\u3000\u3 China Vanke Co.Ltd(000002) 157 Jiangxi Zhengbang Technology Co.Ltd(002157) )
Event:
Jiangxi Zhengbang Technology Co.Ltd(002157) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 47.670 billion yuan (- 3.04%), a net profit attributable to the parent company of -18.819 billion yuan (- 427.62%), an operating revenue of 6.49 billion yuan (- 48.92%) and a net profit attributable to the parent company of -2.433 billion yuan (- 124973%) in the first quarter of 2022.
Key data points:
The pig price is low and the performance is down. The company achieved a revenue of 47.670 billion yuan in 2021, a year-on-year decrease of 3.04%. The company takes pig breeding as its core business. Affected by the downturn of pig price in 2021, the revenue of this business segment was 28.955 billion yuan, down 16.88% year-on-year, accounting for 60.74%. Feed revenue reached 16.48 billion yuan, a year-on-year increase of 20.73%, accounting for 34.57%. In addition, the company independently developed, produced and sold veterinary drug products, achieving a revenue of 186 million yuan, a year-on-year increase of 97.56%. In terms of regions, the company’s main business is concentrated in the south area, with a high proportion of revenue, reaching 54.4%.
The feed business has developed steadily. In 2021, the company sold 4.8194 million tons of feed, with a year-on-year increase of 6.33%, including 2.6316 million tons of pig feed, with a year-on-year increase of 11.91%. Due to the effective release of pig production capacity in that year and the company’s technical advantages in preventing and controlling African swine fever, the sales of pig feed increased. The sales volume of poultry was 1.8444 million tons, the same as last year. The strategic positioning of the company’s feed business segment is to support the development of its main business, and its operation has been relatively stable in recent years.
Light loading, capacity optimization and upgrading. In 2021, the company sold 149267 million pigs in the whole year, with a year-on-year increase of 56.14%, ranking in the forefront of A-share pig breeding listed companies. In the first quarter of 2022, the company sold 2426100 pigs, a year-on-year decrease of 5.91%. In terms of production capacity, the company’s sow production capacity is about 2.2 million. The company will adjust its development strategy from the downturn to the improvement of efficiency in 2021. Actively reduce the scale of breeding and reserve population, eliminate inefficient sows, and continuously improve the population efficiency. At the end of 2021, the productive biological assets were 2.397 billion yuan, a year-on-year decrease of 73.68% compared with the beginning of the year. By the end of the first quarter, 380000 sows could be bred. In addition, the company eliminated inefficient and uneconomic leasing sites, cancelled some uneconomic agent construction capacity, and further optimized and upgraded the capacity. In terms of cost, the company’s complete fattening cost in the first quarter was about 20 yuan / kg, and the breeding cost excluding four expenses was 16.45 yuan / kg, which is expected to be further reduced.
Multi channel financing ensures the stability of capital flow, and it is expected to hit the bottom and rebound after this round of pig cycle. Pig prices in the Chinese market continued to be depressed, and the company’s performance was greatly affected. In terms of capital reserves, by the end of the first quarter of 2022, the company’s monetary capital was 3.073 billion yuan, a decrease of 40.14% compared with the end of 2021. The company has continuously deepened cooperation with a number of financial institutions across the country. At present, the financing channels mainly include bank financing, asset market financing, special fund support, issuing bonds, activating assets and other ways to provide a certain supplement to cash flow. By the end of the first quarter of 2022, the total bank credit of the company was 25.4 billion, of which the unused credit was 7.1 billion.
In addition, as the largest private enterprise in Jiangxi Province, the company’s relevant departments, institutions and companies with investment platforms in various countries in Jiangxi Province have recently helped the company to solve difficulties, provide financial support and relevant policy support, ensure the stability of the cash flow required by the company in the development process, and help the company successfully survive this round of pig cycle and achieve sustainable development. At present, the company’s cash flow pressure is gradually reduced. With the inflection point of the pig cycle approaching in the second half of the year, Jiangxi Zhengbang Technology Co.Ltd(002157) positive shares and corresponding convertible bonds are expected to rebound at the bottom.
Risk tips:
The slaughter volume of pigs is less than the expected risk;
The spread of the epidemic in China has intensified;
Animal epidemic outbreak
