\u3000\u3 Shengda Resources Co.Ltd(000603) 566 Pulike Biological Engineering Inc(603566) )
Investment logic: 1) the breeding cost center has moved down and the profitability has been restored. The current pig price is about 12.2 yuan / kg, which is in the bottom consolidation stage. In the future, the pig price is expected to pick up and the demand for animal protection will increase; 2) With the smooth implementation of the new version of GMP, the industrial capacity may be reduced by about 30%, the concentration will be further improved, and the company’s product matrix is rich, which is expected to benefit; 3) The company has strong R & D strength, obvious quality advantages of vaccines and chemical drugs and high market recognition. In the future, the company is expected to benefit from the smooth marketization of plague vaccine and market increment.
Under the influence of the environmental demands of the government and the sudden African swine fever, the concentration of pig breeding industry has further increased, the attention to animal protection has increased, the attention to animal conservation has increased, and the ten listed pig breeding companies ( Hongda Xingye Co.Ltd(002002) 714 \ , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Shenzhen Kingsino Technology Co.Ltd(002548) ) a total of 94.28 million were sold in 2021, accounting for about 14% of the 670 million sold in China, Large scale farms are more standardized and pay attention to epidemic prevention, so the demand for animal health products increases. We believe that due to the impact of African swine fever, the factors affecting the current performance of the animal protection industry have been transformed into the restoration of profitability in the short term. With the adjustment of the structure of fertile sows, the proportion of high-quality varieties has increased, the overall breeding efficiency has been improved, the healthy piglet rate has been improved, the piglet cost has been effectively controlled, the complete cost center of the industry has moved down and gradually returned to the level before the non plague. In the third quarter of 21, the industry was in a deep loss state, Although it is still in the bottom consolidation stage, it is expected that the price of pigs will pick up, the value of pigs will increase in the future, the profitability of farmers will be repaired, and the demand for animal protection products will increase.
The concentration of veterinary medicine industry may be further improved. The company has rich product matrix and obvious competitive advantage. On June 1, 2020, the new version of GMP was officially implemented, which clearly stipulates that veterinary drug enterprises need to pass the new version of GMP certification before June 1, 2022, so as to improve the entry threshold of veterinary drug industry and eliminate backward production capacity. In order to control risks, enhance traceability at the breeding end or reduce suppliers of animal protection products, so as to further force the improvement of industry concentration. The company’s main products include swine influenza vaccine, cefuroxime for injection, cefuroxime for injection and pseudodoxorubicin for avian influenza, and so on. In 2018, the company, together with China Animal Husbandry Industry Co.Ltd(600195) and CITIC agriculture, established Zhongpu biology, which has the qualification for the production of foot-and-mouth disease vaccine. The bivalent three component genetic engineering subunit vaccine of foot-and-mouth disease (type O + type A) developed in cooperation with Lanzhou Institute of veterinary medicine, Chinese Academy of agricultural Sciences carried out preclinical research according to the plan.
The development of African classical swine fever vaccine was smoothly promoted. The science and technology development center of the Ministry of agriculture and rural areas publicized the research and development related projects of African classical swine fever vaccine as the key special project of the key research and development plan “research and development and application of key technologies for comprehensive prevention and control of animal epidemics”. At present, the research and development related to subunit vaccine has a high degree of attention. With the variation of classical swine fever virus, its toxicity gradually weakens and its infectivity increases. The inactivated subunit vaccine is weaker. Although the vaccine is less effective, it has higher safety, Therefore, the promotion possibility is greater. If it is successfully commercialized in the future, the attention and growth of the industry will be further improved. The company takes advantage of the platform to participate in promoting the research and development project of compound subunit vaccine of Lanzhou Institute. If it is commercialized, the company is expected to benefit.
Profit forecast and investment suggestions. It is estimated that the EPS from 2021 to 2023 will be 0.78 yuan, 1.02 yuan and 1.33 yuan respectively, and the corresponding dynamic PE from 21 to 23 years will be 36, 27 and 21 times respectively. The company has strong R & D strength and wide growth space for capacity expansion in the future. The current market valuation is relatively reasonable. It is covered for the first time and is rated as “held”.
Risk tip: the company’s capacity expansion is less than expected; There is an epidemic at the breeding end; R & D is not as expected.
