\u3000\u3 China Vanke Co.Ltd(000002) 299 Fujian Sunner Development Co.Ltd(002299) )
Event:
Fujian Sunner Development Co.Ltd(002299) released the first quarterly report of 2022: during the reporting period, the total operating revenue of the company was 3.379 billion yuan, an increase of 9.45% year-on-year, and the net profit attributable to the parent company was -653341 million yuan, a decrease of 181.53% year-on-year
Key investment points:
The chicken price was low, the cost rose, and there was a loss in the first quarter.
① in the first quarter of 2022, the total operating revenue of the company was 3.379 billion yuan (year-on-year + 9.45%), and the net profit attributable to the parent company was -653341 million yuan (year-on-year – 181.53%). During the reporting period, the company sold 241300 tons of chicken in the poultry breeding and processing sector (year-on-year + 10.2%), and 59300 tons of products in the deep-processing meat products sector (year-on-year + 6.5%). The company’s sales increased steadily and suffered losses, mainly because the price of chicken was at the bottom of the cycle and the price of bulk raw materials continued to rise since the Spring Festival, squeezing the profit space at the breeding end. The company continued to actively make efforts in the field of food deep processing, and increased the production increase of chicken products and the sales of various channels. The sales revenue of Shengnong food, a subsidiary, increased by 16.50%, and the net profit attributable to the parent company increased by 45.71 million yuan. At the same time, the company made provision for the falling price of chicken products and chicken products of RMB 190657 million (an increase of 192.95%).
② during the reporting period, the company’s asset liability ratio was 47.67%, an increase of 5.89 percentage points over the beginning of the year, still at a good level, mainly due to the increase of bank loans; The current ratio was 74.03%, an increase of 7.19 percentage points over the beginning of the year; The quick ratio was 40.40%, an increase of 13.57 percentage points over the beginning of the year, and the short-term solvency was improved. The annual turnover of the company’s accounts receivable increased by 0.62 times to 18.54 times compared with the same period of the previous year, still maintaining a stable and high level, reflecting the company’s ability to effectively control and manage the recovery risk of accounts receivable and the strong competitiveness of the company’s products; The number of annual turnover of inventories was 4.90, an increase of 0.08 over the same period of last year. The overall turnover speed of the company’s inventory is fast and its liquidity is strong. The company has always maintained a good inventory management ability, and the products are in a good sales state.
Provenance breakthrough has been certified, and the breeding end has been incrementally improved. In December 2021, the white feather broiler mating line “Shengze 901” independently developed by the company passed the appraisal, marking a milestone breakthrough in the development of China’s white feather chicken industry. The “Shengze 901” mating line has strong local adaptability, stable heredity, high egg production rate, egg breeding qualification rate, fertilization rate and hatching rate of parental breeders, low feed egg ratio, short marketing age and strong disease resistance. It is suitable for breeding in various regions of China. With the advantage of “Shengze 901”, the breeding of the company will continue to grow in 2021. At the same time, the company has completed the closed loop of the whole industrial chain. In the future, the seed source advantage will be further transformed into cost advantage, which improves the industry competitiveness of the company.
The bottom of the white feather chicken industry fluctuates, and the production capacity adjustment may bring opportunities for improvement to the industry. From the analysis of white feather chicken industry, the ancestral farm has suffered losses for more than a year, and the stock of grandparents and parents have shown a downward trend. The short-term commodity generation breeding link has rapidly recovered from losses to profits, while the slaughterhouse is still in deep losses. The extremely asymmetric profits may affect the price of wool chicken in the near future, which can adjust or bring opportunities for improvement to the industry. The company has long-term investment value.
The profit forecast and investment rating are affected by the rise of raw material prices and the downturn of chicken prices. We believe that the net profit attributable to the parent company from 2022 to 2024 is 678 / 2493 / 2732 million yuan, corresponding to 30.97/8.42/7.69 times of PE respectively. Considering the impact of the de production capacity of the industry, the chicken price may rise in the second half of 2022, and the seed source advantage of gongshengze 901 is expected to be further transformed into cost advantage in the future to maintain the “buy” rating.
Risk warning: the risk of chicken price fluctuation; Risk of price fluctuation of raw materials; Risk of epidemic disease; The risk of food end explosion is less than expected; The risk that the company’s performance expectations do not meet the standards, etc.
