\u3000\u3 Guocheng Mining Co.Ltd(000688) 526 Wuhan Keqian Biology Co.Ltd(688526) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In the past 21 years, the company achieved a total revenue of 1.103 billion yuan, yoy + 30.81, and a net profit attributable to the parent company of 571 million yuan, yoy + 27.45%; In Q1 of 22 years, the revenue was 203 million yuan, yoy-36.46%, and the net profit attributable to the parent company was 91 million yuan, yoy-46.28%.
Under the background of continuous restoration of breeding profits, the company’s performance is expected to rise steadily. The pig breeding industry recovered rapidly in the past 21 years. The company seized the opportunity to explore the market, increased the income of pig seedlings by 29.85%, and driven the steady growth of revenue. In addition, under the background of declining pig prices and poor vaccine demand from farmers, the company’s gross profit margin remained basically stable, and the gross profit margin of pig seedlings only decreased slightly by 1.95pcts to 81.79%, fully showing the excellent product quality and strong advantages of the company’s pig seedlings at the sales end. The company’s annual performance also slightly exceeded our previous expectations. 22q1 affected by the bottom of the second round of pig prices, farmers’ willingness to purchase vaccines further decreased, and the company’s revenue and profit decreased significantly. However, we believe that with the coming of the next cycle and the continuous repair of breeding profits, the demand for animal protection is expected to continue to repair, and the company’s performance is expected to rise steadily.
Accurate layout of canal ends and continuous improvement of market share. In terms of distribution channels, in the past 21 years, the company has continued to develop the national sales market, actively optimized the customer sales channels in the online market, carried out county and municipal vaccine promotion meetings, accelerated the sinking of the sales network, extended to villages and towns, and continued to expand the market share and service coverage of the company’s products. The annual distribution revenue of the company is yoy + 33.44%. In terms of direct sales channels, the company has actively expanded head breeding customers such as Wenshi and muyuan. In the past 21 years, the company’s direct sales revenue was yoy + 26.68%, and the sales proportion of the top five customers has reached 30.18%. We believe that under the background of the gradual transition from pig breeding to “dumbbell” form, the company is expected to continue to improve the market share of the company in the field of pig seedlings by focusing on the two largest markets of sinking retail investors and head enterprises, realizing the accurate layout of the sales end, continuously consolidating and developing the downstream market, and superimposing the company’s strong product competitiveness and rich product pipelines. At the same time, the company continues to accelerate the layout in the fields of bird vaccine and pet vaccine, which also brings broad space for the company’s sustained and long-term growth.
With R & D as the core, we will continue to build the advantages of dynamic protection platform. The company has always attached importance to the construction of dynamic insurance platform with R & D as the core. In 21 years, the company has invested a total of 80.028 million yuan in R & D, yoy + 35.42%. In terms of R & D achievements, in the past 21 years, the company has obtained 5 new veterinary drug registration certificates, 1 product registration announcement, 3 clinical trial approvals, 19 invention patents and 7 authorized invention patents, including porcine pseudorabies gE gene deletion inactivated vaccine (hnx-12 strain). In addition, the company has rich product pipelines in the research of pig vaccine, bird vaccine, pet vaccine, ruminant vaccine, diagnostic reagent, etc. the R & D cooperation with central China Agricultural University has been steadily promoted, and the company’s R & D and platform advantages have been continuously built. It is expected to continuously enrich the company’s product structure and continuously enhance the competitiveness of the company’s products.
Profit forecast and investment rating of the company: we expect the net profit attributable to the parent company in 22-24 years to be 600, 744 and 941 million yuan respectively, EPS to be 129, 1.60 and 2.02 yuan, and PE value to be 18.35, 14.79 and 11.69 times. We are optimistic that the recovery and growth of demand for dynamic insurance will lead to the steady rise of the company’s performance, and the strong advantages of the company in R & D, products and canal end layout will lead to the strong market competitiveness of the company and the continuous improvement of the market share of the industry. Maintain a “strongly recommended” rating.
Risk tip: the growth of demand for motor insurance is less than expected, the promotion of market reform is less than expected, and the company’s product R & D is less than expected.
