\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 61 Jiangsu Lihua Animal Husbandry Co.Ltd(300761) )
Event:
Jiangsu Lihua Animal Husbandry Co.Ltd(300761) released the annual report of 2021 and the first quarterly report of 2022: in 2021, the company realized an operating revenue of 11.132 billion yuan, an increase of 29.12% year-on-year, and realized a net profit attributable to the parent company of -396 million yuan, which turned from profit to loss year-on-year. In the first quarter of 2022, the company realized an operating revenue of 2.711 billion yuan, a year-on-year decrease of 0.91%, and realized a net profit attributable to the parent company of – 178 million yuan, which turned from profit to loss year-on-year.
Key investment points:
In 2021, the company’s business revenue of yellow feather chicken increased by 30.2% year-on-year, and the sales volume of commercial chicken increased by 14.6% year-on-year. In 2021, the company’s yellow chicken business revenue was 10.01 billion yuan, a year-on-year increase of 30.2%, 370 million commercial chickens were sold, a year-on-year increase of 14.6%, and the gross profit margin of yellow chicken business was 9.3%, a year-on-year increase of 0.9pct. The company’s chicken industry has steadily promoted the regional expansion strategy, and continued to strengthen the development of major consumer markets in southwest, South China and central China. In December 2021, Liuzhou Lihua, a wholly-owned subsidiary, acquired 100% equity of Xugang huangliuzhou company, accelerating the process of regional market in Guangdong and Guangxi. The company’s revenue in East China accounted for 70.6% in 2021 and 75.0% in 2020. In terms of chilled chicken, the company sold 21600 tons of chilled chicken and frozen products in 2021, with a year-on-year increase of 0.74%. The company has accelerated the development of downstream yellow feather chicken slaughtering business, has successfully started the planning and construction of many slaughtering and processing projects such as Xiangtan, Huizhou and Yangzhou, and has completed the preparations before the commencement of Taian and Weifang slaughtering and processing projects. The company plans to form a fresh poultry processing capacity accounting for about 50% of the total slaughter volume in the next five years. In the future, the company will continue to rely on its own “Huashan chicken”, “Xueshan chicken”, “suqinhuang” and other national yellow feather chicken variety supporting systems to improve the added value and brand premium of the company’s fresh yellow feather chicken products. From 2019 to 2021, the company’s yellow chicken sales accounted for 6.34%, 7.29% and 9.15% of the country’s total sales respectively. The market share has increased year by year, ranking second in the country.
In 2021, the company sold 413000 commercial pigs, a year-on-year increase of 123.9%. The average sales price was 17.9 yuan / kg, a year-on-year decrease of 44.5%; The sales revenue was 810 million yuan, a year-on-year increase of 20.4%. Affected by the continuous downward trend of pig prices, the company’s pig sector suffered a large loss. Due to the fluctuation of market conditions and breeding costs, an asset impairment loss of 590 million yuan was recognized. In the future, the company will continue to promote the medium and long-term development planning of pig breeding sector, reasonably adjust the construction progress of pig production capacity, continuously reduce costs and increase efficiency, and improve breeding efficiency. By the end of 2021, the pig raising projects of Menghe and Wujin remote observation buildings in Changzhou have been completed and put into operation.
In 2022q1, 85.6 million commercial chickens were sold, with a year-on-year increase of 5.5%. In 2022q1, the company realized an operating revenue of 2.71 billion yuan, of which the sales revenue of commercial chicken was about 2.47 billion yuan, a year-on-year increase of 7.0%, and the average sales price of commercial chicken in the first quarter increased by about 1.4% year-on-year. Due to the continuous loss of pig business and the impact of the provision for impairment, the net profit attributable to the parent company in 2022q1 was – 180 million yuan.
Profit forecast and investment rating: the company is a leading enterprise of yellow feather chicken, with the number and market share of yellow feather chicken ranking second in China. The cost advantage and remote layout promote the continuous growth of yellow chicken business; The pig sector has gradually recovered under the background of post plague, and the slaughter volume has increased significantly. At present, the stock of fertile sows in China has been significantly reduced, the upward inflection point of pig price is approaching, the parent generation production capacity of yellow feather chicken industry is at a historically low level, and the prosperity of the industry is expected to rise in the second half of the year. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.21/26.5/1.75 billion respectively, and the corresponding PE will be 10.6/4.8/7.4 times respectively, maintaining the “buy” rating.
Risk warning: animal disease risk; Chicken price is lower than expected risk; Feed raw materials have increased significantly for a long time; Risk of sales volume falling short of expectations; The company’s performance is lower than the expected risk.
