\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 76 New Hope Liuhe Co.Ltd(000876) )
Event:
New Hope Liuhe Co.Ltd(000876) released the annual report of 2021 and the first quarterly report of 2022: in 2021, the company realized an operating revenue of 126.26 billion yuan, an increase of 15.0% year-on-year, and realized a net profit attributable to the parent company of -9.59 billion yuan, from profit to loss year-on-year. In 2022q1, the company’s internship operating income was 29.51 billion yuan, a year-on-year increase of 0.9%, and the net profit attributable to the parent company was – 2.88 billion yuan, which was turned from profit to loss year-on-year.
Key investment points:
Feed business volume increased simultaneously and consolidated its leading position. In 2021, the company’s feed sales increased significantly, with a total sales volume of 28.24 million tons, an increase of 18.1% year-on-year, accounting for about 10% of the national total. Among them, the total sales volume of poultry accounted for 13% of the national total, ranking first in the country, pig feed accounted for about 8% of the national total, and aquatic feed accounted for about 7% of the national total, both ranking in the top three in the country, and ruminant feed accounted for about 3% of the national total. The total sales volume of exported materials was 21.32 million tons, with a year-on-year increase of 21%, accounting for 75.5% of the total sales volume. In terms of varieties, the total sales volume of pig feed was 9.95 million tons, a year-on-year increase of 48.5%, and the export volume was 5.84 million tons, a year-on-year increase of 68.8%; The total sales volume of poultry was 16.06 million tons, with a year-on-year increase of 4.0%, and the export volume was 13.33 million tons, with a year-on-year increase of 7.0%; The total sales volume of aquatic materials was 1.61 million tons, a year-on-year increase of 23.0%; The total sales volume of ruminant was 450000 tons, with a year-on-year increase of 4.7%. The operating income of feed was 70.82 billion yuan, a year-on-year increase of 37.1%. The gross profit margin of feed business was 6.5%, a year-on-year decrease of 0.7pct, and the gross profit was 4.61 billion yuan, a year-on-year increase of 23.7%.
The pace of pig business has been adjusted and the management has achieved initial results. In 2021, due to the decline of pig price and high cost, the company recognized losses in pig business. In the whole year, 9.97 million pigs were sold (2.63 million breeding piglets, 7.35 million commercial pigs, and the proportion of self feeding and stocking was 1:4), realizing an operating revenue of 17.2 billion yuan, a year-on-year decrease of 30.6%, a gross profit margin of – 21.2% and a gross profit loss of 3.65 billion yuan. The recognized loss of asset value is 2.89 billion yuan, of which the loss of inventory falling price is 2.68 billion yuan and the impairment loss of productive biological assets is 190 million yuan. In terms of production capacity, by the end of 2021, the production capacity of the company’s completed and under construction pig breeding farms was close to 1.7 million according to the stock size, of which the load rate of the pig breeding farms in normal operation was close to 90%, the production capacity of the completed and under construction fattening farms had also reached 6.8 million according to the stock size, the stock of fertile sows was about 1 million (about 60% self breeding), and the reserve sows were close to 400000. In terms of target, the company aims to sell 13-18 million in 2022 and about 20 million in 2023. In terms of cost, the company has stopped outsourcing piglets and breeding pigs in the first half of 2021. By the end of 2021, the company’s complete cost of self breeding piglet fattening was 17.9 yuan / kg (excluding headquarters expenses). It is hoped to reduce the total cost to 16 yuan / kg from June to July 2022.
In 2022q1, 3.697 million pigs were sold, with a year-on-year increase of 61.9%. In the first quarter, the company’s pig sales revenue was 4.44 billion yuan, a year-on-year decrease of 34.1%. The average price of commercial pigs from January to march was about 12.0 yuan / kg. In the first quarter, the company’s gross profit margin was – 2.5%, and the asset impairment loss was 600 million yuan, mainly for the provision for inventory falling price.
The food business expanded rapidly, the industrial chain was integrated, and the business matrix was enriched. The food business is the direction of the company’s long-term transformation and development. In 2021, the company’s food business revenue was 9.04 billion yuan, with a year-on-year increase of 2.2%. A series of product matrices were formed for small crispy meat, ham sausage and hot pot ingredients. Traditional supermarkets, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) NEW retail channels and group meal business channels continued to achieve breakthroughs. In 2021, 294000 tons of pork products were sold, with a year-on-year increase of 86000 tons, an increase of 41.6%; Sales of all kinds of deep-processing meat products and prefabricated vegetables were 254000 tons, with a year-on-year increase of 37000 tons, an increase of 16.9%. In 2021, the gross profit margin of food business was 2.3%, a year-on-year decrease of 8.6pct.
Multi measure financing to ensure sustainable growth in the future. In terms of capital operation, the company issued 8.15 billion yuan of convertible corporate bonds and 1 billion yuan of renewable corporate bonds in 2021; The management of the company completed a total repurchase of about 830 million yuan and an increase of nearly 260 million yuan throughout the year. In January 2022, the company issued a plan for non-public offering of shares, which plans to raise no more than 4.5 billion yuan to repay debts. Various capital operations of the company will provide financial support for business operation. The performance assessment requirements in the draft employee stock ownership plan in 2022 are that the total sales volume of feed in 2022 shall not be less than 30 million tons / pig, and the sales volume shall increase by more than 40%; In 2023, the total sales volume of feed shall not be less than 65 million tons / pig sales volume, an increase of not less than 85% over 2021 / net profit of not less than 4 billion yuan; In 2024, the total sales volume of feed shall not be less than 105 million tons / pig sales volume, an increase of not less than 135% over 2021 / net profit of not less than 10 billion yuan.
Profit forecast and investment rating: the company’s feed business, as the first in the industry, is steady and growing steadily; The inflection point of the pig cycle is now. It is expected that the pig price will enter the upward cycle in the second half of the year. After the adjustment of the company’s pig business, it is expected to rise from the bottom and its performance is expected to be repaired; Based on the principle of prudence, the impact of fixed increase on the company’s performance is not considered temporarily. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 540 / 137.6/11.78 billion respectively, and the corresponding PE will be 122.5 / 4.8 / 5.6 times respectively, maintaining the “overweight” rating.
Risk warning: non plague and other epidemic risks; The slaughter volume of pigs is less than the expected risk; Risk of long-term sharp rise in the cost of feed raw materials; Pig price fluctuation risk; Increase the risk less than expected; The company’s performance is lower than the expected risk.
