\u3000\u3 China Vanke Co.Ltd(000002) 311 Guangdong Haid Group Co.Limited(002311) )
The company disclosed the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 85.999 billion yuan, a year-on-year increase of 42.56%, and the net profit attributable to the parent company was 1.596 billion yuan, a year-on-year decrease of 36.73%. In Q1 2022, the company achieved a revenue of 19.953 billion yuan, a year-on-year increase of 26.98%, and a net profit attributable to the parent company of 201 million yuan, a year-on-year decrease of 71.62%.
Feed sales reached a new high. In 2021, the company achieved an external sales volume of 18.77 million tons of feed, with a year-on-year increase of 28%, much higher than the growth rate of the industry, and the market share further increased. Among them, the export of poultry feed was 9.44 million tons, a year-on-year increase of 11%, the export of pig feed was 4.6 million tons, a year-on-year increase of 100%, and the export of aquatic feed was 4.67 million tons, a year-on-year increase of 21%. In Q1 2022, the company exported 4.19 million tons of feed, with a year-on-year increase of 22%, and the sales volume maintained a stable growth.
The market is depressed and the breeding business has hit the bottom. In 2021, the company sold about 2 million pigs and realized an operating revenue of about 4.642 billion yuan, a year-on-year increase of 25.08%. In the early stage, the company mainly focused on the construction of breeding team, and its own breeding system has not been fully established, so the pigs sold in 2021 are mainly fattened by purchasing piglets. Affected by the sharp fluctuations in the prices of piglets and pork, the pig breeding business lost 896 million yuan in the whole year. In Q1 2022, the number of pigs sold by the company was about 830000, with a revenue of 1.374 billion yuan, a year-on-year decrease of 1.56%. The war between Russia and Ukraine and the weather in South America have led to a sharp rise in global Shenzhen Agricultural Products Group Co.Ltd(000061) prices and a sharp rise in breeding costs. At the same time, the covid-19 epidemic in China has repeatedly had a major impact on consumption and continued to hinder logistics and transportation, resulting in the overall situation of the breeding industry is not optimistic. In Q1 2022, the net profit attributable to the mother of the company’s pig breeding sector was about -302 million yuan, a year-on-year decrease of 236.07%.
Seedlings and animal protection continued to grow. The core technical advantages of the company’s aquatic seedling business have been highlighted, and the profitability has been further improved. In 2021, the operating revenue was 855 million yuan, with a year-on-year increase of 42.30% and a gross profit margin of 51.22%. The dynamic insurance business realized an operating revenue of 892 million yuan, a year-on-year increase of 34.27% and a gross profit margin of 50.85%. Seedling and animal protection business is conducive to further improving the construction of breeding service system and enhancing the core competitiveness of the main business.
Profit forecast and investment suggestions
Considering the high price of raw materials and the downturn of the downstream breeding industry, we slightly reduced the feed sales volume and gross profit margin from 2022 to 2023 and increased the pig breeding cost in 2022. Therefore, it is estimated that the net profit attributable to the parent company in 20222024 will be 3.209/47.86/6.058 billion yuan (the net profit attributable to the parent company in 20222023 was 3.506/5.036 billion yuan), an increase of 101% / 49.2% / 26.6% year-on-year. The company’s main feed industry has maintained steady growth, and the breeding business has reached the bottom. With the recovery of breeding market in the second half of the year, the company’s performance may have great room for improvement. We use FCFF valuation with a target price of 83.74 yuan to maintain the “buy” rating.
Risk tips: the risk of decline in feed demand, the risk of fluctuations in pig prices, the decline in consumer demand exceeding expectations, overseas business less than expected, etc.
