\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Performance overview: in 2021, the revenue decreased by 13.31% year-on-year, and the net loss attributable to the parent company was 13.404 billion yuan. The company released its annual report for 2021. Fy2021 achieved a revenue of 64.965 billion yuan, a year-on-year decrease of 13.31%. The net loss attributable to the parent company was 13.404 billion yuan, and the year-on-year profit turned into loss. During the reporting period, the provision for impairment of biological assets was about 2 billion yuan. Among them, 2021q4 achieved a revenue of 18.388 billion yuan, a year-on-year decrease of 5.62%, and a net loss attributable to the parent company of 3.703 billion yuan. The annual revenue of broilers / pigs / other breeding / raw milk and dairy products / veterinary drugs / meat products processing products / equipment was 30.328 billion yuan / 29.494 billion yuan / 2.723 billion yuan / 1.062 billion yuan / 716 million yuan / 401 million yuan / 125 million yuan respectively, with a year-on-year change of + 24.84% / – 36.36% / + 32.87% / + 26.42% / – 4.69% / + 10.03% – 47.05%.
The pig market recovered rapidly, and the depressed pig price in the industry dragged down the performance. In 2021, the company sold 132175 million pigs, with a year-on-year increase of 38.47%, exceeding the target at the beginning of the year. Among them, the number of pigs sold in 2021h1 / 2021h2 accounted for 35.5% / 65.5%, with a year-on-year change of – 3.7% / + 82.3% respectively. The market recovered rapidly in the second half of the year. Since January 2021, the pig price has shown a unilateral downward trend, and the average sales price of the company’s hairy pigs has decreased significantly by 48.2% year-on-year to 17.39 yuan / kg. At the same time, due to the continuous rise in the price of feed raw materials, the fattening of some pig seedlings purchased by the company and the continuous promotion of pig breeding optimization, the gross profit margin of pig breeding business was – 30.39%, resulting in deep losses.
The structure of breeding pigs is improved, the efficiency is improved, the provision for impairment is implemented, and the cost improvement is deterministic. During the reporting period, the company optimized the structure of breeding pigs by replacing inefficient production capacity with its own breeding system. The original book value of breeding pigs in productive biological assets increased by 5.895 billion yuan, the proportion of self breeding rose to 81.6% (YoY + 19pcts), and the book value of breeding pigs decreased to 3.567 billion yuan at the end of the period (8.186 billion yuan at the beginning of the period). At the end of the reporting period, the number of high-quality fertile sows remained stable at 1-1.1 million. Since 2021q3, the number of healthy piglets per litter has increased to 10.1-10.3, the listing rate has steadily rebounded to about 85% for many consecutive months, and the production efficiency has been significantly improved. Meanwhile, during the reporting period, the company raised a total of 1.907 billion yuan of impairment of breeding pig assets. The improvement of production efficiency and the implementation of impairment will effectively alleviate the pressure on the company’s pig production cost. In January 2022, the comprehensive cost has been reduced to less than 9 yuan / kg.
The poultry industry performed steadily, and the transformation of fresh sales and prefabricated vegetables continued to advance. In 2021, the company’s poultry production remained stable at a high level, with a total sales of 1.101 billion broilers, a year-on-year increase of 4.76%. Benefiting from the improvement of the prosperity of Yellow Chickens since 2021q4, the annual average sales price of wool chickens was 13.2 yuan / kg, a year-on-year increase of 13.50%, and the gross profit margin was 9.00%. The epidemic prevention and control achieved remarkable results. The listing rate of broilers reached a record annual high of 94.75%. By optimizing the feed formula to hedge the rise of raw material cost, the annual feed meat ratio decreased by 0.15 year-on-year. As of February 2022, the complete cost of wool chicken was about 6.5 yuan / kg. During the reporting period, the company sold 150 million fresh chickens, with a year-on-year increase of 18.33%. At present, the cumulative production capacity of a single broiler slaughtering shift has reached 285 million / year, which strongly supports the further development of fresh chicken sales business. In addition, the sales volume of prefabricated vegetable products during the year was 16889 tons. On the whole, the transformation and upgrading of poultry business has made phased progress.
The capital situation is better than that of the industry. Huangji supplements the positive cash flow and waits for the cycle to reverse. The pig business will make efforts. As of the end of the reporting period, the company’s asset liability ratio was 64.1%. Excluding the 9.297 billion yuan of convertible bonds issued in 2021, the adjusted asset liability ratio was 54.5%, and the funds in hand at the end of the period were 7.633 billion yuan, all at the leading level in the industry. Judging from the industry trend, the company gradually reduced the capital expenditure investment scale ahead of the industry as early as 2020q4. The capital expenditure in 2022 is preliminarily planned to be 4-5 billion yuan. It is expected that the current capital situation can easily tide over the industry downturn. At the same time, the yellow chicken business is expected to achieve reasonable profits in 2022, contribute positive cash flow and wait for the cycle to reverse the pig business.
Profit forecast: Pig and broiler breeding are two leading enterprises, with significant advantages in breeding scale, cost control and operation management efficiency, comprehensive upstream and downstream layout of the industrial chain, and steady progress in fresh food transformation. We are optimistic about the recovery of the company’s pig breeding capacity and the expected growth of chicken and pig double drive thanks to the yellow chicken boom. We adjust the company’s profit forecast, and expect the company’s net profit of fy20222024 to be RMB 250 / 130.9 / 2.05 billion, Corresponding to EPS 0.04/2.06/0.32 yuan / share, maintain the “buy” rating.
Risk tips: the outbreak of industrial diseases, repeated covid-19 epidemic, and the reversal of pig prices are less than expected
