\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Dragged down by pig breeding business, the company lost 13.4 billion yuan in 2021.
The company released its annual report: in 2021, it achieved an operating revenue of 64.95 billion yuan, a year-on-year decrease of 13.3%, a loss of 13.4 billion yuan before deduction and 14.67 billion yuan after deduction. From 2021q1 to Q4, the net profit attributable to the parent company was 544 million yuan, – 3.04 billion yuan, – 7.2 billion yuan and – 3.7 billion yuan respectively. The sharp decline in the company’s performance was mainly due to the sharp decline in the price of pigs in 2021, the continuous rise in the price of feed raw materials, the outsourcing of some piglets for fattening, the continuous promotion of pig breeding optimization and other factors, which pushed up the cost of pig breeding, and the deep loss of the company’s pig breeding business.
In 2021, the number of pigs sold increased by 38.5% year-on-year, and the full cost of pig business decreased steadily.
In 2021, the company sold 13.217 million pigs, a year-on-year increase of 38.5%, and the average sales price of hairy pigs was 17.39 yuan / kg, a year-on-year decrease of 48.2%. According to our calculation, the company’s pig breeding business lost about 11.5 billion yuan in 2021, of which 1h2021 lost about 3.2 billion yuan, Q3 lost about 5.2 billion yuan, Q4 lost about 3 billion yuan, and the corresponding full costs were 28.9 yuan / kg, 24.0 yuan / kg and 20.7 yuan / kg respectively; From the perspective of breeding cost, the company’s pig breeding cost in 2021 was 20.6 yuan / kg, down 11.6% from 2020. In 2021, the company made provision for impairment of consumable biological assets and productive biological assets of about 2 billion yuan, of which the impairment of breeding pigs was 1.907 billion yuan, mainly due to the high cost of purchased breeding pigs and the low utilization rate of breeding pigs caused by the invasion of epidemic diseases, resulting in the high book value of breeding pigs, so it is necessary to make provision for impairment of large biological assets.
Reconstruct the biosafety prevention and control system and continuously optimize the structure of breeding pigs.
The company reconstructed the biosafety prevention and control system, comprehensively promoted the “Yunnan non prevention model”, updated and improved the biosafety manual of pig farms, service departments and feed plants, established the business division and three-level company biosafety team, and the management cadres at all levels took root in the production line, commanded ahead, and unified the management work such as hardware configuration, process management and operation supervision. Since the second half of 2021, the listing rate of the company’s pigs has steadily rebounded to about 85%. Combined with the operation status of pig cycle and the prediction of pig price in the future, the company has steadily done a good job in the introduction and elimination of inefficient sows according to the established production plan, continuously optimized the breeding pig structure, and steadily improved the quality of breeding pigs. By the end of 2021, the number of high-quality fertile sows in the stock was controlled at 1-1.1 million, and the gestational age of fertile sows in the stock was small, laying a good foundation for the subsequent production of high-quality piglets. Since 2021q3, The average healthy litter size of the company’s pig breeding farm is maintained at 10.1-10.3. With the improvement of the quality of breeding pigs, the reproductive performance and production performance of breeding pigs are steadily improved, and the cost of pig seedlings is expected to gradually decline.
In 2021, 1.1 billion broilers were sold, with the best listing rate and feed meat ratio for many years.
In 2021, the company sold 1.101 billion broilers, a year-on-year increase of 4.8%, and 579789 million ducks, a year-on-year increase of 1.9%. According to our calculation, the profit of the company’s poultry business in 2021 was about 1 billion yuan. The company focused on the production technology and management of broilers, maintained high-level and stable production, and the effect of epidemic prevention and control was better than that of its peers. In 2021, the listing rate of broilers reached 94.75%, a record annual high; The company optimized the feed formula to offset the impact of the rise in the price of feed raw materials. The annual feed meat ratio decreased by 0.15 year-on-year, and the complete cost of broiler breeding decreased to 6.5 yuan / kg. The breeding cost still has a strong competitive advantage against the background of the sharp rise in the price of raw materials.
It is expected that the price of poultry chain will rise in 2022 and the price of pigs will rise in 2023.
The turning point of production capacity of China’s pig breeding industry appeared in June last year: according to the data of the Bureau of statistics, the number of fertile sows in China will increase from 45.64 million at the end of June last year to 42.68 million at the end of February this year, a cumulative decrease of 6.5%; According to the data of the Ministry of agriculture, the number of fertile sows decreased by 0.5% month on month in February this year, which is still in the decline channel; Pig prices continued to be depressed in March, and we expect the number of fertile sows in March to continue to decline. Recently, the price of piglets has soared, and the enthusiasm of free range farmers bran has rebounded. We maintain our previous judgment that if there is no serious epidemic, the industry will experience the bottom grinding stage this year, and the pig price is expected to enter the upward cycle in 2023.
We expect the price of bird chain to rise in 2022. ① In 2020, 1 million sets of white feather broilers will be renewed, with a year-on-year decrease of 18%. The price of white feather broilers is expected to stabilize and rise in 2022; In 2021, the national ancestral renewal volume increased by 24.3% year-on-year, and the chicken price may decline in 2023. ② Affected by covid-19 epidemic, increased production capacity and other factors, the loss degree of yellow feather broiler industry in 2020 is second only to that of 2013 impacted by the “human infection h7n9 epidemic”. The stock of ancestors began to decline from the middle of 2020. The yellow feather chicken industry suffered an overall loss from 2020 to 2021, and the industry continued to lose production capacity. The price of yellow feather chicken is expected to rise moderately in 2022.
Investment advice
We estimate that from 2022 to 2024, the number of pigs sold by the company will be 18 million, 27 million and 37.8 million, with a year-on-year increase of 36.2%, 50.0% and 40.0% respectively, corresponding to the net profit attributable to the parent of -5.094 billion yuan, 7.676 billion yuan and 22.379 billion yuan, corresponding to eps-0.8 yuan, 1.21 yuan and 352 yuan. After adjusting the breeding pig system and creating a high breeding sow group, the production performance of breeding pigs has improved comprehensively, and the slaughter volume is expected to reach 18-20 million in 2022. We expect that the price of live pigs is expected to rise in 2023. Now we give the average market value of pig heads to the company 8000 yuan, corresponding to the market value of pig business 144 billion yuan, broiler business 30 billion yuan, target market value 174 billion yuan, reasonable valuation 27.39 yuan, and maintain the “buy” rating.
Risk tips
Epidemic situation; Pig prices fell sharply.
