Shuanghui Development (000895): Slaughtering volume, new highs, meat products stabilise upwards and maintain buying
Investment Highlights: Event: The company released its 2018 annual report and achieved 487 revenue in 2018.
6.7 billion, down 3 previously.
33%, net profit attributable to mother 49.
1.5 billion, an increase of 13 in ten years.
78%, deducting non-net profit 46.
4.8 billion, an increase of 15 in ten years.
9%, earnings per share is 1.
We forecast the company’s expected performance growth rate of 13% in the performance forecast. The company’s net profit growth rate attributable to its parent is in line with standards, and the non-net profit growth rate is slightly higher than expected.
At the end of 2018, dividends will be paid again, with 5 per 10 shares.
5 yuan in cash (including tax), the dividend rate in 2018 is 97.
35%, the dividend rate increased by 13 in ten years.
In 2019, the company will unswervingly implement the strategic plan of “adjusting the structure, expanding the network, promoting transformation, and scaling up” to achieve positive growth in revenue and profits.
Investment rating and estimation: Maintain the profit forecast for 2019-2020, supplement the profit forecast for 2021, and forecast the EPS for 2019-2021 to be 1.
6 yuan, 1.
82 yuan, 2 yuan, each increase by 7.
5%, corresponding to PE of 16x, 14x, 13x in 2019-2021, maintain BUY rating.
We are optimistic about the company’s core logic: 1. Under the African swine fever epidemic, the local government’s crackdown on private slaughter will bring space to large-scale slaughter companies. At the same time, due to the existence of regional price differences and brand premiums, the company is expected to achieve scaleGood for both.
2. The most difficult period for meat products has passed. Since 2018, the company has made all-round adjustments from research and development, products, channels, marketing, personnel and incentives around “adjusting the structure”, and determined long-term improvement trends.
3. At the high point of the pig cycle, the company is expected to once again 无锡桑拿网 leapfrog the ton price and ton profit, and the cost pressure is less than the market’s pessimistic expectations.
4. From the three perspectives of capacity utilization, net interest rate and dividend rate, the company is expected to maintain high ROE and high conversion rate.
The slaughter volume has risen steadily, and both the slaughter volume and the slaughter head have reached a record high.
Revenue from slaughtering business in 2018 was 289.
1.7 billion, down 4 previously.
95%, of which, foreign trade income was 241.
2.4 billion, a decrease of 9%, and inward income 47.
9.2 billion, an increase of 22 per year.
51%, the decline in slaughtering external income was mainly due to the decline in pig prices, and the increase in inbound income was mainly due to the increase in the use of meat to adjust the structure of pork and the reduction in the price gap between China and the United States to reduce imports.
In terms of demolition volume and price, the slaughter volume in 2018 was 16.31 million heads, an increase of 14% each year. The slaughter volume reached a record high. The sales volume of fresh produce increased by 153, an increase of 1%, and the price of white strip meat fell more than 12%.
The slaughter volume growth rate in the second half of the year is mainly affected by the African swine fever epidemic. The slaughter volume growth rate is significantly higher than the external sales growth rate. The main reasons are: 1. Imports are reduced; 2. Meat products and structural pork use and proportion are both increased; 3. InventoriesFrozen meat increased.
On the profit side, the gross profit margin for slaughter in 2018 was 9.
95%, increase by 2 every year.
89 units, operating profit 10.
4.9 billion yuan, an increase of 70% every year, the average profit of 64 yuan, the average profit in ten years hit a record high.
The main reasons for the significant increase in slaughter profits are: 1. Productivity increased by slaughtering volume, unit costs and unit costs have decreased; 2. Spreads in the African swine fever epidemic, Shuanghui takes full advantage of the capacity of the national layout to achieve ordersAllocation between regions; 3, the proportion of frozen products increased. Looking ahead to 2019, the upward pressure on pig prices exists objectively. The market generally believes that rising pig prices will not be able to bear the pressure on large amounts of slaughter, but we believe that this company is still expected to achieve both volume and profit.
Under the African swine fever epidemic, the local government ‘s crackdown on private slaughter will bring market space to large-scale slaughter companies. The company will also actively seize the opportunity to continue to advance the “slaughter to scale” strategy, and the slaughter volume will bring capacityThe best increase, slaughtering gross profit margin is still expected to continue to increase.
Meat products have achieved the first volume and price growth for the first time since 2013, and comprehensive adjustments have achieved certain performance.
Revenue from meat products in 2018 was 232.
11 ppm, a ten-year increase2.
43%, the demolition price, sales of 160 units, an annual increase of 1%, ton price increases by 1 each year.
33%, meat products have achieved the first increase in volume and price since 2013. Although the growth rate is not large, it shows that the overall adjustment of meat products has achieved certain performance.
In 18Q4, the sales of meat products fell by 2%, and the ton price increased by 3%. The increase in sales was mainly due to the direct price increase of meat products at the end of 2018, which has a short-term impact on sales.
Gross profit margin of meat products 30.
29%, a small margin of 0 a year.
22%, operating profit 47.
4.7 billion, an increase of 1 every year.
1%, the average profit per ton is 2965 yuan, flat for many years.
The pressure on the profit side of meat products has mainly increased: 1. Chicken costs and other costs have increased; 2. Market support has been increased to give a certain discount; 3. Continued improvement of product quality and increased pork consumption
At the end of 2017, after the president Ma Xiangjie took office, the company opened a new path for meat product adjustment and reform. From the current point of view, the most difficult period for Shuanghui meat products has passed. In 2018, the sales of meat products have stabilized, and it is expected to step out of the “difficult period”.
Since 2018, the company has made a series of adjustments on all aspects of meat products, including R & D, products, channels, marketing, personnel, and incentives. The adjustment of product structure is a long-term process, and low-end products will be eliminated.Facing the pain, the situation of coexistence of new and old products will persist for a long time. Due to the fragmentation of industry demand and the company’s strategic choice in product development, it may be difficult to produce a second large single product of the “king of kings” level.Recovery in meat sales is slow.
However, the company’s senior management team has a clear understanding of its own past problems, and has clarified its strategies and adjustment measures for the current contradictions. The thinking and direction are correct, but the process is long, and the long-term improvement and good trend aredefinite.
Looking ahead to 2019, the general rise in pork prices on the market will bring huge pressure on the cost of Shuanghui meat products, but in fact pig prices do not affect the core variables of meat product profitability. The company can increase imports by directly increasing prices and stocking frozen meat.And other means to calm down cost fluctuations.
During the past 10 years of re-examination, every significant jump in the ton price and ton profit of Shuanghui Meat Products was achieved at the high point of the pig cycle. In 2019, the pig price has entered the upward cycle again. The company has prepared in advance to respond. The direct price increase of some meat products on a monthly basis will have a certain impact on sales in the short term, but in the long term, the price increase is likely to be successful. At the same time, the structural adjustment is expected. The ton price and ton profit of meat products are expected to make new strides.
Highest performing catalyst: Higher-than-expected revenue and profit growth Core assumptions Risk: Food safety incident