\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Founded in 1983, Wen has developed into a cross regional modern agricultural and animal husbandry enterprise group focusing on livestock and poultry breeding and supporting related businesses. Since the listing of the company in 2015, various businesses have been continuously strengthened, and the integrated layout of breeding, animal protection, feed, animal husbandry equipment and fattening links at the production end of the industrial chain has been improved. It is accelerating the extension to downstream slaughtering processing fresh and other retail terminals, and is committed to building a leading company in the whole industrial chain. The company’s main business income has increased steadily, with a CArG of 7.68% in 10 years; The net profit attributable to the parent company fluctuated with the cycle. Affected by the low outlook of the pig industry in 2021, the company lost its first loss since listing.
The company follows the cooperative breeding mode, and the “company + breeding community” mode continues to upgrade. The company follows the breeding mode of “company + farmers”. Through the outsourcing of fattening links, the company makes full use of the labor force of cooperative farmers and its own site to fatten livestock and poultry. The company can realize rapid replication and expansion with low capital investment, forming an efficient agricultural industrialization business model. Before the African swine fever, the company managed more than 50000 farmers, and the entrusted farmers’ breeding fees fluctuated with the cycle. Under the background of African swine fever, the company’s cooperative breeding mode is upgraded to “company + breeding community”. Under the mode of breeding community, the chicken business will save 0.5 yuan / animal, and the pig business will save about 75 yuan / head. It can better prevent and control the epidemic, reduce the difficulty of management, and maximize the trinity of specialization, intensification and efficiency.
The main breeding industry continues to improve, and the industry boom is expected to reverse. From the perspective of pig sector, the company’s slaughter volume has gradually recovered from the impact of non plague. It will slaughter 13.22 million pigs in 2021 and is expected to slaughter 18 million pigs in 2022. In terms of cost, due to the high breeding cost of purchased piglets and breeding pigs, the company’s complete cost of pigs in 2020 is about 11-11.5 yuan / kg, which is significantly higher than 6 yuan / kg in front of African swine fever. With the gradual reversal of the pig cycle in the second half of 2022, the improvement of the pig sector is clear. The company is expected to fully benefit from the recovery of the industry cycle, and the market elasticity and space are large. From the perspective of yellow chicken sector, the company is the leader of the yellow feather chicken industry in China. In 2021, the number of yellow feather chickens sold was 1.101 billion, the market share reached 26.9% in 2021, and the compound growth rate from 2015 to 2021 was 6.75%; The profitability of broiler sector fluctuates periodically with the price. From 2020 to 2021, yellow feather chicken breeding has been in a state of loss for a long time, and the uncertainty of boom reversal is high. At the same time, the transformation of yellow feather broiler is the general trend. Previously, most yellow chickens were sold through live poultry market channels, and retail investors withdrew from the market affected by this. The market space will be divided up by large-scale breeding enterprises, and the company, as the leader of yellow feather chicken breeding, is expected to benefit from it.
Nirvana reborn, enduring. The company has been greatly impacted by African swine fever, and the slaughter volume, sow stock, production index and complete cost have been significantly damaged. After the setback, the company has carried out reform and adjustment from the organizational framework, internal management, breeding mode, breeding system and other aspects. The production recovery is obvious, the cost decreases month by month, and the production index continues to recover. It is expected to achieve the cost reduction target of 7.8 yuan / kg in 2022. In the downward cycle, the company has made sufficient capital preparation and is in a safe and stable state. The capacity expansion in the early stage has been completed, and the output from 2022 to 2023 has reached 18 / 28 million, with strong certainty. From the perspective of stock price and head average market value, the company is at the bottom of valuation at present. Although the sector has undergone a short correction, it is still in a good configuration window.
Profit forecast: we expect the net profit attributable to the parent company from 2021 to 2023 to be -133.371249226518 billion yuan and EPS to be -2.1/0.2/4.17 yuan / share respectively. However, considering the continuous decline of the breeding cost of the company’s pig business in 2022 and the continuous improvement of the company’s fundamentals, it is expected to usher in a new round of growth with the arrival of the inflection point of the pig cycle in the second half of 2022; The prosperity of yellow feather chicken industry is rising, and the breeding profit is gradually rising. At present, the company’s valuation is at the bottom, the number of pigs is expected to maintain rapid expansion, the leading position of yellow chicken is further consolidated and the “buy” rating is maintained.
Risk tip: the risk of excessive fluctuation of pig price; Risk of non plague impact exceeding expectations; The risk that the company’s performance is less than expected; Due to the impact of the Russian Ukrainian war, the cost of raw materials such as corn and soybean meal is too high, which will affect the risk of breeding cost; Risk of management decision-making; The risk of future uncertainty of pig cycle; Under the influence of covid-19 epidemic, the catering recovery is less than the expected decline in pork demand; Risk of inventory impairment, etc.
