\u3000\u3 China Vanke Co.Ltd(000002) 840 Zhejiang Huatong Meat Products Co.Ltd(002840) )
Matters:
The company released the livestock and poultry sales briefing in March 2022. The company sold 82000 pigs in March, maintaining a significant increase compared with February (59000), with a total of 162200 pigs in 2022q1, a significant increase of 509.57% compared with 2021q4.
Guoxin agriculture’s view: 1) we believe that the company’s high growth in pig slaughter in March once again proves the company’s breeding capacity. The monthly slaughter in 2022 is expected to maintain the momentum of rapid growth. It is expected that the number of pigs sold in 20222023 will be 1.2 million and 2.5 million respectively. The average market value of the company next year is only about 2000 yuan / head, and there is enough room for growth and valuation repair. 2) 2022 is the best stage for the layout of the pig sector. In particular, targets with small volume, fast marketing growth and strong financial strength are recommended, with better performance elasticity and growth certainty. From this perspective, we recommend Zhejiang Huatong Meat Products Co.Ltd(002840) . 3) Huatong breeding assets should enjoy a higher valuation because Zhejiang breeding assets are scarce (the high price of pigs in Zhejiang and less retail investors bring little pressure on the prevention and control of African swine fever). The March monthly report once again verified that Zhejiang Huatong Meat Products Co.Ltd(002840) single pig sales have obvious excess income. The company is expected to achieve less losses and cash sustainability by virtue of the advantage of high regional pig price in the future. 4) Risk tip: uncontrollable pig epidemic deaths in the industry and cost pressure caused by uncontrollable rise in the price of grain raw materials. 5) Investment advice: the company is a typical beta and alpha double-click target. Beta lies in the timing of the pig cycle; Alpha lies in that the company’s production capacity is realized month by month, the Q1 cost is expected to achieve significant marginal improvement, there is enough room for growth and valuation repair, and the pig production capacity in Zhejiang is scarce, which is the core asset of agricultural breeding, so it continues to be recommended. It is estimated that the net profit attributable to the parent company in 21-23 years is -192 / 4.21 / 1.010 billion yuan, corresponding to the current share price PE of -39.8 / 18.2 / 7.6x, maintaining the “buy” rating.
Comments:
The company’s listing is cashed month by month, and there is enough room for growth and valuation repair
At present, the company has built an integrated self breeding capacity of nearly 2.5-2.6 million buildings. It is estimated that the number of buildings to be sold from 2022 to 2023 will be 1.2 million and 2.5 million respectively. The high growth of the company’s pig slaughter in March once again proves the company’s breeding capacity. It is expected that the overall slaughter will be about 500000 in the first half of 2022 and about 700000 in the second half of 2022. The monthly slaughter of 2022 is expected to maintain the momentum of rapid growth. Considering that the pig cycle is expected to reverse before 2023, the average market value of the company’s head next year is only about 2000 yuan / head, and there is enough space for valuation and repair.
Zhejiang has obvious geographical advantages, and the sales price of the company is higher than that of the same industry
According to the monthly sales report of March announced by the company, the sales revenue of a single pig in March was about 1650 yuan. We calculated the average weight of 115 kg. It can be concluded that the sales price of commercial pigs in March was 13-14 yuan / kg, which was significantly higher than muyuan’s 11.64 yuan / kg and Wen’s 12.17 yuan / kg. A single pig has obvious excess income. Zhejiang is a big province of pig consumption, and the sales price of pigs is significantly higher than the national price. From the company’s monthly sales report in March, this logic has been verified again. In the context of deep losses in the industry, the company is expected to achieve less losses by virtue of the advantage of high regional pig price, and its cash sustainability may be better than that of its peers.
Building pig breeding has obvious advantages, and Q1 breeding cost is expected to exceed expectations again
The company’s breeding mode is the integrated model of building pig breeding, and the whole process breeding survival rate is close to 90%, which reflects the obvious advantages of building pig breeding. According to our calculation, the company’s Q1 loss is expected to be about 100 million, and the breeding cost may decrease significantly month on month. In addition, there are few farmers in Zhejiang, which belongs to a natural breeding epidemic free area and has natural advantages in the prevention and control of African classical swine fever and other diseases. Considering that the company is currently a scarce large-scale breeding listed company in Zhejiang Province, the company’s pig production capacity should have a higher head average market value and sufficient valuation and repair space.
Investment suggestion: continue to focus on recommendation
The company is a typical beta and alpha double-click target. Beta lies in the timing of the pig cycle; Alpha lies in that the company’s production capacity is realized month by month, the Q1 cost is expected to achieve significant marginal improvement, there is enough room for growth and valuation repair, and the pig production capacity in Zhejiang is scarce, which is the core asset of agricultural breeding, so it continues to be recommended. It is estimated that the net profit attributable to the parent company in 21-23 years is -192 / 4.21 / 1.010 billion yuan, corresponding to the current share price PE of -39.8 / 18.2 / 7.6x, maintaining the “buy” rating.
Risk tips
The uncontrollable pig epidemic deaths in the industry and the uncontrollable rise in the price of grain raw materials have brought cost pressure.
