\u3000\u3 China Vanke Co.Ltd(000002) 1 Shenzhen Kaifa Technology Co.Ltd(000021) 00)
Event: the company recently released its 2021 annual report and its 22nd quarterly report. In 2021, the revenue reached 15.744 billion yuan, an increase of 31.35% at the same time; The net profit attributable to the parent company was -685 million yuan, with a decrease of 139.87%; The net profit attributable to the parent company after deducting non profits was -655 million yuan, with a decrease of 137.93%. In the first quarter of 2022, the revenue reached 3.391 billion yuan, an increase of 1.58% at the same time; The net profit attributable to the parent company was -69.6 million yuan, with a decrease of 123.12%; The net profit attributable to the parent company after deduction of non-profit is – 70.07 million yuan, with a decrease of 122.9%. Comments are as follows:
The business volume of pig raising increased and the cost decreased, and the trend was good. In 2021, the company sold 1 Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) pigs, an increase of 19.2% at the same time; The loss of breeding and food business was 1.237 billion yuan, of which the net loss of pig business was about 1.1 billion yuan (the net loss excluding the impact of provision for asset impairment was about 820 million yuan), and the net loss of other breeding businesses was about 120 million yuan. The loss of pig raising business is mainly due to the fact that the feed business unit carried out the outsourcing pig fattening business when the piglet price is high, resulting in the increase of the comprehensive average cost of breeding; Secondly, it is related to the low capacity utilization rate of Henan, Gansu and other bases that are still in the construction and production period. Since the second half of 2021, the company has gradually reduced the scale of raising pigs by the feed division, and has stopped outsourcing piglets and fattening pigs by the feed division in 2022. Henan and Gansu bases entered the full production period in the second quarter of 2022. We believe that with the elimination of adverse effects, the company’s pig breeding costs will decline in a trend. In the first quarter of 2022, the company sold 376900 pigs, an increase of 6.5% at the same time. It is estimated that 2.2 million pigs will be sold in the whole year.
Feed and animal protection continued to grow. In terms of feed business, the sales volume of feed in 2021 was 2.3125 million tons, an increase of 21.08% at the same time; The revenue was 5.135 billion yuan, an increase of 21.83% and a net profit of 249 million yuan. In terms of vaccine business, in 2021, the revenue was 980 million yuan, an increase of 15.8%, and the net profit was 252 million yuan. The two businesses contributed a total net profit of 501 million yuan. In the first quarter of the year, the income of feed and vaccine business still maintained rapid growth, and the growth trend is expected to continue in the second quarter and the second half of the year. These two businesses are stable cash cow businesses, which can provide good financial support for the expansion of breeding business.
The company’s whole industry chain model has obvious advantages against the bottom of the cycle, the market share may increase steadily, and maintain the buy rating. The company’s strategy focuses on animal protein products. We are optimistic about its advantages of smooth performance fluctuation at the bottom of the cycle and more stable cash flow compared with its peers. We expect that the pig price will enter an upward cycle in the second half of 2022, and the company’s breeding business will fully benefit from it. It will also show good performance flexibility and maintain the “buy” rating. It is estimated that the company will sell 2.2/3.5 million pigs in 22 / 23 years, with a net profit attributable to the mother of RMB 303 / 1.625 billion, corresponding to PE of 40x / 7.46x.
Risk tip: the trend of pig price is less than expected, and the progress of the project is less than expected
