\u3000\u3 China Vanke Co.Ltd(000002) 714 Muyuan Foods Co.Ltd(002714) )
On April 30, 2022, Muyuan Foods Co.Ltd(002714) published the annual report of 2021 and the first quarterly report of 2022.
Low pig prices hurt corporate profits.
In 2021, the company sold 40.263 million pigs, a year-on-year increase of + 122%. Among them, there were 36.887 million commercial pigs, a year-on-year increase of + 220%; 3.095 million piglets, a year-on-year increase of – 48%; 281000 breeding pigs, up – 56% year-on-year. In 2021, the operating revenue of the company was 78.9 billion yuan, a year-on-year increase of + 40%, and the net profit attributable to the parent company was 6.9 billion yuan, a year-on-year increase of – 75%.
In 2022, the number of pigs sold by Q1 company was 13.817 million, a year-on-year increase of + 79%. Q1 operating income was 18.3 billion yuan, a year-on-year increase of – 9.3%, and the net profit attributable to the parent was – 5.2 billion yuan, a year-on-year increase of – 174%, with an average head loss of about 375 yuan.
Cost Leadership helps the company through the cycle.
Affected by the rising price of raw materials and grain, the cost of the company rose slightly in the first quarter, but it is still at the leading level in the industry. The complete cost of Q1 pig breeding in 2022 is about 15-16 yuan / kg.
At present, the company’s psy is about 24 and MSY is about 21-22. In the future, with the transformation of some old pig farms and the promotion and application of intelligent equipment, the breeding efficiency is expected to be improved and the complete cost can be reduced.
Steady operation at the bottom of the cycle, slowing down the pace of expansion and maintaining cash flow security.
The company aims to sell 50-56 million pigs in 2022.
The company has sufficient cash reserves. By the end of the first quarter, the monetary capital of the company was 16.1 billion yuan. The company’s Q1 cash inflow and outflow from operating activities were basically flat, about 58.21 million yuan.
The company slowed down the pace of expansion. The increment of fixed assets and projects under construction in Q1 in 2022 was less. The fixed assets were 100.9 billion yuan at the end of the first quarter and 99.6 billion yuan at the end of 2021; At the end of the first quarter, the construction in progress was 11.3 billion yuan, compared with 11.1 billion yuan at the end of 2021. Q1 productive biological assets are 7.1 billion yuan, about 7.4 billion yuan at the end of 2021.
Layout the downstream slaughtering business and strengthen the moat. In 2021, the company slaughtered 2.899 million pigs. In 2022, Q1 sold 1.745 million pigs to muyuan meat, a wholly-owned subsidiary. By the end of 2021, the company has put into operation a slaughtering capacity of 16 million pigs / year, and the slaughtering volume of pigs this year is expected to exceed 10 million. Independent slaughtering will help the company smooth the fluctuation of profits caused by the pig cycle.
Investment suggestion: we estimate that the operating revenue of the company from 2022 to 2024 will be 101.9 billion yuan, 157 billion yuan and 1426 yuan respectively, and the net profit attributable to the parent company will be 5.5 billion yuan, 37.8 billion yuan and 17.8 billion yuan, corresponding to 50x, 7x and 15x PE. Maintain the “buy” rating.
Risk tips: the risk of rising raw material prices, the risk that the reversal of pig cycle is less than expected, and the risk of animal diseases.
