Makihara (002714) 2019 Interim Report comment: Costs stabilized, sow has a significant advantage in expanding its leader
Core point of view Pig price rise + cost stabilization, the company achieved profit in 19Q23.
Interim reports on the growth of consumable biological assets are expected to be higher in the second half than in the first half.
Productive biological assets have increased rapidly. We expect that the sow size has stabilized and repaired, and the growth rate of slaughter may be ahead of the industry to achieve speed.
Revise the forecast for the number of columns in 2020 and the profit forecast for 2019/20/21, raise the target price to 95 yuan, and maintain the “Buy” rating.
The pig price went up + the cost stabilized, and the profit in 19Q2 was 3.
In the first half of 2019, the company realized operating income of 71.
600 million (30% increase), attributable net profit -1.
56 billion (billion dollars).
Among them, 19Q2 achieved 南宁桑拿 operating income of 41.
100 million (the same increase of 49%), attributable net profit of 3.
8.5 billion (same increase of 2.
The performance was in line with expectations.
The increase in revenue was mainly driven by the expansion of slaughter volume + pig price increase: 1) slaughter volume: the company sold a total of 5.82 million live pigs in the first half of the year (the same increase of 23%); 2) growth rate: driven by the 19Q2 pig price increase,In the first half of the year, the company’s average hog sales price was about 12.
6 yuan / kg (10% increase); 3) Average weight: Affected by the advancement of the market in 19Q1, the proportion of piglets increased in the first half of the year.
The increase in the average level in the first half of the year was the largest, mainly due to the non-epidemic 失败:重查 situation that caused the company’s epidemic prevention and construction costs to rise, squeezing profit.
The company’s estimated average full cost for the first half of the exploration period was approximately 13.
3 yuan / kg (of which the complete cost of fat pigs is about 13.
1 yuan / kg).
Among them, 19Q2 stabilized due to cost (the total cost of fat pigs is about 13).
2 yuan / kg), the pig price went up, and the supplementary amount increased, the company achieved single quarter profit, and the average profit was about 140 yuan.
Consumable biological assets have grown, and the long-term listing goal has been completed without worry.
Historical data shows that the growth rate of the company’s listing volume is basically the same as the growth rate of consumable biological assets six months ago.
In addition, when the proportion of piglets increases, the growth rate of slaughter volume often exceeds the growth rate of consumable biological assets half a year ago.
In the first half of 2019, the company’s consumable biological assets exceeded 15%. Considering the increase in the proportion of its piglet sales, it is expected that its slaughter volume in the second half of 2019 is expected to reach 6-7.5 million heads.
The scale of sows has expanded, and the growth rate of slaughter may be accelerated.
As of June 2019, the previous breeding sow inventory had a vertical decline of about 27%, an increase of 5 variables from March, which means that the industry’s sow production capacity is still accelerating.
The interim report shows that the company’s productive biological assets have stabilized and increased by 18% and 32% in the same period.
We estimate that it can reproduce the sow stock size or has grown again.
Taking into account the company’s ability to improve its epidemic prevention and control capabilities through equipment remediation and plant remodeling, and its unique breeding system to ensure rapid replenishment of sows, we estimate that the company’s sow size will increase from 19Q3 to the zero upward channel, thereby helping the companyThe growth rate of slaughter pigs has obviously improved since the second half of next year.
The company is expected to grow sow stocks to 1 million heads by the end of the year.
In addition, as the company can flexibly adjust the sales ratio of piglets, it is expected that the growth rate of the company’s pig production will be inflection point or ahead of schedule.
Therefore, we judge that the growth of the company’s hog production volume will be ahead of the industry to achieve an acceleration, and it is expected to fully enjoy the bonus period of double volume and profit in the future.
Industry expansion and reshuffle, leading market share promoted rapid increase.
Affected by the non-plague epidemic, the production of pigs in the south has accelerated and accelerated since 2018, and the production of pigs has continued to shrink since 19Q1. It is expected that it will be difficult to recover in the next 1-2 years.
Correspondingly, pig prices are expected to continue upward or high in 2019/20.As the volume and price increase, the output value of the integrated food hog breeding industry will maintain a growth of about 10% in 2019/2020.
Due to the non-plague situation, the shortage of supplementary columns has been improved. It is expected that the cost control will be poor, and the enterprises / farmers with poor cash flow will be eliminated quickly, and the industry concentration will be accelerated.
In the three consecutive quarters from 18Q4 to 19Q2, the company has demonstrated its scale expansion against the trend and maintained the leading advantage of lower cost than the industry level. It is expected to have a market share (about 1 in 2018.
6%) is expected to improve rapidly.
Risk factors: Livestock and poultry prices rise more than expected; raw material prices fluctuate sharply; livestock and poultry epidemics.
Investment suggestion: Considering that the company’s sow inventory has stabilized and improved, and the company’s epidemic prevention capacity has been improved, we have revised the company’s 2020 production volume to 20 million heads (previously 17 million heads).
At the same time, we have revised up our EPS forecast for 2019/20/21 to 1 as pig prices rise more than expected.
24 yuan (was 1).
With reference to the company’s average profit level in the previous cycle and the historical forecast level of its peers, it gave a 13x PE valuation for 2020 earnings, raised its target price to 95 yuan, and maintained a “buy” rating.