\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 975 Hunan New Wellful Co.Ltd(600975) )
Event:
On April 29, the company disclosed the first quarterly report of 2022. In 2022q1, the company realized an operating revenue of 368 million, a year-on-year decrease of 19.02%; The net profit attributable to the parent company was -112 million yuan, a year-on-year decrease of 357.45%.
Event comments:
The slaughter volume of live pigs increased significantly, and the pig price affected the performance
In the first quarter of 2022, the number of pigs sold by the company reached 135900, a year-on-year increase of 156.42%. During the reporting period, the price of live pigs continued to decline, from 15 yuan / kg at the beginning of the year to 12.20 yuan / kg at the end of the season, a decrease of 18.7%. Affected by the downward trend of pig prices, the overall gross profit margin fell to – 37.29%, which directly led to the company’s loss in the first quarter.
The core assets of pig breeding business grew rapidly
Since last year, the company has significantly accelerated its investment in pig breeding business, and various core assets have increased rapidly. The productive biological assets of 2022q1 company were 472 million yuan, a year-on-year increase of 117%, the inventory was 1.004 billion yuan, a year-on-year increase of 26.5%, and the use right assets were 2.093 billion yuan, a year-on-year increase of 150.6%. It is expected that the company will add 14 leased sow farms and 18 fattening farms this year, with a new sow production capacity of about 100000.
Acquisition of Tianxin seed industry to enhance the company’s core competitiveness
Hunan Tianxin Seed Industry Co., Ltd. is a national pig core breeding farm. In 2021, Tianxin seed industry realized an operating revenue of 534 million yuan, a net profit of 49 million yuan and a net asset of 703 million yuan. The acquisition of Tianxin seed industry by the company will greatly enhance the strength of pig breeding and pig production, expand the scale of pig breeding and improve the core competitiveness of the company.
Investment advice and profit forecast
Due to the rapid development of the company’s breeding business, it is expected that the pig cycle will reverse. We estimate that from 2022 to 2024, the net profit attributable to the shareholders of the parent company will be RMB – 540 million, RMB 930 million and RMB 780 million respectively. According to the latest share capital calculation, the corresponding basic earnings per share will be RMB: – 0.67, RMB 1.16 and RMB 0.97/share respectively. According to the latest share price calculation, the corresponding PE valuation will be – 14, 8 and 10 times respectively. Maintain the company’s “buy” investment rating.
Risk tips
Epidemic risk, lower than expected rise in pig prices, significant rise in breeding costs, lower than expected asset restructuring, and food safety risks.
