town, so as to drive the upgrading and development of local industries.
At the same time, in the current severe anti epidemic situation, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) as a key agricultural leading enterprise and livelihood guarantee enterprise in Guangdong Province, it has overcome the difficulties such as blocked transportation and sharp rise in labor cost of raw material logistics, fully mobilized resources, strengthened production, unblocked the market supply chain, worked in shifts for 24 hours, ensured the stable volume and price of “Shenzhen products” pork, and gave full play to the “ballast” role of pork supply and price.
head enterprise’s voice is expected to improve and open up long-term growth space
Continuing to deepen the development of the main agricultural industry is the established strategy for Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) 2022. At present, the four projects of Xuwen, Gaozhou, Wenchang and Hezhou invested by the company have been introduced and put into operation successively. In 2022, the number of pigs sold by the company is expected to exceed 1 million, and the annual number of pigs sold after the project is completed is expected to exceed 2 million. In addition, the company’s 180000 ton feed plant in Gaozhou has been completed and officially put into operation at the end of November last year; The annual output of 360000 tons of pig feed and 60000 tons of premix in Hezhou will be capped in December 2021; Xuwen (360000 tons) and Wenchang (120000 tons) feed plants are also steadily advancing and under construction.
The continuous operation of feed plants will not only greatly increase the sales and income of the company’s feed business, but also reduce the cost of breeding business through self production and self supply, so as to improve the overall efficiency of the company’s agricultural sector. Galaxy Securities also emphasized the importance of “cost reduction and efficiency increase” in the current environment. It pointed out that at present, the industry is at a trough and has a full margin of safety. For breeding enterprises, efforts will be made to reduce costs and increase efficiency in 2022 and maintain a certain growth in marketing, which will help them safely tide over the industry trough and have a strong certainty of good expectations in the future.
At the same time, it can be predicted that with the effective reduction of costs and the continuous release of production capacity, the company’s modern agriculture sector will also enter the performance explosion period and significantly improve the profitability.
In the long run, the adjustment of policy orientation and the change of industrial competition pattern will also create good space and opportunities for Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) developing modern agriculture.
At present, with the recovery of China’s pig production capacity and the increase of pork supply, the contradiction between supply and demand is no longer the main contradiction in the development of the industry. The national policy guidance has also changed from vigorously encouraging “stabilizing production and ensuring supply” in the early stage to promoting the high-quality development of animal husbandry. In contrast to the current pattern of the breeding industry, the four listed breeding companies with a large number of meat and poultry in China accounted for only 12.90% of the country in 2021; In terms of pig breeding, last year, 15 listed pig enterprises listed 965063 million pigs, accounting for only 14.38% of the market share. The market of China’s livestock and poultry breeding industry is still relatively scattered, the industry concentration needs to be further improved, and the voice of the leading enterprises of large-scale breeding is expected to be further enhanced.
As the impact of the epidemic is gradually controlled and residents’ consumption continues to recover and return to normal, the consumption demand of meat and poultry will be in a sustained growth cycle for a long time. In the process of improving the industry concentration, the leading enterprises will fully enjoy the dividends of the rapid growth of the industry.
Although there are still uncertainties at the macro-economic level, and potential risks such as cyclical fluctuations in pig prices and high prices of feed raw materials still exist, on the basis of continuous expansion of production capacity, Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) the breeding model integrating feed production, breeding, breeding and breeding, as well as the advantages accumulated in feed cost, R & D, breeding and disease prevention and control, are further highlighted, And help the company continuously reduce costs and increase efficiency, so as to realize the steady growth of business scale and the continuous improvement of profitability.
