\u3000\u3 China Vanke Co.Ltd(000002) 299 Fujian Sunner Development Co.Ltd(002299) )
Events
Fujian Sunner Development Co.Ltd(002299) released the first quarterly report of 2022: the company realized an operating revenue of RMB 3.379 billion in Q1 of 2022, an increase of 9.45% at the same time, and the net profit attributable to the parent company was RMB 653341 million, a year-on-year decrease of 181.53%.
Key investment points
The market downturn is superimposed on the rise of feed cost, and the performance turns into loss
In the first quarter, the company sold 241300 tons of chicken, an increase of 10.2%, and the sales of deep-processing meat products was 59300 tons, an increase of 6.50%. The sales volume still maintained a stable growth. Due to the weak performance of chicken industry and the weak supply of raw materials, the overall profit of chicken industry has been further weakened, and the supply of raw materials has been further weakened. However, the chicken products business actively arranged by the company still maintained strong growth momentum and profitability. The revenue of Shengnong food increased by 16.50% in the first quarter, realizing a net profit of 45.71 million yuan.
Balance sheet: as of the end of the first quarter, short-term borrowings increased by 1.97 billion yuan, mainly due to the company's plan to expand against the trend and reserve funds in response to the bottom environment of the industry, increased a large number of bank borrowings with low interest rates, and the asset liability ratio increased by 5.9 percentage points to 47.7%. The financial situation is still relatively stable.
The advantages of the whole industry chain are obvious, and the downstream business is growing rapidly
In December 2021, the company identified and passed the white feather chicken supporting strain "Shengze 901" independently developed by the company. So far, the company has a whole industry chain management system in the white feather chicken industry chain, from ancestral breeding to deep processing of chicken products. "Shengze 901" has solved the vertical disease, and its performance index is not inferior to that of foreign strains. It has been sold in China, and the market feedback is good. The downstream business continued to launch explosive products, and the compound growth rate of food deep processing revenue in recent five years reached 27%, becoming the second growth curve of the company.
The bottom is good for the leader, and the company expands against the trend to increase the market share
At present, the production capacity of grandparents and parents is still in a high position. The industrial chain is expected to undergo bottom consolidation for a period of time, with high feed costs and weak consumption. Small and medium-sized farmers who do not have financial advantages will gradually withdraw from the market, benefiting large enterprises with strong comprehensive strength. At present, the company has a breeding capacity of 600 million feathers, and has planned a production capacity of 150 million feathers in Pucheng and Gansu bases. The company continues to expand against the trend and improve its market share.
We are optimistic about the recovery of the industrial chain and the obvious investment value of the company
The industry has been in a downturn for nearly two years. Since October of last year, the parents' farm has suffered serious losses, and a large number of early elimination have occurred. The stock of grandparents and parents' generation has begun to trend. The sales volume of chicken seedlings of parents' generation has declined rapidly recently. We expect that the production capacity will be gradually cleared, the business outlook will recover, and the company has good investment value.
Profit forecast and valuation
We believe that at present, the industry is in the process of capacity deregulation, and the industrial chain is expected to gradually recover in the second half of this year. Considering the impact of feed raw materials on costs and the pace of expansion of the company in the next two years, we expect the net profit attributable to the parent company to be 545 million / 1799 million / 1287 million in 20222024, corresponding to PE of 36.74x/11.12x/15.55x, maintaining the "buy" rating.
Risk tips
Chicken prices remain low; Large scale epidemic risk; The promotion of food business was less than expected.
