\u3000\u3 China Vanke Co.Ltd(000002) 567 Tangrenshen Group Co.Ltd(002567) )
Event: the company recently released the monthly sales report of February 2022 and the announcement of the completion of the registration of the first grant of the stock option incentive plan in 2022. In February 2022, the company sold 122400 pigs, down 19.10% year-on-year and 6.13% month on month; The total sales revenue was 165.02 million yuan, a year-on-year decrease of 47.86% and a month on month decrease of 16.95%. On March 14, 2022, 54906000 stock options were granted for the first time, and the registration was completed. Comments are as follows:
Adjust the rhythm according to the cycle. In 2022, the rhythm may be low first and then high. From January to February 2022, a total of 252800 pigs were sold, a year-on-year decrease of 198000. Among them, the sales volume of piglets was 9400, a year-on-year decrease of 96.18%, and 245500 in the same period last year; The sales volume of commercial pigs was 243400, basically the same year-on-year, 245500 in the same period last year. The decline in pig sales was mainly due to the company’s orderly arrangement of production and sales according to the changes in pig prices, resulting in a significant decrease in piglet sales. It is expected that pig sales will rise significantly since the third quarter. Throughout the year, the slaughter of pigs is mainly affected by the stock level of sows in the early stage, that is, productive biological assets. At the end of the first to third quarters of 2021, the company’s productive biological assets were 436 million yuan / 493 million yuan / 493 million yuan respectively, with a year-on-year growth rate of 136.5% / 72.61% / 28.96%, and an average growth rate of 79.34% in the first to third quarters. Therefore, it is expected that the annual sales will increase significantly in 2022, with a growth rate of more than 30%.
The production capacity layout of aquaculture business has been steadily promoted. The company strategically attaches importance to the development of pig breeding business, and the breeding capacity layout is still carried out in an orderly manner. In 2021, the breeding subsidiary Longhua agriculture and animal husbandry 1 million building pig house project was completed and put into operation, which greatly improved the breeding capacity that year. In the first quarter of 2021, 1.55 billion yuan was successfully raised in the way of fixed increase, of which 1 billion yuan was used to promote the construction of 32900 sows in Yunnan and about 400000 integrated pig farms in Gansu. At the end of 2021, the proposed overseas senior bond project of US $200 million was filed by the national development and Reform Commission, of which about US $125 million was mainly used to promote the construction of Wenshao Wenshi pig Industrial Park project, Zhuangtian phase II pig breeding base project, Hainan Changjiang Da’an integrated 150000 head breeding project and Yunfu yun’an Wenshi ecological breeding Co., Ltd. building pig farm project. In March 2022, the company announced that it plans to raise funds through non-public offering of shares again for project construction and daily operation..
Equity incentive shows development confidence. In Q1 2022, the company announced and implemented the 2022 stock option incentive plan, granted 54.906 million stock options to 857 incentive objects including senior executives, core management and technical backbone, with an exercise price of 6.2 yuan / share, and reserved 4.51 million stock options. The performance assessment target is that the sales volume of pigs in 2022 / 23 / 24 will exceed 2 / 3.5 / 5 million or the sales volume of feed outside the same period will exceed 5.6 / 6.2 / 7 million tons. This equity incentive is the company’s first launch in nearly 10 years. This will help promote the company to establish and improve the incentive and restraint mechanism, mobilize the enthusiasm of employees, and cultivate a sense of responsibility and mission, so as to ensure the long-term development of the company and effectively combine the interests of shareholders, the company and managers.
At the bottom of the pig cycle, it is recommended to buy. The production capacity of the pig breeding industry has been reduced for eight consecutive months since the middle of 2021. The pig price bottomed in the middle of 2022, and the probability of reversing upward in the second half of the year is high. It is estimated that the average price of pigs in the whole year is 16-17 yuan / kg, which is basically the same as that in 2021. The company actively develops building pig breeding, and the innovation of breeding mode has achieved remarkable results. In recent 10 years, equity incentive is the first to be promoted, management improvement is imminent, and the cost of pig breeding is expected to be continuously optimized. It is estimated that the company will sell 2 million pigs / 3.5 million pigs in 22 / 23 years, and the net profit attributable to the mother is 132 / 1.585 billion yuan. The target price in the next year is 15.75 yuan, which is 60 +% away from the current price, and the purchase rating is given.
