\u3000\u3 Guocheng Mining Co.Ltd(000688) 526 Wuhan Keqian Biology Co.Ltd(688526) )
Key investment points
Performance summary: in 2021, the company achieved an operating revenue of RMB 1.1 billion, a year-on-year increase of 30.8%, and a net profit attributable to the parent company of RMB 570million, a year-on-year increase of 27.5%, and a net profit attributable to the parent company of RMB 550million, a year-on-year increase of 28.6%; In the first quarter of the year, the company realized an operating revenue of 200 million yuan, a year-on-year decrease of 36.5%, and the net profit attributable to the parent company was 90 million yuan, a year-on-year decrease of 46.3%.
Comments: the growth of the company’s performance is mainly due to the growth of pig vaccine demand in 21 years and the company’s marketing strategy. The company’s revenue of pig vaccine was 1.06 billion yuan, with a year-on-year increase of 29.9% and a gross profit margin of 81.8%, which was mainly due to the large number of pigs in the downstream. The company actively explored the market and achieved the growth of industrial performance in the country. Affected by the market situation, the revenue of poultry vaccine was 110 million yuan, with a year-on-year decrease of 11.2%. In terms of sales, the company actively optimized the sales channels of customers in the online market, actively carried out county and municipal vaccine promotion meetings, and accelerated the network sinking and extension to villages and towns. The distribution revenue increased by 33.4% year-on-year, accounting for about 46%, and the direct sales revenue was 580 million yuan, an increase of 26.7% year-on-year, accounting for 53%. The sharp decline in revenue and profit in the first quarter was mainly due to the low price of pigs, the continuous loss of farmers, the decline in willingness to purchase vaccines due to the market environment, and the pressure on the company’s performance.
The overall demand of the animal protection industry may grow due to the repair of downstream profitability. In this cycle, African swine fever has widened the cost range of breeding, and the cost gap between different breeding subjects can reach 10 yuan / kg. Therefore, we believe that the core factor of the demand of the animal protection industry is affected by African swine fever at one time, and the short-term will be the restoration of the profitability of breeding enterprises. With the adjustment of the structure of breeding sows, the proportion of high-quality sows will increase, the healthy litter rate, Psy dead Amoy rate and other indicators will improve, and the cost center of the industry will move down, At present, the price of live pigs is about 12.2 yuan / kg, but the price of pigs is expected to pick up in the future, and the demand for animal protection will increase. The overall cost center will move down, the profitability will be improved, and the demand for mobile insurance products will gradually accelerate the recovery. In the long run, the breeding end will make it clear that capital advantage is no longer the only threshold, and the cost control and scientific prevention and control attitude towards epidemic diseases will work together with it to become the measurement standard of excellent and efficient breeding enterprises.
The company focuses on product R & D and innovation. As a leading enterprise of non compulsory immunization vaccine, the market share is expected to further expand in the future. In 2019 and 2020, the company ranked second in the market sales revenue of non state compulsory immunization veterinary biological products in China, first in the market sales revenue of non state compulsory immunization porcine biological products, and first in the market share of many products such as Porcine Pseudorabies Vaccine, porcine parvovirus vaccine, porcine gastroenteritis and diarrhea vaccine. It also has the national enterprise technology center, the Enterprise Key Laboratory of the Ministry of agriculture and rural areas Post doctoral scientific research workstation and other qualifications, build a variety of research platforms, update products, and strive for technology to be ahead of the industry and products to be ahead of demand. In order to control risks, enhance product traceability and reduce the number of suppliers of animal protection products, downstream breeding enterprises will force the industry concentration to increase. The company has a rich product matrix to help them obtain competitive advantages, and the market share is expected to increase. During the reporting period, the company added 8 production lines and passed GMP certification. There are a wide range of vaccine production lines. 12 process improvement projects were completed throughout the year, and the stability of product quality was further improved. The company can provide live and inactivated Swine Pseudorabies Vaccine at the same time. It has obvious advantages in virus strain extraction technology. It adopts the local epidemic strain isolated from pigs in China, so the product has stronger adaptability and immunogenicity and is more suitable for domestic pig breeding in China; The company adheres to the system of “direct selling + distribution” to expand the service radius, has different strategies for large, medium and small farms, gives full play to the dual advantages of products and services, and continues to expand business.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 1.37 yuan, 1.74 yuan and 2.18 yuan respectively, and the corresponding dynamic PE will be 17 / 14 / 11 times respectively, maintaining the “buy” rating.
Risk tip: capacity expansion is less than expected; The product sales were not as good as expected.
