\u3000\u3 China Vanke Co.Ltd(000002) 124 Tech-Bank Food Co.Ltd(002124) )
1. Industry: low pig price + high raw material price, intensified industry losses, and the deregulation of production capacity is expected to accelerate
The pig price is low, and the de production capacity of the industry is expected to accelerate. We expect that the de production of breeding sows is expected to be over realized under the support of ultra-low pig prices in the first half of the year. At present, the slaughter of live pigs is still growing steadily, the impact of covid-19 on the resumption of work in the off-season of traditional consumption is superimposed, and the loose state of supply and demand is exacerbated. It is expected that the current low average price of 12 yuan / kg live pigs will continue to fluctuate until May, and may be further explored; The pig price is depressed and the breeding cash loss is significant. If we consider the increase in feed costs caused by the continuous high operation of grain prices, we expect the self breeding cash loss to be 200 + yuan / head, retail investors may further take the initiative to eliminate it, the capital pressure on scale farms is intensified, the passive elimination is expected to accelerate, and the cycle turning point is expected to come around the middle of this year.
2. The company: multi-dimensional improvement helps the high growth of the company's pig sector.
1) technology oriented breeding leading pig enterprise: in 2014, the company strategically invested in choicegenetics, a world-class breeding enterprise. After that, the research team combined industry, University and research, absorbed the world's advanced breeding technology, maintained a high level of R & D capacity in the industry for many years, and realized the stage from introducing and absorbing common breeding to independent innovation breeding; The company has built a complete set of breeding facilities such as boar station, core farm and expansion farm. Through the "two-point" breeding system and digital transformation, the company has created a unique advantageous pig breeding system based on its existing endowment.
2) with sufficient capacity reserves, the company's marketing is expected to grow rapidly: the accelerated delivery of fertile sows and fixed assets is the core support for the accelerated recovery of the company's marketing volume. By the end of 2021, there are 330000 fertile sows in stock and sufficient reserves. With the rapid growth of projects under construction in the early stage, it is expected to support the high growth of the company in the future; In addition, the production capacity increased rapidly under the mode of "self built fattening + rental fattening + farmer cooperation". By the middle of 2021, the total annual production capacity of cooperative farmers of the company has increased to about 6 million, and the "self built + leased" production capacity has exceeded 4 million. The total annual production capacity is expected to be about 10 million, which fully meets the production capacity required by the company's 5-6 million pigs and 8 million pigs in 2022 and 2023.
3) actively withdraw funds and focus on pig business: impacted by the downward cycle of pigs, the company went to diversification and focused on the development of main breeding industry. By selling vaccine business and feed business, the company suspended the construction of feed plant to supplement working capital, and quickly recovered funds to provide financial support for pig business; With the help of the transfer of feed factory, the company launched strategic cooperation with Tongwei and obtained about 2 billion yuan of supply chain financing. At the same time, through the improvement of feed channels, the company reduced feed costs and helped the development of breeding business.
4. The company's valuation is in the relative bottom range, with considerable upward space. It is recommended!
Taking into account the expected changes in pig prices and the impact of costs, combined with the company's business adjustment in 2021, we adjusted the company's operating revenue from 2021 to 2023 to be RMB 109.95/95.89/20.459 billion (the previous value was RMB 203.223948044.062 billion), and the company's net profit attributable to the parent company to be RMB -37.95 / - 16.52/4.521 billion (the previous value was RMB 45.64/53.89/2.721 billion), with a year-on-year growth rate of - 216.96% / 56.48% / 373.72%. The current market value of the company corresponds to the sales volume in 2023. The average market value of the head is less than 2000 yuan / head. The average market value of the head is at the bottom of history, with considerable upward space. Referring to the historical data of the company's average market value and the profit space brought by the pig price and cost in the future business cycle, we believe that the average market value has considerable upward space, which is recommended!
Risk tips: 1. The pig price does not meet expectations; 2. The company's listing did not meet expectations; 3. Non plague outbreak; 4. The decline in costs did not meet expectations.
