\u3000\u3000 Wens Foodstuff Group Co.Ltd(300498) (300498)
Event:
Wens Foodstuff Group Co.Ltd(300498) released the performance forecast for 2021: the company’s performance is the first loss, and the annual loss in 2021 is expected to be 13-13.8 billion.
Key investment points:
In 2021, the annual loss is expected to be 13-13.8 billion yuan, the pig sector has a deep loss, and the poultry sector has an overall profit.
① the company sold about 13217400 pigs (year-on-year + 38.46%), and the average sales price of hairy pigs was 17.39 yuan / kg (year-on-year – 48.18%). During the reporting period, the price of live pigs decreased significantly. At the same time, the continuous rise in the price of feed raw materials, the fattening of some pig seedlings purchased by the company, the continuous promotion of pig breeding optimization and other factors pushed up the cost of pig breeding. The profit of the company’s pig breeding business decreased significantly year-on-year, resulting in deep losses.
② the company sold 1.101 billion broilers (year-on-year + 4.76%), and the price of yellow feather broilers rebounded. The marketing volume of the company in Q3 and Q4 in 2021 was at an all-time high. Although the breeding cost was raised due to the continuous rise in the price of feed raw materials, the overall profit of poultry business.
③ in 2021, the company accrued about 3-3.5 billion yuan, of which the amortized equity incentive expense was about 500 million yuan, and the initial impairment of consumptive biological assets and productive biological assets was about 2.5 billion yuan. The company increased financing in response to the downturn of the industry, and the financial expenses increased significantly year-on-year.
The breeding cost entered the downward channel, the company’s fundamentals continued to improve, and the loss narrowed in the fourth quarter. During the reporting period, the company promoted the work of strengthening the foundation of pig business, improved the biosafety prevention and control system, continuously improved the quality of sows on hand and improved the listing rate of pigs. The cost of pig breeding decreased from 15 yuan / kg in 2021q1 to 8.8-9 yuan / kg at the end of 2021. It is expected to achieve the cost reduction target of 7.8 yuan / kg in 2022. In 2021, Q4 company’s overall loss was about 3.8 billion yuan, and the loss narrowed. The inflection point of the company’s operation has passed, the fundamentals have been continuously improved, and we are optimistic about the long-term development potential of the leader.
The bottom of pig price fluctuates, and the layout leader waits for the return. After the second quarter of 2021, the pig price continued to decline, and the industry ushered in a deep loss for three quarters. At present, the pig price is in the second bottom of the w bottom. Before the Spring Festival in January 2022, the average price of raw pigs fluctuated at 14-15 yuan / kg, which is still lower than the industry cost line, and the downward space of pig price is very limited. With the continuous de industrialization of production capacity, the second half of 2022 is expected to usher in a cycle inflection point. At present, the valuation of the sector, especially the leader, is still at the bottom, which has a certain margin of safety and can be arranged appropriately.
Profit forecast and investment rating in 2021, the pig price continued to decline and the company suffered deep losses. We lowered the net profit attributable to the parent company from 2021 to 2023 to -126.12 / – 288 / 11.612 billion yuan and EPS to -1.99 / – 0.05/1.83 yuan / share respectively. However, considering that the breeding cost of the company’s pig business continues to decline in 2022, the company’s fundamentals continue to improve, and the business inflection point has passed, it is expected to usher in a new round of growth with the arrival of the inflection point of the pig cycle in the second half of 2022; The prosperity of yellow feather chicken industry is rising, and the breeding profit is gradually rising. At present, the company’s valuation is at the bottom, which is a good layout time point and maintains the “buy” rating.
Risk warning: the company’s performance is lower than expected; Risk of epidemic outbreak affecting marketing; The risk that the company’s cost decline is less than expected; The risk that the rate of capacity removal in the industry is lower than expected; The risk of long-term downturn in pig prices.
