\u3000\u3000 Muyuan Foods Co.Ltd(002714) (002714)
Event:
The company released the performance forecast for 2021. During the reporting period, the company achieved revenue of 77-80 billion yuan and net profit attributable to shareholders of listed companies of 6.5-8 billion yuan, a year-on-year decrease of 71% – 76%; In the fourth quarter, the company realized a net profit attributable to shareholders of listed companies ranging from -704 million to -2.204 billion yuan (the net profit attributable to the parent company in the first three quarters of 2021 was 8.704 billion yuan), a year-on-year decrease of 111% – 134%.
Our analysis and judgment
1. The company has a significant cost advantage in raising pigs, and the proportion of fattening pigs has increased.
1) high growth in marketing and increase in the proportion of fattening. According to the company’s monthly sales report, the company sold 40.263 million pigs in 2021, an increase of 122% at the same time; Including 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs; 14.157 million pigs were sold in 2021q4, with a same increase of 127% and a ring increase of 63%. As the price of live pigs fell, the price of piglets and breeding pigs was significantly corrected. The company actively adjusted the marketing structure, and the proportion of piglets and breeding pigs in the marketing structure decreased significantly (the proportion of piglets and breeding pigs decreased from 22% in 2020q4 to 1.3% in 2021q4).
2) the cost advantage of raising pigs is significant. In terms of price, the price of live pigs fell in 2021, and the price of pigs rebounded in November. According to the estimation of the monthly report, the weighted average sales price of commercial pigs of the company in 2021 was estimated to be 16.45 yuan / kg, a year-on-year decrease of 46%; The average selling price of 2021q4 commercial pigs was 13.97 yuan / kg, a year-on-year decrease of 50% and a slight increase of 4% on a ring basis; In terms of slaughter weight, considering the slaughter structure of the company’s piglets and breeding pigs, it is estimated that the average slaughter weight of commercial pigs in 2021 is 115-120kg; Among them, 2021q4 is about 110kg, slightly increased compared with the same period and decreased by 5-11% month on month; In terms of cost and profit, the company has significant advantages in cost control. We estimate that the full cost of 2021q4 commercial pigs has dropped to less than 15 yuan / kg, and the average loss per head is about 100-150 yuan / head; The cost of weaning piglets is about 300 yuan / head (the landing cost is less than 200 yuan / head). Referring to the industry piglet price, it is estimated that the average price of Q4 piglets has a slight loss.
2. The pig breeding leader can expect high growth, and there is still room for cost reduction.
The company’s marketing volume is expected to grow. By the end of 2021, the company can breed 2.831 million sows. At the same time, the current capacity construction can support the marketing of more than 70 million, laying a foundation for the company’s future marketing growth; The company adopts the self breeding mode and has formulated a series of standardized systems and technical specifications for various production processes in business links such as feed processing, breeding pig breeding, breeding pig expansion and commercial pig feeding. In the face of the impact of pig disease, the company has significant advantages. Under the current significant cost advantage, it is expected that with the further optimization of feed formula and internal management, there is still room for cost reduction, The company expects to reduce to RMB 13-14 / kg in 2022 with strong profitability. Especially in the cold winter of the industry, the excellent cost control ability provides guarantee for the company’s cash safety. In addition, the company’s pig slaughtering business is expected to gradually reach production capacity. With the improvement of capacity utilization, it is expected to gradually achieve profitability in 2022.
3. It is expected that the trend of capacity reduction in the pig breeding industry has been established, and the pig leaders with significant cost advantages and growth are recommended..
The loss of the pig industry has led to a significant de industrialization of production capacity, and it is expected that the de industrialization trend has become a trend; Pig prices stopped rising in the short term, the industry’s willingness to fill the column is not strong, and the deregulation of production capacity is expected to accelerate marginally; We estimate that Muyuan Foods Co.Ltd(002714) in 2022-2023, 55-60 million and 65-70 million units will be sold. The current market value of the company corresponds to the average market value of the first units sold in 2022 / 2023, which are 4893-5338 yuan / head and 4194-4517 yuan / head respectively; Considering the head average profit and head average market value at the peak of the company’s business cycle, there is expected to be sufficient upward space.
4. Give “buy” rating: the pig price itself fluctuates periodically, and the pig price enters the downward cycle in 21 years. Therefore, we reduce the income and profit in 21 years. However, according to the pig slaughter volume corresponding to the high point of fertile sows, it is expected to reach the low point of pig price in this cycle around the middle of 22 years, and then start a new upward phase of the cycle, 23 years is expected to become the upward stage of the cycle. It is estimated that from 2021 to 2023, the company will realize revenue of 79.6/103.4/163.4 billion yuan (value of 88.365/104.572 billion yuan before 21-22 years), an increase of 41.49% / 29.91% / 57.98% at the same time, and net profit attributable to parent company of 79 / 98 / 54.4 billion yuan (value of 36.25/27.833 billion yuan before 21-22 years), an increase of – 71.17% / 24.01% / 453.83% at the same time.
Risk tips: 1. Epidemic risk; 2. Price fluctuation, 3. Risk of policy change; 4. Less than expected; 5. The performance forecast is the preliminary calculation result. Please refer to the annual report
