Zhao Yafei recently conducted research on Huatong shares and released a research report "First Coverage Report: Expansion, Quality and Steady Growth, Taking Advantage of the Momentum to Build Huazhang", this report gives ** rating to Huatong shares, and the current stock price is 1835 yuan.
Huatong shares (002840).
Investment Essentials. Zhejiang Province's "breeding + slaughtering" double leader, the pace of integrated operation has accelerated. The company started with feed and slaughtering business, and began large-scale pig breeding after benefiting from the policy of stable production and supply guarantee in the province, becoming the double leader of livestock and poultry breeding and slaughtering in Zhejiang Province. At present, the company's business covers feed production, livestock and poultry breeding, livestock and poultry slaughtering, deep processing of meat products and other four major business links, Huatong adopts building breeding, self-breeding and self-raising mode, 22 years of the company slaughtered 346 pigs40,000 head (+14. year-on-year.)70%), the market share in Zhejiang Province exceeded 30%, and 120 pigs were slaughtered480,000 heads, a year-on-year increase of +776%, achieving leapfrog development of more than one million heads.
Under the low pig price, the production capacity will continue to be reduced, and the opportunity to lay out the pig plate on the left side will be emphasized. In the short term, the pressure on live pigs is still large, and the inventory of frozen products is high, and the pig price in the peak season is expected to be limited; In the medium term, 24H1** is expected to increase year-on-year, and the superimposed holiday will enter the off-season of consumption, and pig prices are expected to see the low point of this cycle. As of November 23, the production capacity of this cycle has been reduced for 11 months, and the cumulative reduction has exceeded 5%. In the case of the bottom of the pig price in 24H1, the production capacity will continue to be decentralized, and with the accumulation and amplitude of the loss time, the production capacity is expected to accelerate, and the cumulative depletion is expected to reach 10%+, supporting a round of medium and large cycles. Under the premise of capital security, low-cost pig enterprises with high slaughter growth are expected to grow through the cycle.
The pig business goal is clear, and the endogenous extension is high-quality growth. 1) Deep cultivation in the Zhejiang region, pig price advantages are obvious.
Due to the gap in production and marketing in Zhejiang Province, the pig price has been higher than the national average for a long time, and the pig price in Zhejiang Province has been 0 since the beginning of 23 years85 yuan kilogram premium. From January to November 2023, the average price of the company's commercial pigs is 1515 yuan kg, which is 047 yuan kg. 2) The path of scale expansion is clear, and the rapid growth of slaughter can be expected. 2023Q1-3 The company slaughtered 168 pigs080,000 heads, doubling year-on-year. At present, the company's production capacity in Zhejiang Province has reached 3 million, and the company's pig capacity utilization rate is 70 as of 2023H188%, the future increase in slaughter is mainly due to the full production capacity in the province and the expansion of production capacity outside the province. In the province, the company can promote the rapid increase of pig slaughter by improving capacity utilization. Outside the province, the design capacity of the Jixi project in Anhui Province is 350,000 heads, which is expected to be cashed out in the following year; The long-term target of the Fuzhou project in Jiangxi Province is 2 million heads, which is expected to be gradually implemented. In 24 years, the company's slaughter target is 4 million to 5 million heads, and the median value of the range is expected to increase by 95% year-on-year. 3) The cost reduction effect is remarkable, and the certainty of future cost improvement is strong. The company has strengthened refined management, and the cost of breeding has shown a gradual downward trend, and the complete cost in 2023Q3 has dropped to 16-17 yuan kg, -12% compared with April 2022. The company's epidemic prevention effect is remarkable, and the survival rate of live pigs in October 23 is 87-88%, leading its peers. In terms of breeding, we will continue to promote the transformation of the breeding pig system from the American system to the French system, and after the completion of the French high breeding system, PSY is expected to reach 27-28 (23Q3 in 24-25). Coupled with the decline in expenses and depreciation and amortization brought about by the high increase in pig slaughter, the company's future cost will continue to improve with strong certainty.
The slaughtering business has expanded steadily and has excellent hematopoietic capacity. Thanks to the consumption habits of hot fresh meat in Zhejiang Province, the company's slaughtering business is based on sales, and can maintain a relatively stable level of profitability and excellent hematopoietic ability, 2023Q1-3 In the case of deep losses in pig breeding, the company's net cash flow from operating activities is still nearly 200 million yuan, a year-on-year increase of +2025%。By expanding to southern provinces and expanding sales channels, the company's pig slaughter volume in 2023Q1-3 is about 3.11 million heads. With the release of pig production capacity, the proportion of self-supply of pigs used in slaughtering has increased significantly (41% in 23H1), which is expected to reduce procurement costs and improve the capacity utilization rate of slaughtering (24% in 23H1), and the profitability of slaughtering business is expected to be further improved.
Investment advice: We expect the company's operating income from 2023 to 2025 to be 9928/168.65/201.5.4 billion yuan, and the net profit attributable to the parent company was -590/6.80/9.1.9 billion yuan, and the current stock price corresponds to 16 PE in 2023-202459/12.28 times, covered for the first time, given a "** rating."
Risk warning: the occurrence of animal diseases, commodity fluctuations, natural disasters and other risks.
*According to the calculation of the research report data released in the past three years, the research team of Guoxin Lu Jiarui has conducted in-depth research on the stock, and the average accuracy of the past three years is 208%, and its **2023 attributable net profit is 9 million, and the **PE converted according to the current price is 125959。
The latest profit** breakdown is as follows:
A total of 5 institutions have rated the stock in the last 90 days, ** 5 ratings; The average institutional price target over the last 90 days is 2231。
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