\u3000\u3 China Vanke Co.Ltd(000002) 714 Muyuan Foods Co.Ltd(002714) )
Investment summary:
The pig cycle is going through the dark moment, the channel of capacity de conversion is opened, and the pig price is expected to usher in an upward inflection point during the year.
In terms of production capacity, in June 2021, the number of fertile sows reached a high of 45.64 million. It is estimated that the pig price will reach a low level after 10-12 months (i.e. April June 2022). In February 2022, the stock of fertile sows decreased to 42.68 million, and the capacity removal rate was about 6.5%, which was still higher than the normal stock of 41 million, and the capacity will continue to be cleared.
From the perspective of industry cash flow, the pig grain ratio continues to decline, the loss intensifies, and the operating cash flow of breeding enterprises is tight. Although huge profits have been accumulated in the upward cycle of pig prices, most breeding enterprises expand rapidly when cash flow is abundant, consuming a lot of funds. Cash flow is not enough to support long-term losses, and the de industrialization of production capacity will accelerate.
Historically, the bottom of the cycle or the inflection point of the upward cycle is the best time to allocate the breeding sector. In recent rounds of pig cycles, the rise and fall of the stock price of the breeding sector is often more than half a year ahead of the change of pig price.
The industrial chain of \ue5e3 covers the whole process from feed production to breeding pigs and raising piglets, and then to piglet fattening to listing. In recent years, it has continued to expand and distribute the downstream pig slaughtering business. Recently, it has established veterinary medicine production base in cooperation with China Animal Husbandry Industry Co.Ltd(600195) to continuously strengthen its moat.
In terms of feed production, the company developed different feed formulas for pigs in different growth periods to achieve accurate nutrition supply and intelligent feeding, saving a number of costs.
Muyuan's feed is produced and used by itself, which saves packaging cost, market cost and transportation cost;
Intelligent production in the whole process of feed processing and production, accurate ingredients, less personnel and lower labor costs;
The self-developed feed can improve the digestibility and utilization rate of feed and reduce the feed meat ratio, so as to reduce the feed feeding cost;
Timely adjust the feed formula according to the cost performance of raw materials to effectively reduce the feed cost.
In terms of breeding, the company created an efficient binary recurrent breeding system and used high-tech means for intelligent breeding, which reduced the cost of introduction from outside and the risk of external diseases, and improved the efficiency and quality of breeding. In 2021, the average live litter size of muyuan breeding pigs increased steadily, with an average annual increase of 1.2, four times the increase rate of Denmark. At present, the company's psy is about 24 and MSY is about 20, far higher than the national average.
In terms of fattening, muyuan successfully transformed the pig house and greatly improved the production efficiency. The company has established a "Three Prevention" pig house for disease prevention, odor prevention and non plague prevention, and tried to "raise pigs in buildings" to build a highly intelligent complex pig house. The daily fattening weight of muyuan super farm is 1098g, the feed meat ratio is as low as 2.32, the fattening survival rate is as high as 98.9%, exceeding the top 25% level in Denmark, and the complete breeding cost is as low as 10.2 yuan / kg. Excellent results are expected to be copied and popularized.
In terms of slaughtering, comply with the policy change from "transporting pigs" to "transporting meat", and build slaughtering capacity. By January 2022, the slaughtering capacity has reached 22 million, and the breeding capacity will be covered in the future. Slaughtering layout will bring many advantages:
Commercial pigs are slaughtered nearby to improve operation efficiency and save transportation costs;
Slaughtering and breeding integration, slaughtering traceability system to ensure food safety and improve product added value;
The company will have better marketing autonomy. Under the condition of extreme price fluctuation, the company can adjust the marketing speed through slaughter and reduce the pressure on the column.
The dual factors of cost and policy promote the scale and intensification of China's pig industry, and there is great room to improve the share of Muyuan Foods Co.Ltd(002714) city. In 2019, the Cr5 of pig breeding industry in the United States was about 41%, while that in China was only 13% in 2021. By the end of 2021, muyuan had a production capacity of 70 million pigs, and the slaughter volume is expected to increase significantly.
Investment suggestions:
It is estimated that the net profit attributable to the parent company will be 7.4 billion yuan, 4.9 billion yuan and 37.6 billion yuan respectively in 2021, 2022 and 2023, with a year-on-year change of - 73%, - 34% and 668%. The EPS will be 1.38, 0.92 and 7.07 yuan / share respectively, and the corresponding PE will be 40, 60 and 8 times respectively; The net assets per share are 11, 11.9 and 18.2 yuan / share respectively, and the corresponding Pb is 5, 4.7 and 3 times respectively. The target price in 2022 is 86 yuan, and the "buy" rating is given for the first time.
Risk tips: the risk of rising raw material prices, the risk that the reversal of pig cycle is less than expected, and the risk of animal diseases.
