\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 98 Wens Foodstuff Group Co.Ltd(300498) )
Performance overview: in 2022q1, the revenue decreased by 13.26% year-on-year, and the net loss attributable to the parent company was 3.598 billion yuan. The company released the first quarterly report of 2022. Fy2022q1 achieved a revenue of 14.586 billion yuan, a year-on-year decrease of 13.26%, a net loss attributable to the parent of 3.763 billion yuan, a year-on-year profit into loss, and a net loss of 3.598 billion yuan deducted from the non attributable to the parent. The provision for the falling price of pork inventory during the reporting period brought an asset impairment loss of 997 million yuan. During the reporting period, sales expenses, administrative expenses and R & D expenses decreased steadily year-on-year, and financial expenses increased significantly due to the expense of interest on convertible bonds. In 2022q1, the sales / management / R & D / financial expense rates were 1.17% / 7.36% / 0.75% / 2.51% respectively, with a year-on-year change of + 0.08 / + 1.02% / – 0.12 / + 1.24pcts, and the gross profit margin / net profit margin of sales was – 6.25% / – 26.10%, which was mainly affected by the loss of pig business.
The number of pigs sold increased significantly year-on-year, and the downturn in pig prices continued to cause deep losses. According to the company’s monthly business briefing, 2022q1 company sold a total of 4.024 million pigs (including pigs and fresh products), with a significant year-on-year increase of 91.9%, mainly benefiting from the recovery of the company’s reproductive capacity and the improvement of production efficiency since 2020, which is in line with the rhythm of the annual output plan of 18 million pigs. The estimated average weight of the column is 117.8 kg, with a year-on-year / month ratio of – 0.55% / + 1.40% respectively. 2022q1 company achieved a pig sales revenue of 6.152 billion yuan, a year-on-year decrease of 18.96%, Mainly due to the sharp decline in pig prices from the beginning of the year to the end of the first quarter, it is estimated that the average sales price of 2022q1 is 12.98 yuan / kg, with a year-on-year / month on month decrease of 57.52% / 11.08% respectively.
Focus on the quality improvement of basic sows, and the production indicators have been significantly improved. By the end of 2021, the number of high-quality fertile sows of the company has stabilized at 1-1.1 million. Since 2021q3, the number of healthy piglets per litter has increased to 10.1-10.3, and the listing rate has steadily rebounded to about 85% for many consecutive months. It is expected to further improve in 2022q1, and the pig production data has basically reversed. The productive biological assets of 2022q1 are 5.056 billion yuan, a month on month increase of + 6.3%. According to the company’s plan, the number of fertile sows will increase to 1.4 million by the end of 2022. With the gradual recovery of production efficiency, breeding efficiency and early impairment provision, the comprehensive cost of pig breeding of the company has been reduced to less than 18 yuan / kg in January 2022, which has fallen steadily compared with the high level of 22-23 yuan / kg in 2020. It is expected to continue to improve in the future. The poultry industry is stable and positive, and it is expected to achieve small profits during the reporting period. According to the company’s monthly business briefing, 2022q1 company sold 227 million broilers (including wool chicken, fresh products and cooked food), with a year-on-year increase of 0.14%. It is estimated that the average sales price of yellow feather chicken of 2022q1 company is 13.95 yuan / kg, with a year-on-year / month ratio of – 2.59% / 0.79% respectively, and the sales revenue is 6.635 billion yuan, with a year-on-year increase of 0.91%. It is expected that according to the company’s 2021 annual report, the production efficiency of the poultry industry also shows a good trend, and the listing rate and feed meat ratio are at a historically high level. As of February 2022, the total cost of the company’s wool chicken is about 6.5 yuan / kg. It is expected that the cost will increase due to the increase of feed cost in February and March, and the poultry industry is expected to make a small profit in the first quarter. In terms of downstream extension, at present, the cumulative production capacity of broiler slaughtering single shift has reached 285 million / year, which strongly supports the further development of fresh chicken sales business.
With sufficient funds, the upgrading of breeding mode continues to be promoted, and the cycle is met steadily. As of the end of the reporting period, the company’s asset liability ratio was 66.48%, with monetary capital of 6.66 billion yuan and trading financial assets of 3.135 billion yuan. Its capital status and solvency were leading the industry. In 2022, the initial capital expenditure is planned to be 4-5 billion yuan to promote the steady upgrading of the breeding mode to “company + breeding community + farmers”. It is expected that the current capital situation can steadily pass the bottom of the cycle. From the perspective of the industry supply side, the yellow chicken price will still be supported during the year. It is expected that the yellow chicken business can achieve reasonable profits in 2022, contribute positive cash flow, and wait for the cycle to reverse the strength of the pig business.
Profit forecast: Pig and broiler breeding are two leading enterprises, with significant advantages in breeding scale, cost control and operation management efficiency. The upstream and downstream layout of the industrial chain is comprehensive, and the transformation of fresh food is advancing steadily. We are optimistic about the recovery of the company’s pig breeding capacity and the expected growth of chicken and pig driven by the yellow chicken boom. We adjust the company’s profit forecast. It is estimated that the net profit attributable to the parent company from fy20222024 is RMB 250 / 130.9/2.05 billion, corresponding to eps0.05 billion 04 / 2.06/0.32 yuan / share, maintaining the “buy” rating.
Risk tips: the outbreak of epidemic diseases in the industry, the repeated covid-19 epidemic, and the reversal of pig prices are less than expected.
