\u3000\u3 China Vanke Co.Ltd(000002) 714 Muyuan Foods Co.Ltd(002714) )
Event: the company released the annual report of 2021 and the report of the first quarter of 2022. According to the announcement, the company achieved a total operating revenue of 78.890 billion yuan in 2021, a year-on-year increase of 40.18%; The net profit attributable to the parent company was 6.904 billion yuan, a year-on-year decrease of 74.85%. In the first quarter of 2022, the total operating revenue was 18.278 billion yuan, a year-on-year decrease of 9.30%; The net profit attributable to the parent company was -5.180 billion yuan, a year-on-year decrease of 174.40%.
Comments:
Affected by factors such as downward pig prices and rising costs, the company’s performance is under pressure. In 2021, the company achieved a total operating revenue of 78.890 billion yuan, a year-on-year increase of 40.18%; The net profit attributable to the parent company was 6.904 billion yuan, a year-on-year decrease of 74.85%. In a single quarter, 2021q4 achieved a total operating revenue of 22.608 billion yuan, a year-on-year increase of 32.11%; The net profit attributable to the parent company was -1.8 billion yuan, a year-on-year decrease of 127.86%. Since 2021, with the release of pig production capacity, pig prices have decreased significantly, and the superimposed breeding cost is at a high level, so pig breeding enterprises are facing greater operating pressure. From the specific data, the company’s net profit attributable to the parent company has suffered a loss since the third quarter of 2021, and the loss range has increased in 2021q4. Since 2022, due to the conflict between Russia and Ukraine, the drought in North America and other factors, the feed cost has further increased, the superimposed pig price is in the downward channel, and the loss of the company in 2022q1 has further increased month on month. In the first quarter of 2022, the company achieved a total operating revenue of 18.278 billion yuan, a year-on-year decrease of 9.30%; The net profit attributable to the parent company was -5.180 billion yuan, a year-on-year decrease of 174.40%.
The company ranks first in the country in terms of sales volume in 2021 and is expected to sell more than 50 million in 2022. In order to further improve its market competitiveness, the company has actively expanded its farms and feed plants in recent years. In 2021, the number of pigs sold by the company increased by 122.26% year-on-year, reaching 40.263 million, ranking first in China. Among them, there are 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs. In the first quarter of 2022, the company achieved a slaughter volume of 13.817 million pigs, including 12.975 million commercial pigs, 809000 piglets and 33000 breeding pigs. According to the current actual pig production capacity of the company, the company expects to sell 50-56 million pigs in 2022, with a year-on-year increase of 24.18% – 39.09%.
The company’s breeding cost is in a leading position in the industry. In 2022, it is committed to reducing the full cost to 13 yuan / kg in stages. At present, the company adopts the production and operation mode of self breeding. Through the self breeding mode, the company has absolute control over the pig breeding plant, so as to ensure the breeding environment and management quality, strong anti risk ability and low cost. In 2021, the full cost of the company is 15 yuan / kg, which is in a leading position in the industry. In the first quarter of 2022, affected by factors such as the rise of feed cost, the company’s full cost increased slightly to 16 yuan / kg. The company said that in 2022, it will reduce the breeding cost by improving the high-cost pig farm and improving the survival rate, and reduce the complete cost to 13 yuan / kg in stages, so as to further improve the market competitiveness.
Maintain recommended ratings. It is estimated that the company’s EPS from 2022 to 2023 will be 1.81 yuan and 5.54 yuan respectively, and the corresponding PE will be 29 times and 9 times respectively. Under the influence of factors such as downward pig prices and rising feed costs, the company’s 22q1 performance is under pressure. As a leader in the pig breeding industry, the company has sufficient cash flow at present. The goal of pig slaughter formulated in 2022 is relatively reasonable, and the slaughtering business is also advancing steadily. In the follow-up, we need to continue to pay attention to the production capacity removal process of fertile sows and pigs, as well as important indicators such as feed cost and breeding profit, so as to grasp the upward inflection point of pig cycle. Maintain the “recommended” rating of the company.
Risk warning. Product promotion is less than expected, market expansion is less than expected, industry competition intensifies, macroeconomic problems and food safety problems.
