\u3000\u3 China Vanke Co.Ltd(000002) 505 Pengdu Agriculture & Animal Husbandry Co.Ltd(002505) )
Key investment points
Performance summary: in Q1 2022, the company achieved an operating revenue of 5.21 billion yuan, a year-on-year increase of 28.3%, a net profit attributable to the parent company of 30 million yuan, a year-on-year decrease of 42.2%, and a net profit attributable to the parent company of 30 million yuan after deduction, a year-on-year decrease of 36.8%.
Comments: the company's performance and profit in the first quarter declined. Due to the rise of grain prices, the operating revenue of protein food trade related businesses increased by 28.3%, the operating cost increased by 31.7%, the sales freight of Brazil subsidiary increased, and the overall sales expense increased by 43.6%. As of the first quarter, the company's productive biological assets were 540 million yuan, an increase of 60.5% over the end of 2021, due to the increase in beef cattle procurement. At present, the beef cattle breeding sector is still in the initial investment stage of development, and the introduction of cows and calves is still in the breeding stage. It is expected to gradually sell in the second quarter, which will be reflected in the profit side. In the future, the beef cattle business will develop steadily and the long-term situation will be better.
China is a net importer of beef, and there is still a gap between supply and demand in the beef market. According to the data of the National Bureau of statistics, in 2021, China's beef output was 6.98 million tons, an increase of 3.9% over the previous year. China's beef consumption was 9.32 million tons, an increase of 5.3% over the previous year. The gap between supply and demand reached 3.229 million tons. From the perspective of per capita consumption level, there is still room for improvement. According to OECD data in 2021, China's per capita beef consumption is 4.2kg/year, far lower than that of other major countries, which are 55.7% and 35% of that of Japan and South Korea, both East Asian countries. Beef consumption is expected to further increase in the future. From the supply side, China's beef cattle breeding started late, with a small increase in supply. According to the data of the National Bureau of statistics, 47.07 million beef cattle were sold in 2021, with a year-on-year increase of 3.1%. At present, the price of beef is at a high level, and China is a net importer of beef, and the import is uncertain due to trade policies and diseases. In September 2020, the general office of the State Council issued opinions on promoting the high-quality development of animal husbandry, It is pointed out that the security guarantee ability of livestock and poultry products supply should be strengthened, and the self-sufficiency rate of beef and mutton should be increased to about 85% by 2025. Taking advantage of its overseas cattle source advantages, the company selects partial meat cattle breeds for both milk and meat, introduces high-quality breeding cattle from overseas, and then expands and cultivates them in China. Both external and internal are carried out at the same time for common development. The company plans to introduce 1.5-2 million high-quality breeding cows from abroad in the next 3-5 years. In 2021, the company made every effort to promote the development of the company's beef cattle industry and imported more than 85000 breeding cows. At present, 80000 pastures are under accelerated construction. In December 2021, the first batch of 51 tons of Myanmar silage arrived in China. The opening of the import channel of Myanmar silage can effectively reduce the breeding cost. The beef cattle achieved an operating revenue of 820 million yuan, accounting for 5.7%, a year-on-year increase of 246.8%.
The company has advantages in the field of beef cattle breeding. The main difficulties of beef cattle breeding are as follows: 1) beef cattle breeding is a heavy asset industry, with high initial capital investment and slow turnaround; 2) The degree of feed end matching is low, and only Yunnan, Xinjiang, Inner Mongolia and other places can provide the feed scale required for large-scale feeding; 3) The pace slowed down due to insufficient support from local governments. Now the company has advantages in these three aspects: 1) Pengxin group, the parent company, supports the company's development of beef cattle industry, takes advantage of overseas high-quality breeding cattle, introduces fertile cows, and adopts the parallel mode of "company + base" propagation and "company + cooperative + farmer" fattening, so as to move closer to "asset light"; 2) The company grasps the geographical advantages, makes use of Yunnan local resources and superimposes the silage import qualification to solve the feed end problems, and in addition to the feed, it also makes layout for the downstream slaughtering at the same time. Ruilipeng and slaughterhouse cover an area of 2500 mu, with an annual slaughtering capacity of 500000 heads, which is the largest slaughtering and processing capacity of meat cattle in China at present; 3) Beef cattle industry helps rural revitalization, promotes employment development, cooperates with local governments to solve people's livelihood problems and improve people's quality of life.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.13 yuan, 0.38 yuan and 0.63 yuan respectively, and the corresponding dynamic PE will be 19 / 6 / 4 times respectively, maintaining the "buy" rating.
Risk warning: epidemic situation in aquaculture industry; The introduction progress of breeding cows is less than expected.
