\u3000\u3 China Vanke Co.Ltd(000002) 124 Tech-Bank Food Co.Ltd(002124) )
Key investment points:
The rise of feed prices accelerates the de production capacity, and the pig price is expected to usher in a low point in the third quarter.
Since the beginning of this year, the downturn of pig price has led to the overall loss of the industry. As of April 8, the price of pigs had dropped to 12.53 yuan / kg, which was far lower than the cost of pig breeding in the market. After the Spring Festival, it is the off-season for pork consumption. The mismatch between supply and demand still puts great pressure on pig prices. The decline of pig prices will further accelerate the de industrialization of industry capacity and benefit the rebound of pig prices in the future. Affected by the conflict between Russia and Ukraine and the drought in South America, the price of feed raw materials has risen and the capacity removal has accelerated, which is expected to usher in a greater cycle reversal in the future.
The slaughtering end expanded and the breeding giant transformed into a food enterprise.
After stripping off the feed business, the company vigorously develops the slaughtering and deep processing capacity, and changes from pig sales to meat products sales. The company slaughtered 1331300 pigs in 2021. After the company’s Fuyang slaughterhouse is fully put into operation, the slaughtering capacity is expected to be further improved, and the slaughtering capacity can digest all the pigs of the company. At the same time, the company extends to e-commerce, deep processing, fresh group purchase, catering and other channels, and fully opens up the integrated operation channels of breeding and slaughtering food in East China.
The company plans to sell 5 / 8 million pigs in 22 and 23 years, which can multiply and maintain growth.
The company has about 300000 fertile sows and abundant reserve capacity. In 2021, the company eliminated nearly 500000 inefficient fertile sows, which has been basically eliminated. At present, the company plans to sell 5 / 8 million pigs in 22 and 23 years. In the future, the pig price will rebound. The company is expected to increase the quantity quickly with high-quality fertile capacity, so as to further improve the market share and usher in the reversal of difficulties.
Earnings forecast, valuation and rating
We estimate that the company’s operating revenue in 202123 will be RMB 115.64/160.77/26.076 billion respectively, the net profit attributable to the parent company will be RMB -35.20 / – 11.17/1.478 billion respectively, the EPS will be RMB -1.91 / – 0.61/0.80/share respectively, the corresponding PE will be -4.27x / – 13.47x/10.18x respectively, the net asset BPS per share will be RMB 2.86/2.25/2.99/share respectively, and the corresponding Pb will be 2.86x/3.63x/2.73x respectively. As a large-scale pig breeding enterprise, relying on the advantages of scale and the layout of downstream slaughtering end, the company is expected to usher in excess returns through the cycle. Considering the characteristics of the integrated development of the company and referring to the average valuation of comparable companies of China pig breeding company and the historical valuation center of the company, the company is given a “buy” rating of 4.50xpb in 2022, with the corresponding target price of 10.13 yuan.
Risk tips
Spread of African swine fever; Pig prices have been low for a long time; The price of feed raw materials has risen sharply; Slaughtering and food processing business is less than expected; The company’s liabilities rose.
