\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Key investment points
Pig production capacity shows a trend of deregulation, which is pregnant with a new cycle
At present, the price of pigs continues to be depressed, the price of feed raw materials continues to rise, the ratio of pigs to grain falls below 5, the industry is in a period of continuous loss, and the production capacity will continue to be de transformed. Since June 2021, the number of fertile sows has continued to decline after reaching the highest point. Based on this, it is expected to usher in a cycle reversal from April to may 2022.
The pig business got out of trouble and resumed growth
Before the outbreak of non plague, the company was at the absolute leading level in the industry in terms of scale and cost control, and had the foundation and experience of large-scale breeding and national expansion. Trapped by the impact of non plague, the listing scale continues to shrink from 2019 to 2020. With the exploration of a set of effective air defense measures against non plague, the monthly listing volume has resumed growth since May 2021. In January 2022, the listing volume has increased to more than 1.5 million. It is basically determined that the company has walked out of the quagmire of non plague and returned to the normal operation track.
The cost has been continuously reduced and the cost has been further optimized
Under the influence of non plague and the influence of purchased piglets, the cost of the company once climbed to more than 20 yuan / kg. With the continuous optimization of breeding pigs and the reduction of purchased seedlings, the overall cost at the end of the year was reduced by less than 9 yuan. The company expects the full cost to be 7.8 yuan / kg this year. In addition, the company strengthened cost control and further improved the full cost.
Financial stability and sufficient funds to get through the bottom of the cycle
While relying on the rapid expansion of light assets, the company also obtains the asset turnover capacity higher than that of its peers, and the return on net assets is still higher than that of its peers under the condition of low asset liability ratio. By the end of the year, the capital reserve ratio of the company had reached 11 billion, which was enough to cope with the plague. Although the capital reserve ratio had increased by nearly two years, the capital reserve ratio had reached 11 billion.
The price of yellow feather chicken will recover and is expected to resonate with chickens and pigs
In 2021, the yellow feather chicken industry continued to be depressed, the profitability of farmers was poor, the industrial production capacity continued to be de transformed, the stock of breeding chickens of grandparents and parents continued to decline month on month, and the price of yellow feather chicken is expected to gradually recover. The company can list more than 1 billion yellow feather chickens annually, accounting for 20% of the market share, which will bring full benefits.
Profit forecast and valuation
We believe that as the industry leader before the non plague, Wen has management experience in large-scale breeding. The non plague temporarily destroys the company's pig breeding resources, resulting in difficulties in short-term operation. The market has an overly pessimistic response to it. The time and range of market value adjustment are higher than those of other companies. After adjustment, the company's operation is on the right track, and the recovery speed will be higher than that of its peers, becoming a high growth target in the next cycle. According to the profit forecast, the net profit attributable to the parent company is expected to be -1.88 billion yuan, 16.16 billion yuan and 25.37 billion yuan respectively in 2021, 2022 and 2023, with EPS of -0.30, 2.54 and 3.99 yuan / share respectively, and the corresponding PE of -76.5x, 8.9x and 5.7x respectively; The net assets per share are 4.81, 7.36 and 11.35 yuan / share respectively, and the corresponding Pb is 4.7x, 3.1x and 2.0x respectively. We expect that the growth of the company will remain high in the next two years. Combined with the high valuation of the previous cycle at about 5.8x, the Pb will be 5x, and the corresponding share price will be 36.8 yuan / share. The company will be given a "buy" rating for the first time.
Risk tips
(1) animal disease risk.
(2) risk of large fluctuation of pig price.
(3) the risk that the price of feed raw materials will continue to rise.
(4) the cost reduction is less than the expected risk.
