\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 195 China Animal Husbandry Industry Co.Ltd(600195) )
Performance overview. In 2022q1, the revenue decreased by 12.93% to 1.123 billion yuan, and the net profit attributable to the parent company increased by 11.40% year-on-year. The company released the first quarterly report of 2022. Fy2022q1 achieved a revenue of 1.123 billion yuan, a year-on-year decrease of 12.93%, and a net profit attributable to the parent company of 134 million yuan, a year-on-year decrease of 17.06%, including Xiamen Kingdomway Group Company(002626) holding investment income of 252031 million yuan (holding Xiamen Kingdomway Group Company(002626) 2133% equity). After excluding the impact of Xiamen Kingdomway Group Company(002626) investment income (calculated based on the investment income to associates and joint ventures), fy2022q1 achieved a net profit attributable to the parent company of 109 yuan, A year-on-year increase of 11.40%.
It is expected that the performance of veterinary drugs will be stable, the market of foot-and-mouth disease will continue to grow significantly, and the overall income level will outperform the industry. In terms of segments, ① chemical medicine sector: it is expected that 2022q1 will be affected by the decline in the price of API and the weakening of the deep loss demand of the downstream pig breeding industry, but the export business and key customer sales form a certain support. It is expected that the revenue will decline slightly year-on-year, which is better than the industry. At the same time, the proportion of the revenue of high gross profit preparation products will continue to increase; ② Biopharmaceutical sector: the continuous growth in the number of large-scale field customers combined with the increase in customer procurement is expected to support the growth rate of seedlings in the foot-and-mouth disease market in 2022q1, which will continue to increase by 20% in 2021. In the high growth stage, it shows certain characteristics of resisting the fluctuation of breeding cycle. The income scale of political seedling mining has steadily decreased due to the de industrialization of industrial capacity, and the proportion of seedlings in the high gross profit market continues to increase. ③ The feed sector is expected to decline slightly and the trade sector is expected to be flat year-on-year.
Product structure optimization + cost reduction and fee control are significant, and the profitability continues to improve. Benefiting from the rapid increase in the proportion of seedlings in the foot-and-mouth disease market in the raw medicine sector, the rapid increase in the proportion of preparation products in the chemical medicine sector, and the upgrading of production lines such as Lanzhou new factory, the overall cost reduction and efficiency increase are significant. The gross profit margin level in 2022q1 has increased steadily and slightly to 25.80% (YoY + 0.31pcts). At the same time, the proportion of group customers has increased, and the scale effect of sales expenses is significant, The ratio of sales / management / Finance / R & D expenses in 2022q1 was 5.31% / 7.76% / 0.01% / 2.12% respectively, with a year-on-year increase of -1.79 / + 0.39 / – 0.06 / + 0.27pcts, and the profitability continued to improve. In 2021q1, after excluding Xiamen Kingdomway Group Company(002626) investment income, the net interest rate was 9.70%, with a year-on-year increase of 2.12pcts.
Steady progress has been made in the construction of new production capacity. The market seedlings of veterinary drugs, foot-and-mouth disease and new single products support sustainable growth. The incentive mechanism has been improved and the development vitality has been released. ① Biological products: under the background of the effective promotion of the policy of “fight before supplement” and the gradual elimination of the policy of political seedling collection in 2025, the development opportunities of market seedlings are clear. While the company’s political seedling collection remains in the leading position, the market seedlings are gradually in large quantities. The phase II construction of Lanzhou plant is steadily promoted to support the growth of seedling height in the foot-and-mouth disease market. In addition, there are abundant reserves of new single products, and the optimization of biological product sector structure can be expected to grow continuously. ② Veterinary drugs: the trend of banning resistance at the end of feed and large-scale breeding promotes the demand for high-efficiency therapeutic chemical drugs. The new GMP standard may eliminate the backward production capacity of the industry after June 1, 2022. As the leader of the industry, the company will give priority to dividends, and the integration of API preparation can realize quality control and cost control. The construction of new production line of Inner Mongolia plant will bring increment. The combination of China animal husbandry + Southern medicine – muyuan strong is expected to open a new development space for the company’s chemical medicine business. ③ The incentive mechanism of SOE reform promoted by SASAC, including “excess profit distribution” and “contracting”, is expected to be implemented in 2022, which is expected to effectively improve the vitality of the core team.
Profit forecast: the company is a leading enterprise in China’s animal health insurance, with a comprehensive product layout, continuously highlighting the competitive advantages of vaccines and chemical drugs, fruitful market-oriented transformation, and deterministic growth supported by new production capacity, quality and efficiency improvement. It is estimated that the company’s net profit attributable to the parent company from fy2022 to 2024 will be RMB 680 / 8.9/1.14 billion, an increase of 32.9% / 29.9% / 28.3% at the same time, and the corresponding EPS will be RMB 0.67/0.87/1.12/share respectively, corresponding to pe15.5% 7x / 12.1x / 8.9x, maintain the “buy” rating.
Risk tip: the outbreak of epidemic diseases in the breeding industry, the repeated covid-19 epidemic, and the progress of production capacity construction are less than expected.