Da Beinong (002385) 2018 Annual Report Comments: The trough has passed and the profit elasticity is yet to be released
The core point of view The feed business is low, the investment in hog breeding business, the cost accrual and other factors, the company’s profit in 2018 decreased by 60%.
The reversal of the pig cycle is expected to drive the company’s breeding business, and the feed business will continue to rise. At the same time, the company’s pig production volume is expected to increase on time, and the performance flexibility needs to be released.
Raise target price to 8.
7 yuan to maintain the “overweight” level.
The main business was at a low point, expenses were accrued, and profits increased by 60%.
In 2018, the company achieved revenues of 19.3 billion (a 3% increase) and a net profit of 5.
100 million (down 60%).
The increase in revenue was mainly driven by the expansion of the scale of the pig breeding business.
In 2018, the company’s holding subsidiaries produced a total of 1.13 million live pigs and realized revenue13.
100 million (same increase of 29%).
利润最高的主要系：1）饲料业务低谷：受猪价下降低迷及非洲猪瘟疫情的影响，下游养殖利润较差，公司的饲料业务相应受到冲击，甚至销量增速由双位数达到至 4%, And gross profit margin fell by 3 units to 19.
5%; 2) The investment in pig breeding business is nearly 2.
600 million; 3) Expense accrual: accumulate incentive expenses accrual 1.
19 ppm, accrual of asset impairment losses2.
The company is still able to achieve profit mainly due to 杭州夜网论坛 the feed business and the transfer of some equity in Rongxin Interconnection (net profit after tax 2).
Performance was lower than expected.
Live pigs are slaughtered or put up on time to enjoy cycle conversion.
The non-plague situation has accelerated the elimination of production capacity in the pig breeding industry, and the current pig price has entered an upward cycle.
And because the production capacity is deep, the current cycle is expected to be a highly resilient and prosperous round.
The company mentioned in its annual report that “the company will fully implement the plan of 6 million heads in 2020 and 10 million pigs in 2021” and “has been put into production18.
The capacity of 70,000 sows is already under construction5.
There have been 10 constructions of 30,000 sows in the pens.
Production base for 50,000 sows “.
In combination with the company’s fixed assets and construction in progress, we judge that the company may have prepared excess pigsty for this scale, and the key to the expansion of the scale is the sow stock and the amount of piglets purchased.
At the end of 2018, the company’s productive biological assets increased by 312.55% 95.25 million yuan each. Based on the performance of the listed companies in the same industry and the industry dynamics, we judge that the company’s sow inventory scale may have shrunk.Piglets.
Taking into account the expansion of the company’s original breeding pig production capacity, we expect the company’s outsourcing piglet share to decrease year by year. The profit elasticity of its pig breeding business is expected to be significantly released in the next two years.
Feed sales are under pressure in the short term, and gross profit margins need to be restored.
The non-plague situation has led to a shrinking demand for production feed fodder.
According to feed association monitoring data, the industry’s pig feed sales fell by 14 in the first quarter of 2019.
Combined with the historical cycle law, we judge that the company’s feed sales will remain under pressure in the short term.
Taking into account the increasing enthusiasm of the industry to fill up the fence, the former segment with high gross profit margin is the company’s core product, and the improvement of the profitability of downstream breeding will drive the profit improvement of the feed industry. It is expected that the gross profit margin of the company’s feed business is expected to gradually repair.
Risk factors: Pig prices fail to meet expectations; feed sales growth does not meet expectations; seed promotion fails to meet expectations.
Investment suggestion: In view of the pressure on feed sales in 2019, the relatively high proportion of outsourced piglets and the increase in epidemic prevention costs may affect the profitability of the company’s breeding business, we revised down the EPS forecast for 2019 to 0.
23 yuan (was 0.
25 yuan).Considering that the company’s pig production volume is expected to increase significantly from 2020, and the pig price is high in 2020, we revised up the EPS forecast for 2020 to 0.
67 yuan (was 0.
37 yuan), adding 2021 EPS forecast is 0.
With reference to the estimated level of listed companies in the industry, we will give 13X PE to 2020 and raise the target price to 8.
7 yuan to maintain the “overweight” level.