On the evening of March 28, Henan Shuanghui Investment & Development Co.Ltd(000895) ( Henan Shuanghui Investment & Development Co.Ltd(000895) , SZ) released the annual report of 2021. In 2021 Henan Shuanghui Investment & Development Co.Ltd(000895) achieved an operating revenue of about 66.7 billion yuan, a year-on-year decrease (after adjustment) of 9.72%; The net profit attributable to shareholders of listed companies was about 4.87 billion yuan, a year-on-year decrease (after adjustment) of 22.21%.
The reporter of “daily economic news” noted that the decline of sales price and asset impairment loss are important reasons for the decline of Henan Shuanghui Investment & Development Co.Ltd(000895) net profit.
Henan Shuanghui Investment & Development Co.Ltd(000895) said that in 2021, the total external sales volume of meat products (including poultry products) was 3.3 million tons, an increase of 8.3% year-on-year. However, due to the great decline of pig and meat prices, the operating revenue decreased.
Looking forward to 2022, Henan Shuanghui Investment & Development Co.Ltd(000895) said: “the price of pigs in China shows a downward trend, which is conducive to the company to reduce costs and participate in competition. In 2021, the production capacity of pigs in China will recover, and the price of pigs will show a downward trend. It is expected that the price of pigs will be low in 2022, which is conducive to the expansion of the company’s slaughtering industry and the reduction of costs in the meat industry.”
lower selling prices drag down revenue
In 2021, Henan Shuanghui Investment & Development Co.Ltd(000895) of packaged meat products achieved an operating revenue of about 27.4 billion yuan, a year-on-year decrease of 2.66%; Slaughtering achieved an operating income of about 39.1 billion yuan, a year-on-year decrease of 19.05%; Other operating income was about 6.3 billion yuan, a year-on-year increase of 21.31%p align=”center” style=”text-align:center;”> Image source: Henan Shuanghui Investment & Development Co.Ltd(000895) 2021 annual report screenshot
It is worth noting that although Henan Shuanghui Investment & Development Co.Ltd(000895) sales revenue declined, its sales volume increased. In 2021, Henan Shuanghui Investment & Development Co.Ltd(000895) the sales volume of fresh products was about 1632500 tons, with a year-on-year increase of 18.24%; The sales volume of packaged meat products was about 1557600 tons, a slight decrease of 1.85% year-on-year; The sales volume of poultry products was 111500 tons, a year-on-year increase of 37.32%.
In other words, in Henan Shuanghui Investment & Development Co.Ltd(000895) 2021, the average prices of fresh products and packaged meat products fell, dragging down the growth of operating revenue.
Henan Shuanghui Investment & Development Co.Ltd(000895) said: “during the reporting period, due to the recovery of pig production capacity, the increase of pig supply and the sharp decline of pig price, the sales price of the group’s fresh products decreased by more than 30% year-on-year, affecting the group’s operating revenue to decrease by 16.5 billion yuan year-on-year, accounting for 22% of the revenue in the same period.”
In addition, from the perspective of direct selling and distribution mode, Henan Shuanghui Investment & Development Co.Ltd(000895) 2021 shows the growth of dealers, but the decline of distribution revenue.
In 2021, the revenue of Henan Shuanghui Investment & Development Co.Ltd(000895) direct selling mode was about 12.3 billion yuan, a year-on-year decrease of 5.75%; The distribution mode achieved an operating revenue of about 54.4 billion yuan, a year-on-year decrease of 10.58%. “By the end of 2021, the company had 18947 dealers, a net increase of 1592 compared with the beginning of the year, an increase of 9.17%.” Henan Shuanghui Investment & Development Co.Ltd(000895) scale.
gross profit margin decline
\u3000\u3000 “During the reporting period, the price of purchased pigs of the group decreased by 43.9% year-on-year, mainly due to the recovery of pig production capacity of breeding enterprises, the return of slaughter volume to normal level, the easing of the shortage of pig supply in the early stage, and the continuous decline of pig price. Affected by the continuous decline of pig price, the cost of raw pig materials for fresh products and packaged meat products of the group decreased significantly, affecting the overall operating cost of the group decreased by 19.3 billion yuan year-on-year, accounting for 31% of the operating cost in the same period. ” Henan Shuanghui Investment & Development Co.Ltd(000895) scale.
In 2021, with the decline of operating income, the operating cost of Henan Shuanghui Investment & Development Co.Ltd(000895) is also declining, but the decline of operating cost is less than that of operating income, resulting in the decline of gross profit margin of Henan Shuanghui Investment & Development Co.Ltd(000895) . According to the data, the gross profit margin of Henan Shuanghui Investment & Development Co.Ltd(000895) in 2021 was about 15.35%, compared with 17.26% in the previous year.
“As the pig market fluctuated more than expected in 2021, the group’s grasp of the rhythm of frozen products deviated, resulting in losses on domestic frozen products and imported pork, resulting in a sharp year-on-year decline in the operating profit of fresh frozen products business.” Henan Shuanghui Investment & Development Co.Ltd(000895) scale.
It is worth noting that Henan Shuanghui Investment & Development Co.Ltd(000895) also took advantage of the decline in meat prices to maximize product output Henan Shuanghui Investment & Development Co.Ltd(000895) said: “the production of fresh products increased by 57.73% year-on-year, mainly because during the reporting period, the group seized the rapid decline of pig and meat prices and the favorable opportunity for the market to increase the consumption demand for domestic meat, opened up the market, adjusted the structure and improved the production and marketing scale.”
The reporter of the daily economic news noted that another important reason why the decline of Henan Shuanghui Investment & Development Co.Ltd(000895) profit is much greater than that of revenue is the loss of asset impairment, which accounts for about 20.89% of the total Henan Shuanghui Investment & Development Co.Ltd(000895) profit. In 2021, Henan Shuanghui Investment & Development Co.Ltd(000895) the asset impairment loss was about 1.3 billion yuan, up from 840 million yuan last year, an increase of 460 million yuan year on yearp align=”center” style=”text-align:center;”> Image source: Henan Shuanghui Investment & Development Co.Ltd(000895) 2021 annual report screenshot
From the detailed account of asset impairment loss, it is mainly caused by inventory falling price loss and contract performance cost impairment loss. In 2021, the detailed account was impaired by about 1.28 billion yuan.
Henan Shuanghui Investment & Development Co.Ltd(000895) means: “The main reason is that the asset impairment loss is accrued from the frozen product inventory during the reporting period. The large amount in this period is due to the large fluctuation of pig price during the reporting period. The company accrues the inventory falling price reserve every month. The amount is large when the pig price is low. In the later stage, the inventory falling price reserve is written off to the operating cost with the product sales. Due to the decline of pig price in the second and third quarters and the recovery in the fourth quarter of the reporting period, the cumulative amount of asset impairment loss in the whole year is large, but The amount of impact on the annual profit and loss is far less than the amount of asset impairment loss. “
