\u3000\u3 China Vanke Co.Ltd(000002) 311 Guangdong Haid Group Co.Limited(002311) )
Core view
In 2021 and 2022q1, the revenue increased steadily, the pig price was low, the raw material price was high, and the company’s performance was under pressure in the short term. In 2021, the company’s revenue increased by 42.56% year-on-year to 85.944 billion yuan, and the net profit attributable to the parent company increased by – 36.73% year-on-year to 1.596 billion yuan; In 2022q1, the revenue increased by 26.98% year-on-year to RMB 11.953 billion, and the net profit attributable to the parent company increased by – 71.62% year-on-year to RMB 201 million. The year-on-year decline in the company’s net profit in 2021 and 2022q1 was mainly due to the rise in the price of feed raw materials such as corn and soybean meal and the squeeze at both ends of the depressed pig price. The company’s gross profit margin decreased by 27% to 8.49% year-on-year in 2021 and further decreased to 8.02% in 2022q1.
The cost of pig breeding improved and the feed market share increased against the trend. In terms of business, the company’s income of pig sector in 2021 was + 35.51% to 8.56 billion yuan year-on-year, with a total of about 2 million pigs. However, due to the sharp decline of pig price, the gross profit margin of Shenzhen Agricultural Products Group Co.Ltd(000061) sales sector was – 21.6% to 0.80% year-on-year, and the corresponding net profit loss attributable to the mother of pig business was about 896 million yuan. Considering that the cost of purchased piglets is too high in 2021 and the proportion of purchased piglets accounts for more than 60%, it is expected that the profitability of pig business may continue to improve with the increase of self breeding and self raising proportion in the future. In addition, the performance of the company in 2021 was outstanding except pig breeding. After excluding the pig business, the net profit attributable to the mother of feed, animal protection, seedlings and other businesses in 2021 was about 2.492 billion yuan, a year-on-year increase of about + 32.97%. Among them, the feed sector achieved an increase in market share against the trend. In 2021, the feed sector achieved a revenue of 77.379 billion yuan, a year-on-year increase of 43.39%. The annual external sales volume of feed was about 18.77 million tons (excluding 860000 tons of internal breeding consumption), a year-on-year increase of 28%, significantly exceeding the national feed sales growth rate of 16.1%, and the market share was + 10.3% year-on-year. Under the background of high raw material prices, the company’s unit excess profit advantage was further amplified, The gross profit margin of the feed sector remained strong, with a year-on-year decrease of only 1.24% to 9.35%.
During this period, the expenses will rise in the short term, and the management and operation will continue to be optimized. The company’s sales / management / financial expense ratio in 2021 was 2.10% / 3.35% / 0.47% respectively, with a year-on-year increase of – 6% / – 1% / + 20%; 2022q1 was 2.47% / 3.64% / 0.74% respectively, with a year-on-year increase of + 2 / + 15% / + 45%. We believe that the increase in expenses during the period was mainly due to the expansion of personnel scale and the new incentive plan carried out by the company to achieve the performance target of 40 million tons of feed sales in 2025. In 2021, more than 7300 employees were added, with a year-on-year increase of + 27.88%, and the annual labor cost was 4.54 billion yuan, with a year-on-year increase of + 39.91%. In the long run, the company attaches importance to the improvement of organization and management efficiency, gives full play to the advantages of middle office management, ensures the rapid linkage within the company and improves the market influence by building a four in one management mode of “procurement + R & D + sales + production”, and implements a three-level R & D system to ensure the forward-looking, sustainable output and rapid transformation of technological achievements, and the trend of enhanced management and operation efficiency.
Risk tip: the risk of periodic fluctuation of feed industry affected by abnormal weather and epidemic diseases.
Investment advice: maintain the “buy” rating. The company is expected to become a benchmark enterprise in the agricultural and animal husbandry industry and is firmly optimistic for a long time. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 2.160/37.79/4.968 billion, corresponding to EPS of RMB 1.30/2.27/2.99 respectively, and the latest closing price corresponding to PE of 47.5/27.1/20.6 times respectively.
