Tang Renshen (002567) Interim Review: Stable Feed Growth Slows Down
Investment Highlights Event: Tang Renshen announced the semi-annual report for 2019, and the company achieved operating income of 72 in the first half of 2019.
700 million (+6.
51%); net profit attributable to mother 4501.
60,000 yuan (-35.
96%), deducting non-net profit 5863.
30,000 yuan (-27.
Of which single and second quarter: the company’s operating income 39.
200 million (+10.
49%), net profit attributable to mother 3962.
20,000 yuan (+52.
97%), deducting non-net profit 5938.
50,000 yuan (+88.
72%) The feed business has developed steadily and poultry feed has grown rapidly.
In the first half of the year, the hog inventory continued to expand, and the demand for pig feed was sluggish. The poultry feed benefited from the recovery of the inventory, and sales rebounded, but the prices of raw materials rose.
The company continued to adjust the feed sales structure and increased sales of poultry and aquatic products. In the first half of the year, the company’s overall feed sales were 224.
4 feed (+ 1%), of which 122 tons (+ 17%) of poultry meat sales, estimated 94 pounds (-15%) of pig feed sales, 9 tons (+ 11%) of aquatic feed sales, feed salesIncome 64.
4 billion (+16.
7%). The gross profit margin is flat in the short term. It is estimated that the feed business will contribute about 100 million profit, and the overall development will remain stable.
The pig farming business was rapidly intensified, and the profit in the second quarter improved from the previous quarter.
In the first half of the year, a total of 50 pigs were slaughtered.
850,000 heads, an increase of 60 in ten years.
9%, fattening pigs are expected to be about 25.
50,000 piglets, about 25 piglets.
The pig price was extremely sluggish in the first quarter, and the national average price was only 12.
8 yuan / kg, the industry in the second quarter fully entered the upward cycle, the average price rose to 15.
3 yuan / kg, but the company ‘s full cost has also risen due to the cost of epidemic prevention. It is estimated that the full cost of fattening pigs is about 13.
7 yuan / kg, the piglet’s full cost is about 33 yuan / kg, and the pig farming business will achieve a break-even from the second quarter. The first half of the year is expected to reach 45 million pigs.
The continuous expansion of production capacity will support rapid development in the future.
As of the end of June, the company’s fixed assets22.
900 million (+18.
5%), construction in progress 4.
0 billion (+24.
6%), biological assets of the production line 1.
100 million (-28.
In a non-pestic environment, the company properly responded to the epidemic, and currently it can breed and back up sows a total of 6.50,000, of which sow can breed 4.
At present, the company has formed a sound epidemic prevention system. According to the company’s capacity construction, it is expected that the number of reserve sows can increase to about 80,000 by the end of the year.
Investment suggestion: The company’s feed business has grown steadily, the sluggish period of pig farming business has passed, and the profit in the second quarter improved from the previous quarter.
As the industry’s production capacity accelerates, the national pig price in August has exceeded the previous cycle high, and the second half of the year will continue to run at historical high levels, and the company’s pig raising business will be flexible.
We adjusted the company’s EPS to 0 from 2019 to 2021.
69 and 1.
84 yuan, corresponding to the closing price of PE on August 16, 2019 is 25.
67 times, 7.
32 times and 6.
71 times, maintaining the level of “prudent overweight”.
Risk warning: outbreak risk, fluctuations in pig and poultry prices, changes in commodity prices, policy changes