Xiantan shares (002746) 2019 Interim Report comment: Chicken prices rise and high profits lead to regional expansion and scale expansion

Xiantan shares (002746) 2019 Interim Report comment: Chicken prices rise and high profits lead to regional expansion and scale expansion

The core point of view is that the price of chicken has gone up, and the company’s profit has increased 北京夜网 by 19Q23.

2 times.

The contraction of pork supply is expected to drive chicken consumption, and chicken prices are expected to remain strong.

The company has achieved regional expansion through government cooperation projects, and long-term scale expansion is expected.

Maintain “Buy” rating.

Chicken prices rose, and profits continued to increase in 19Q2.

The company released its semi-annual report for 2019.

At the core of the report, the company achieved operating income of 15.

500 million (43% increase), profit 4.

3.0 billion (same increase of 3.

5 times).

The performance was in line with expectations.

Among them, 19Q2 achieved income 8.

200 million (29% increase, 11% increase), profit 2.

500 million (same increase of 3.

2 times, 57% ring increase).

The increase in slaughter volume is the first priority for the company’s revenue and profit growth, and the increase in chicken prices is the leader in the company’s revenue and profit growth.

We estimate that the company slaughtered about 30 million feather chickens in 19Q2, with an average profit of only about 8.

3 yuan.

The contraction of pork supply or high consumption of chicken meat is expected to continue the boom in the poultry chain.

On the supply side, affected by the high price of chickens, the phenomenon of moulting has increased. The White Chicken Association has monitored the parents’ production inventories of commercial enterprises and the sales of commercial chickens have shown an upward trend since March.

Combined with the parental sales data monitored by the Association, we expect that the white chicken fillet increase in 2019 will be about 15% -20%.

On the demand side, affected by the acceleration of swine fever in Africa, the elimination of swine production capacity, the addition of avian influenza vaccine to boost the recovery of poultry meat consumption, it is expected that chicken consumption will continue to grow from 2019 to 2020, an increase of 25% or more.

Based on comprehensive judgments, it is expected that poultry prices are expected to remain high until 2020.

The Zhucheng project was launched and the regional expansion escorted the expansion.

On August 25, 2019, the company gradually passed the “Zhucheng” 100 Million Broiler Chicken Industry Ecological Project “.

The company intends to raise funds by itself or introduce RMB 6 million invested by other investors. The Zhucheng People’s Government intends to contribute RMB 100 million through the financial guidance fund to jointly establish a joint venture—Shandong Xiantan Zhucheng Food Co., Ltd. (tentative name).

The company’s previous breeding and slaughtering capacity was mainly in Yantai. It is expected that the establishment of a joint venture will help the company to further develop in Zhucheng and achieve scale expansion.

Risk factors: Chicken prices are not 南京夜生活网 up to expectations, outbreaks, food safety incidents.

Investment advice: Chicken prices are strong, and the company’s profit potential continues to increase.

Maintain 2019/20/21 net profit forecast to 8.

5/10.

0/5.

500 million.

Due to changes in the company’s share capital, the EPS forecast for 2019/20/21 was adjusted to 1.

83/2.

16/1.

18 yuan.With reference to the company’s historical estimation level and the estimated level of similar listed companies, 15 times PE estimation is given for 2019, and the target price is adjusted to 27.

45 yuan.

Maintain “Buy” rating.