\u3000\u3000 Jiangsu Lihua Animal Husbandry Co.Ltd(300761) (300761)
China's second rhubarb feather chicken breeding enterprise. Jiangsu Lihua Animal Husbandry Co.Ltd(300761) was established in June 1997. It is an integrated agricultural enterprise integrating scientific research, production and trade, with high-quality grass chicken breeding as the leading industry. It has 58 wholly-owned subsidiaries in 2021h1, covering 11 provinces by 2021h1. In 2020, the company listed about 323 million high-quality broilers and 184200 pigs. The market share of yellow feather chicken is about 7.3%, which is expected to be further improved in 2021.
Chicken consumption continues to grow, and the prosperity of the yellow feather chicken industry is expected to increase under the background of capacity removal. China is the second largest country in chicken consumption and production in the world, but the per capita consumption of chicken is far lower than that of other top 3 countries, and the proportion of chicken in meat consumption is on the rise. The trend of large-scale breeding on the supply side has emerged. The CR10 of yellow feather chicken in 2019 is about 40%, which is still significantly improved compared with more than 70% in the United States in the same period. In the short term, the production capacity of yellow feather chicken's parents has been reduced to the level of 2018, which forms a strong support for the reversal of chicken price.
The company's yellow feather chicken breeding cost is significantly better than that of the industry, and the national expansion continues to advance. Yellow feather chicken breeding adopts the mode of "company + cooperative + farmers". As of 2021h1, there are 6570 cooperative farmers. Benefiting from the high degree of management standardization, large-scale per household breeding and efficient operation and management, the average breeding cost of yellow feather chicken of the company is significantly lower than that of the industry. The integrated business model of the whole industrial chain effectively supports the company's ability to expand in other places. The IPO and fixed increase fund-raising are expected to invest more than 1.1 billion yuan for five non local subsidiaries. After all are completed, the production capacity of yellow feather chickens can be increased by 140 million.
Comply with the development trend of the industry and speed up the layout of the field of fresh food. The company established its subsidiary Jiangsu Lihua in 2014 and tried to distribute it to the fresh food field. In 2020, the company achieved a revenue of 260 million yuan, and the downstream sales channels have initially covered Online + offline. It is estimated that the annual slaughtering capacity will be increased by 81 million after the completion of the four subprojects of medium slaughtering capacity construction, and the pace of production expansion will be accelerated.
The pig breeding business is steady, and it is expected to replicate the breeding advantages of yellow feather chicken. In 2011, the layout of pig breeding began, and the mode of "company + base + farmers" was adopted. 184000 and 148000 commercial pigs were sold in fy2020 and fy2021h1 respectively. By the end of 2020, the company has built a production capacity of 1 million commercial pigs, and plans to reach 3 million in 2025. Due to the low utilization rate of production capacity and the high replacement cost of breeding sows in recent two years, The average cost of the company's pigs exceeds 20 yuan / kg. With the embodiment of scale effect, the company is expected to replicate the cost control advantages of yellow feather chicken, and is expected to benefit from the large-scale breeding trend of the pig industry in the long run.
Profit forecast: we are optimistic about the cost advantage of the company's yellow feather chicken breeding and the national expansion and growth. At the same time, we believe that the company is expected to replicate the advantages of the yellow feather chicken breeding business in the pig breeding business in the future. In the future, the double drive growth of chicken and pig is expected. The net profit of the company from fy2021 to 2023 is expected to be - 3.6/9.7/1.43 billion yuan, turning profit into loss / turning loss into profit / + 47.4% respectively year-on-year, The corresponding EPS is -0.89/2.40/3.54 yuan / share respectively. We believe that the reasonable market value of the company is 18.5 billion yuan, the corresponding target price is 45.8 yuan and the corresponding fy2022pe19.5 yuan 1X, with "buy" rating for the first time.
Risk tips: sudden epidemics or natural disasters, repeated covid-19 epidemics, and the reversal of chicken prices is less than expected
