\u3000\u3000 Wens Foodstuff Group Co.Ltd(300498) (300498)
Event:
The company released the performance forecast for 2021: the net loss attributable to shareholders of Listed Companies in 2021 was 13-13.8 billion yuan, a year-on-year decrease of 275.06% – 285.84%; After deducting non recurring gains and losses, the net loss was 14.3-15.1 billion yuan, a year-on-year decrease of 324.09% – 336.62%, and the performance was lower than the market expectation.
Comments:
The pig price was depressed, the main business suffered losses, and a large amount of provision for asset impairment was made, resulting in a sharp decline in the company’s net profit
The net loss attributable to the shareholders of the listed company in 2021 was 13-13.8 billion yuan, a year-on-year decrease of 275% – 286%, mainly due to: 1) the average sales price of the company’s hairy pigs fell sharply by 48.18% year-on-year in 2021. At the same time, the rising price of feed raw materials and the fattening of some purchased pig seedlings by the company pushed up the cost of raising pigs. The annual net loss of the pig business is expected to exceed 9 billion yuan; 2) The provision for impairment of consumptive biological assets and productive biological assets is about 2.5 billion yuan; 3) Amortization of equity incentive expenses is about 500 million yuan; 4) In response to the downturn of the industry, the financing was increased, and the financial expenses increased significantly year-on-year.
As the pig capacity removal is in progress, the company continues to optimize the population efficiency and waits for the cycle reversal
Since July 21, the number of fertile sows has decreased for five consecutive months. By the end of November 2021, China had 42.96 million fertile sows, down 1.2% month on month. June 2021 is the high point of breeding sows. Theoretically, it is expected that the peak of pig slaughter will be from April to May of 22 years. The de production of pigs will be accelerated, and the actual inflection point of pig cycle is expected to appear in 22q3. The company’s purchased piglets have been sold in November, and the breeding cost is expected to recover to 17 yuan / kg. The company will continue to optimize the efficiency of sows in the future, and the cost of piglets is expected to be further reduced. The company’s target breeding cost in 2022 is 15-16 yuan / kg.
Earnings forecast, valuation and rating
Considering the company’s provision for asset impairment, the peak season of pork consumption in the fourth quarter was not prosperous, and the pig business continued to suffer losses, the company’s profit forecast was lowered. It is estimated that the operating revenue in 2021-23 will be 56.139/68.522/97.533 billion yuan respectively, the net profit attributable to the parent company will be -138.43 / – 812/8.121 billion yuan respectively, the BPS will be 5.10/5.25/5.98 yuan / share respectively, and the corresponding Pb will be 3.78x/3.67x/3.22x respectively. Give the company a 22-year 4x target Pb, corresponding to the target price of 21 yuan, and maintain the “buy” rating.
Risk tips
The animal epidemic broke out, the demand for pork was lower than expected, and the feed cost remained high
