\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Core view
Affected by the downturn of pig price and the rise of grain price, the performance of the company in 2021 is under obvious pressure. The company’s revenue in 2021 was 64.965 billion yuan, a year-on-year -13.31%; The net profit attributable to the parent company was -13.404 billion yuan, a year-on-year increase of -280.51%. In terms of business, the broiler breeding sector recovered significantly, with a revenue of 30.328 billion yuan, a year-on-year increase of + 24.84%, accounting for 46.69% of the total revenue. In 2021, 1086 million broilers were sold, with a revenue of 28.753 billion yuan and an average price of 26.48 yuan / broiler, with year-on-year changes of + 4.73%, + 23.41% and + 17.84% respectively. Affected by the downturn of pig prices and the rise of grain prices, the short-term performance of the pig breeding sector is under pressure, with a total revenue of 29.494 billion yuan, a year-on-year increase of – 36.36%, accounting for 45.41% of the total revenue. In 2021, the number of commercial pigs sold was 132174 million, with a revenue of 27.142 billion yuan and an average price of 17.41 yuan / kg, with year-on-year changes of + 38.47%, – 31.86% and – 48.12% respectively.
The cost of pig breeding has been significantly improved, and the capital advantage ensures the steady expansion of production capacity at the bottom of the cycle. Since 2021, the company’s pig cost has continued to improve. In January 2022, the comprehensive cost has been lower than 9 yuan / kg. At the same time, the company continues to optimize the breeding pig structure and steadily improve the breeding pig quality. By the end of 2021, the company’s high-quality fertile sow stock has reached 1-1.1 million. Since 2021q3, the average number of healthy piglets in the delivery litter of the company’s pig farm has remained at 10.1-10.3. According to the company’s announcement, the company aims to sell about 18 million units in 2022, and the output is expected to maintain steady growth. In addition, facing the risk of tight cash flow caused by the bottom of the pig price cycle, the company has made sufficient capital preparation. On the one hand, the company issued 9.297 billion convertible bonds in April 2021, including 4.252 billion yuan to be invested in pig breeding projects, 1.136 billion yuan to be invested in chicken breeding projects, 1.13 billion yuan to be invested in waterfowl breeding projects, and 2.779 billion yuan to supplement working capital. On the other hand, the company has abundant cash on hand. By the end of 2021, the company’s cash on hand and cash equivalents were about 10.315 billion yuan, and the anti risk capital reserve increased, which can effectively control the normal pace of production and operation.
Yellow chicken breeding has expanded steadily, and the recovery of the cycle may bring improved profits. In 2021, the overall situation of the poultry market has improved. The production performance of the company’s poultry industry has maintained a high level in the company’s history for many months. Although the breeding cost has been raised due to the continuous rise in the price of feed raw materials, the overall profitability of the company’s poultry business has been improved, and the gross profit margin of broiler business has increased by 8.62% to 9.00% over the same period. At the same time, the company continues to promote the purification of seedling diseases, the quality of chicken seedlings has been significantly improved, and the listing rate of broilers is 94.75%, A record annual high. In addition, the company continued to overweight the poultry slaughtering and prefabricated vegetable business. In 2021, the sales volume of fresh chicken reached 150 million, with a year-on-year increase of 18.33%; The sales volume of fresh ducks was 9.8786 million, with a year-on-year increase of 313.31%. The sales volume of prefabricated vegetable products reached 16889 tons, the added value of products continued to improve, and the stability of profits was further consolidated.
Risk tip: uncontrollable epidemic occurred in the breeding process, and the food price rose sharply, increasing the feed cost.
Investment advice: maintain the “buy” rating. The company’s pig and yellow feather chicken breeding business is in a leading position in the industry. It is expected to continue to steadily reduce costs and increase efficiency through fine management in 2022, and enjoy the dividend of both volume and price brought by cycle reversal. It is estimated that the net profit attributable to the parent company in 22-24 years is -39.61/10.27/24.977 billion yuan, the corresponding EPS is -0.62/1.58/3.93 yuan, and the corresponding current share price PE is -34.9/13.8/5.5x.
