\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 61 Jiangsu Lihua Animal Husbandry Co.Ltd(300761) )
Event: the company issued the draft of restricted stock incentive plan for 2022 on March 25. It is proposed to grant 23663000 restricted shares to incentive objects, accounting for 5.86% of the company’s total share capital of 40388000 shares. Comments are as follows:
Equity incentives encourage development. The incentive plan plans to grant 21.77 million restricted shares for the first time and reserve 1.893 million shares, accounting for 92% and 8% of the total equity granted respectively. The incentive objects granted for the first time are 510 people (about 9% of the total number of employees), including directors, senior executives and core management and technical backbones. The grant price is 21.62 yuan / share. Based on 2021, the performance assessment objective is to increase the revenue by 20% / 30% / 40% in 2023 / 24 / 25, or increase the sales volume of commercial broilers by 16% / 24% / 32% (corresponding to 429 / 458 / 488 million feather) in the same period, and increase the sales volume of commercial pigs by 100% / 200% / 300%. This restricted stock incentive plan is the first launched by the company since its listing in 2019. It covers a wide range and has clear performance evaluation objectives. This will help the company establish and improve the incentive and restraint mechanism, fully mobilize the enthusiasm of core talents and promote the joint development of chicken and pig business, so as to ensure the long-term development of the company and bind the interests of shareholders, the company and managers, It is also conducive to the improvement of internal management efficiency.
With the approval of fixed increase, the capacity layout of chicken and pig business will continue to be promoted. In February 2022, the company’s directional issuance of shares to major shareholders was approved by the CSRC. The issuance price was 22.71 yuan / share, the number of shares issued was no more than 704534 million, and the total amount of funds to be raised was no more than 1.6 billion yuan, which was mainly used for slaughtering projects, chicken raising projects, headquarters base projects and supplementary working capital. According to the plan, the above projects will be completed and put into operation successively in 22 / 23. At that time, the company’s broiler breeding capacity will increase by 105 million feathers, broiler slaughtering capacity will increase by 81 million feathers, and feed capacity will increase by 480000 tons. In addition, the early-stage raised and invested project Fuyang Lihua pig project is expected to be completed in H1 of 22, when the pig business capacity will increase by 1 million.
The prosperity of yellow chicken industry rebounds and its performance will recover. The company issued an announcement of pre loss of performance in January 22. It is estimated that the net profit attributable to the parent company in 2021 will be a loss of 350400 million yuan and a profit of 254 million yuan in the same period of last year. The performance loss is mainly due to the obvious narrowing of the profit of the chicken industry due to the rise in the price of feed raw materials and the rise in breeding costs. In addition, the pig raising business suffered a large loss due to the decline of pig price, and took the initiative to withdraw about 120 million yuan of inventory falling price reserves, which together constituted a drag on the performance. Since Q4 of the 21st year, due to the clearing of the production capacity of the industry’s parent generation chicken breeding link, the price of yellow chicken has gradually increased, and the industry boom has gradually picked up. In Q1 of the 22nd year, the price of yellow chicken was always above the cost line and operated strongly. The profit of the industry was good and was expected to maintain throughout the year. Benefiting from the recovery of the industry boom, the company’s 22-year performance is expected to recover significantly.
The company has a leading cost advantage and its market share may increase steadily. It is recommended to buy. The company’s chicken raising cost level has always been in the leading position in the industry, with obvious competitive advantage. The improvement of the incentive mechanism will help to improve the management efficiency and further enhance the cost advantage. At the same time, the pig business will also enter a rapid development channel. We are optimistic about the core competitive advantage of the company’s yellow chicken business and the steady improvement of market share, and the contribution of pig business to performance elasticity will become more and more obvious. Therefore, we maintain the “buy” rating. It is estimated that the company will produce 430 million yellow chickens and 60000 / 800000 pigs in 22 / 23 years, with a net profit attributable to the mother of 453 / 1875 million yuan. According to the performance of 23 years, 12 times PE is given, and the target price in the next year is 47.46 yuan, 35 +% space from the current price.
