\u3000\u3000 Muyuan Foods Co.Ltd(002714) (002714)
Event:
The company released the performance forecast for 2021: it is expected that the net profit attributable to the shareholders of the listed company in 2021 will be RMB 6.500-8 billion, a year-on-year decrease of 70.86% – 76.32%. The non net profit attributable to the parent company was RMB 7.00-8.5 billion, a year-on-year decrease of 71.90% – 76.86%.
Comments:
During the downward period of the pig cycle, the low pig price led to a loss in the third and fourth quarters.
In 2021, the production capacity of pigs will recover rapidly, and the slaughter volume will increase significantly compared with that in 2020. Therefore, the price of pigs will decrease significantly compared with the same period last year. In September 2021, due to the centralized marketing of the market, the pig price fell to a low point on October 8, reaching 10.78 yuan / kg. The company’s main business is pig breeding. It is now known that the average cost of pig breeding of the company is 14.7 yuan / kg. The depressed pig price has led to the reduction of the company’s revenue, resulting in a performance loss in the third and fourth quarters.
The company’s pig slaughter volume increased rapidly, increased costs, and arranged the slaughtering end to improve its anti risk ability. In 2021, the company sold 40.263 million pigs, with a year-on-year increase of 222.26%, including 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs. Although the rapid growth of sales diluted the depreciation of fixed assets and labor compensation expenses, the management efficiency of the breeding plant decreased due to the rapid expansion of the company, which increased the breeding cost. At this stage, the company mainly aims to improve the efficiency of some breeding plants with high cost, so as to reduce the company’s cost. In 2022, the cost improvement goal is 13 yuan / kg. In order to resist the risk of price fluctuation in the pig cycle, the company actively arranges the slaughtering business. It is expected that the slaughtering capacity will reach 37 million by the end of 2022.
Profit forecast
Considering the impact of low pig price on the company’s performance, we adjusted the company’s performance forecast. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 7.085 billion, RMB 13.256 billion and RMB 25.484 billion, corresponding to Pb of 5.24x, 4.40x and 3.37x respectively. The company will be given 5x Pb for 22 years, corresponding to the target price of RMB 63.36, and maintain the “buy” rating.
Risk tips
Large scale spread of African classical swine fever; Pig prices have been low for a long time; The price of feed raw materials has risen sharply.
