Makihara (002714) 2019 first quarterly report comments: cost rises, but still has advantages, scale expansion or return to distance
Under the impact of the epidemic, the company’s hog sales price was sluggish, and its costs rose, which fell by 5 in 19Q1.
Judging from sales in March, the impact of the epidemic on the company has weakened marginally.
Maintain the expected volume of listings in 2019/20 to 13 million / 17 million heads.
The rise in both volume and price is expected to drive the company’s profits to continue to increase.
Target price of 81 yuan, maintain “Buy” rating.
Epidemic shock, 19Q1 may be 5.
In the first quarter of 2019, the company achieved revenue of 30.
4.8 billion (same increase of 10.
6%), attributable net profit -5.
400 million (down 498%), the performance was in line with expectations.
The increase in revenue was mainly due to the expansion of sales scale: the company sold a total of 3.08 million live pigs in the first quarter of 2019 (an increase of 39%). We estimate that the sales volume of commercial hogs is about 2.9 million and the average weight of commercial pigs is about 96 kg / head (Same decrease of 12%).
The main reasons for the profit trend are: 1) The African swine fever epidemic has caused the company’s epidemic prevention and construction costs to rise.
We tendered the full cost of the commercial pig of the company in 19Q1 to about 13.
1 yuan / kg, increase by 1 every year.
2 yuan / kg, mainly due to the increase in 都市夜网 gross cost (about 11.
8 yuan / kg, increase by 1 every year.
1 yuan / kg).
Among them, some technical indicators of production synchronization deviate, accounting for 40% of the cost increase (4.
5 gross / kg); increased feed processing high-temperature processing facilities, increased feed transfer and high-temperature processing facilities in the farm, accounting for 20% of the cost increase (2.
3 gross / kg); increase subsidies for production personnel, accounting for 30% of the cost increase (3.
4 gross / kg); upgrade biosafety hardware infrastructure, accounting for 10% of cost increase (1.
1 gross / kg).
2) The industry’s early release in January-February generally led to sluggish pig prices. At the same time, the company’s greater sales of light weight pigs to strengthen non-blast prevention and control led 重庆耍耍网 to the company’s actual average selling price being lower than the market price.
Our wholesale 19Q1 company sells about 10 pigs on average.
8 yuan / kg (down 12%).
The epidemic has affected marginal attenuation, and the scale is expected to return to distance.
Judging from the company’s sales in March, the sales volume increased by all the orders (the same month, an increase of 5%), but all rose back to 100 kg / head, and the average sales price (12.
8 yuan / kg) and the market price quotes tend to be consistent, indicating that the impact of the non-plague epidemic on the company’s production has weakened marginally.
As of the first quarter of 2019, the company’s construction in progress reached 41.
200 million (with a 102% increase) and 139 fixed assets.
400 million (the same increase of 29%), the growth rate has maintained a high level, is expected to escort the company’s medium and long-term scale expansion.
In the first quarter, the company’s productive biological assets reached 13.
4 ppm, a decrease of 8%, and a decrease of 18%. With reference to the historical experience of the company’s productive biological assets falling in 2014, and the negative growth rate in the mid-2015 release, it is expected that the company’s release growth rate in the first quarter of 2020 mayPressure.
Combined with grassroots research, taking into account the decline in productive biological assets or the decline in the proportion of backed sows, we still maintain the company’s expected slaughter volume in 2019/20 to 13 million / 17 million heads, an increase of 18% / 31%.
The inflection point of the cycle has arrived, and the leader is moving forward.
1) The price of pigs will soon rise.Affected by the severe 18Q2 breeding, the non-epidemic situation and the embargo policy, the current production capacity of the upstream pig breeding industry has reached 21%, far exceeding the capacity reduction in the previous two cycles.
The current trend of de-capacity production is still continuing, or as high as 28%.
Among them, the company’s production capacity is mainly distributed in northern regions such as Henan. Due to the severe epidemic situation in 2018, its production capacity has been deepened, and local pig prices are highly flexible.
In view of the rapid expansion of the breeding sow inventory since April 2018, it is expected that the pig supply will shrink since around April, and pig prices are expected to usher in a new wave of rapid rise.
2) The leading advantage is still there.
In the first quarter of the merger of similar listed companies, the company’s breeding costs increased and the cost advantages of previous similar listed companies remained significant.
Risk factors: Livestock and poultry prices rise more than expected; raw material prices fluctuate sharply; livestock and poultry epidemics.
Investment suggestion: Considering the reversal of the cycle or the significant increase in pig prices, the company’s sales volume is expected to continue to grow at a high level. Maintain the EPS forecast for 2019/20/21 to 1.
With reference to the average profit level of the company in the previous cycle and the historical forecast level of its peers, it will give 13 times PE for 2020 EPS with a target price of 81 yuan and maintain a “Buy” rating.