\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 95 Henan Shuanghui Investment & Development Co.Ltd(000895) )
Event: the company disclosed the annual report of 2021. In 2021, the company achieved a revenue of 66.8 billion yuan, a year-on-year increase of – 9.7%; The net profit attributable to the parent was 4.87 billion yuan, a year-on-year increase of – 22.2%, and the net profit not attributable to the parent was 4.43 billion yuan, a year-on-year decrease of – 23.2%. In the fourth quarter alone, the revenue was 15.75 billion yuan, a year-on-year increase of – 13.3%; The net profit attributable to the parent company was 1.41 billion yuan, a year-on-year increase of + 7.3%; Deduction of net profit not attributable to the parent company was 1.35 billion yuan, a year-on-year increase of + 12.7%. The performance is in line with expectations.
Key points supporting rating
The sales volume of meat products decreased slightly and the ton profit increased. (1) In 2021, the company’s meat products division achieved a revenue of 27.35 billion yuan, a year-on-year increase of – 2.7%, and an operating profit of 5.81 billion yuan, a year-on-year increase of + 0.9%. The sales volume of meat products was 1.558 million tons, with a year-on-year increase of – 1.8%, mainly due to the intensification of market competition and the decline in the sales volume of some ordinary products of the company. (2) In 2021, the ton price of meat products of the company was 17560 yuan / ton, a year-on-year increase of – 0.8%. We judge that during the epidemic in 2020, the company’s production capacity is limited, giving priority to the production of medium and high-grade products, resulting in a significant improvement in the product structure in 2020. Although the ton price decreased slightly year-on-year in 2021, it increased by nearly 12% compared with 2019, and the company’s product structure was still greatly improved compared with previous years. (3) In terms of ton profit, the annual ton profit exceeded 3700 yuan / ton, with a year-on-year increase of + 3%. In the fourth quarter alone, the ton profit exceeded 4000 yuan / ton. We judge that the behavior of meat products under the price of pigs has released profit space.
The slaughtering business volume increased and profits decreased, the downward price of pigs affected the income, and the impairment of frozen goods inventory affected the profit. (1) In 2021, the company’s slaughtering division achieved a revenue of 39.1 billion yuan, a year-on-year increase of – 19.0%, and an operating profit of 90 million yuan, a year-on-year increase of – 94.1%. In 2021, the prices of live pigs and white bars in China fell by more than 30%, which had a negative impact on the company’s slaughtering business income. In addition, the company’s grasp of the rhythm of frozen products deviated, resulting in losses of domestic frozen products and imported meat, which dragged down the profits of slaughtering business. (2) In 2021, the slaughtering volume of the company reached 11.12 million, a year-on-year increase of + 57%. With frozen meat and imported meat, the sales of fresh products totaled 1.633 million tons, a year-on-year increase of + 18.2%. The slaughtering rhythm slowed down slightly in the fourth quarter. We judged that the company was digesting the frozen meat inventory on the one hand and intended to slow down the pace due to the decline of 1q22 pig price on the other hand.
Outlook: the turning point has come, and the profit is expected to continue to improve in 2022. (1) We expect that in 2022, the pig price is expected to show a trend of low before high, and the overall average price is lower than that in 2021. (2) In terms of slaughtering, low pig prices are conducive to the improvement of the scale of slaughtering business. It is expected that the slaughtering of the company will continue to increase in 2022, and the profit after digestion of frozen meat inventory is expected to continue to improve. (3) In terms of meat products, the company will continue to promote the upgrading of product structure, and the new products are expected to increase in large quantities, which will boost the volume and price of meat products. (4) In conclusion, we believe that the inflection point of the company’s performance has reached, and the profit is expected to continue to improve in 2022.
Valuation
According to the annual report, we revised the previous profit forecast and estimated that the EPS in 22-24 years would be 1.74, 1.94 and 2.15 yuan, with a year-on-year increase of + 23.8%, + 11.4% and + 10.7%, maintaining the overweight rating.
Main risks of rating
The promotion of new meat products and market development were less than expected, and the price of pork fluctuated sharply.
