Shengnong Development (002299): Rising prices drive profitability
Event: The company released its 2019 Interim Report and achieved an operating income of 65.
54 ppm, an increase of 29 in ten years.
27%; Net profit 16.
53 trillion, an increase of 393 in ten years.
The demand for chicken meat is improving, and the price increased sharply in the first half of the year, driving the company’s performance to grow rapidly.
Opinion: The price of chicken meat has risen sharply, the volume and price of meat products have risen, and the prosperity of the poultry chain has exceeded expectations, and the company’s chicken meat business profitability has increased significantly.
In the first half of 19, the company’s broiler slaughter business realized revenue44.
21 trillion, an increase of 21 a year.
85%, mainly due to rising product prices, the price of chicken products rose by 25% in the first half.
The rise in prices led to an increase in profitability, and the company’s chicken business gross profit margin increased significantly19.
62 averages reached 30.
Volume and price of meat products rose.
Revenue from meat products business in the first half of the year 17.
9 billion, an increase of 43 previously.
67%, the proportion of revenue increased 2 last year.
74 up to 27.
Meat product sales in the first half of the year increased by 33.
31%; meanwhile, benefiting from rising chicken prices, the average price of meat products rose by more than 7 in the past.
68%, gross profit margin also increased10.
98 up to 31.
In the short term, the peak season for consumption is coming in the third quarter, and the Mid-Autumn Festival and National Day are approaching. At the same time, the downstream chicken stocks are 杭州桑拿 gradually becoming more stable, and the price of broilers will rise.
In the medium and long term, supply will increase and prices will be supported.
In the year, the introduction of bird chains has increased since September 18, and a total of 48 were introduced in the first half of 2019.
80,000 units (270,000 units in the same period in 2018).
But only for this, according to the current domestic pig production capacity, the domestic pork gap is about 800-1000 inches.
According to the introduction and expansion of the poultry industry, the potential for increased production is about 300 tons; the elasticity of other meat protein supplies is even smaller.
Although chicken meat supply has increased, it is difficult to meet domestic protein demand.
Strong alternative demand will support broiler prices.
We are optimistic about the company and maintain a “buy” rating on the price of poultry chains which has risen more than expected, and combined with the company’s expectation to achieve net profit attributable to mothers in the first three quarters24.
Looking at 500 million, we raised the company’s net profit forecast for mother to 19-21 to 32.
26 billion, 35.
3.4 billion and 37.5.4 billion (Previous profit forecast was 29.
50 billion, 31.
4.2 billion and 32.
3.5 billion), the current price of 19-21 years corresponding to PE is 11X, 10X and 10X.
The industry maintains a high degree of prosperity, continues to be optimistic about the company, and maintains a “Buy” rating.
Risk Warning: Product price rise is less than expected risk.