\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 95 Henan Shuanghui Investment & Development Co.Ltd(000895) )
Event:
The company released its first quarterly report and realized a total operating revenue of 13.791 billion in 2022q1, the same as – 24.71%; The net profit attributable to the shareholders of the parent company was 1.46 billion, the same as + 1.34%; Deduct non net profit of RMB 1.369 billion, the same as + 5.69%.
The non deduction performance in the first quarter was basically in line with expectations: due to the sharp year-on-year decrease of 58% in pork price in the first quarter, the company’s revenue in the first quarter fell year-on-year. However, both the sales volume of meat products and the number of slaughtered heads were relatively stable, among which the sales volume of meat products decreased slightly, and the number of slaughtered heads increased by 84.6% year-on-year. The revenue of meat products / slaughtering division in the first quarter was 6.797 billion yuan / 6.017 billion yuan respectively, with a year-on-year increase of – 4.94% / – 38.83%; The operating profit was RMB 1.751134 billion respectively, with a year-on-year increase of + 21.88% / – 52.84%. Under the low cost, the profit of the meat products division of the company increased significantly, and the slaughtering department was still affected by the high performance base last year.
Tons of meat products hit a record high, and the spot outbreak of the epidemic affected sales. Since the beginning of this year, covid-19 epidemic has once again been distributed at multiple points. The company has overcome difficulties to ensure market supply. Some areas, such as Shanghai, Jilin, Shenzhen and Taiyuan, were greatly affected by the epidemic, with strong demand for hoarding goods by residents, relatively perfect group purchase system, and high growth in the sales of meat products; However, due to the relatively strict control policies in many regions, affecting the logistics and transportation, on the whole, the sales volume of meat products of the company decreased slightly in the first quarter. Due to the sharp year-on-year decline in pork prices, the company’s profit per ton of meat products rose to more than 4500 yuan / ton in the first quarter, and is expected to remain at a high level of 4000 yuan / ton this year.
The base and impairment led to the setback of slaughtering profits, which is expected to return to normal in the second quarter. In the first quarter, the slaughtering Department increased market development, improved the operation quality of outlets, strengthened price control and timely carried out product reserves. The slaughtering volume and foreign sales of domestic meat increased significantly (the company slaughtered 3.44 million pigs in the first quarter, a year-on-year increase of + 84.6%), and the profit of fresh products also increased significantly. However, due to the low price of pigs in China, the import of meat decreased significantly, and the contribution profit also decreased accordingly; At the same time, the use of high priced frozen raw materials also affected the current profits (part of the frozen raw materials sold by 2021q4 slaughtering department to meat products department were used in 2021q1, and the actual loss of 2021q4 in accounting was deferred to 2021q1 for recognition). The company’s asset impairment loss in the first quarter was 61.435 million yuan, a significant decrease from 216 million yuan in the same period last year. It is expected that the company’s profit of China’s slaughtering department will return to normal this year, especially in the second and third quarters.
Meat products are subject to two adjustments and one control, and prefabricated dishes are expected to open the second growth curve. The company continues to adhere to the basic strategic policy of “two adjustments and one control”, promote new products, adjust structure, control cost and stabilize price, expand new channels, expand network and deepen channel operation. Some new products have a brilliant performance. The annual sales volume of new products such as spicy, fire whirlwind and balls has exceeded 20000 tons; The annual sales volume of Shuanghui chopsticks kitchen and Qingxiang chicken sausage exceeds 10000 tons. In the first quarter, catering was greatly impacted by the epidemic, but the sales volume of catering materials business of the company bucked the trend and increased by 6%, including pre processed catering food + 23% year-on-year. At present, the prefabricated vegetable industry is growing rapidly. Shuanghui is the leader of meat products. It has mature meat processing technology and perfect distribution network structure. It has prominent Industrial Synergy and cost advantages. It is expected that large single products of prefabricated vegetables will break out in the future.
Profit forecast and investment rating: it is estimated that the company’s EPS from 2022 to 2024 will be 1.74/1.87/2.01 yuan respectively, and the corresponding PE will be 18 / 17 / 15 times respectively, maintaining the “overweight” rating.
Risk warning: covid-19 epidemic lasted longer than expected; The promotion of new products did not meet expectations; Internal marketing reform is less than expected; Pork price fluctuations exceeded expectations; Food safety risks.
