\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 975 Hunan New Wellful Co.Ltd(600975) )
Key investment points
Hunan New Wellful Co.Ltd(600975) : the first listed pig breeding enterprise in China
As the leader of Hunan pig breeding, the company has been engaged in pig breeding business for more than 20 years since its establishment, including the business of supplying live pigs to Hong Kong and Macao. It began to switch from export to domestic sales in 2008. Affected by African swine fever, the scale contracted in 2018, 326900 pigs were sold in 2020, and the production capacity reserve reached 1.3 million in 2022.
Industry: China's pig industry has a broad space, and the short-term production capacity shows a trend of de industrialization
China's pig breeding industry has more than trillion market space. At present, there is a large gap in the scale of the industry compared with foreign countries. The improvement of breeding concentration in the future will bring growth opportunities for large-scale enterprises. In the short term, in the first half of 2022, the supply pressure of live pigs will not decrease, adding to the decline of meat consumption after the Spring Festival and the repeated impact of covid-19 epidemic, the decline of pig prices may accelerate after the Spring Festival, the capacity is expected to accelerate the de industrialization, and the expectation of cycle reversal is expected to continue to strengthen.
The company's core focus: accelerate production capacity construction after non plague, and the leasing mode ensures rapid expansion
(1) the impact of non plague is gradually relieved, and the production capacity ushers in rapid expansion
In the case of non plague, the company eliminated small-scale traditional pig farms, improved the biosafety management system and hardware construction of large-scale franchised farmers, made full use of the advantages of Hilly and mountainous barriers in Hunan, improved the biosafety process design of new pig farms, reduced the transportation of pigs and prevented cross infection. The company has abundant sow reserves, abundant cash flow and rapid expansion of production capacity. It is estimated that the number of sows sold in 2022 will reach 1.1 million, more than double that of 440000 in 2021.
(2) the leasing mode has unique advantages, and the cost reduction and efficiency increase continue
The company has carried out rapid expansion with low cost and high quality through the asset light mode of leasing standardized, new process sow farms and professional fattening farms. By 2020, the company has 13 breeding bases with its own scale and 39 rented pig farms, including 21 rented sow farms and 18 rented fattening farms. The complete breeding cost will reach 18.5 yuan / kg in 2021 and 15.5 yuan / kg in 2022. Cost reduction and efficiency increase will help the company survive the cold winter.
(3) the company continues to promote management reform and stimulate organizational vitality
In the past two years, the company has continuously deepened the reform of management mechanism and streamlined the management department to make the management line more professional and clear. At the same time, increase the introduction of talents, make the management team more professional and young, and launch new incentive schemes to deeply bind the development of the company with the interests of employees and fully stimulate the vitality of the organization.
Profit forecast and valuation
As the earliest listed pig breeding company in China, the company relies on Hunan SASAC to continuously improve epidemic prevention conditions and management level at the bottom of the pig cycle. At the current time, the company has abundant production capacity reserves and sufficient funds, which can ensure steady development at the bottom of the cycle. Based on the pig marketing planning and cost improvement of the company in the next 2-3 years, it is expected that the company will realize revenue of RMB 2431 million, RMB 3677 million and RMB 6789 million respectively in 20212023; The net profit attributable to the parent company is -180, -268 and 795 million yuan respectively, the EPS is -0.28, -0.41 and 1.22 yuan / share respectively, and the corresponding PE is -30.63, -20.65 and 6.96 respectively. We believe that the company has taken pig breeding business as the key development direction in the past two years, and the subsequent growth of slaughter volume is superimposed with periodic dividends, and the company's roe level is expected to be further improved. Considering that the expectation of a new round of cycle reversal in 2022 continues to strengthen, referring to the increase of the company's PB to the level of 5.37-9.33x after the arrival of the last round of pig cycle (2019), the company will give 6 times Pb in 2022, corresponding to the target price of 12.9 yuan, and give a "buy" rating for the first time.
Risk tips
(1) animal disease risk;
(2) risk of large fluctuation of pig price;
(3) price fluctuation risk of feed raw materials;
(4) food safety risks.
