Shengnong Development (002299) 2018 Annual Report Review: Bird Chain Prosperity Continues to Profit in 19Q1 or Accelerates High Growth

Shengnong Development (002299) 2018 Annual Report Review: Bird Chain Prosperity Continues to Profit in 19Q1 or Accelerates High Growth

Benefiting from the recovery of chicken consumption, chicken meat prices remained high in 19Q1, and slaughter profits are expected to continue to increase. The company expects to achieve profitability in 19Q16.

400 million to 700 million.

The contraction of pork supply is expected to drive high growth in poultry meat consumption, and the boom of the poultry chain may transition from 2019 to 2020. Revise the 2019/2020 EPS forecast, raise the target price to 36 yuan, and maintain a “buy” rating.

Chicken prices are strong, with a profit of 1.5 billion in ten years, in line with expectations.

Revenue of 11.5 billion in 2018 (same increase of 13.

7%), attributable net profit of 1.5 billion yuan (same increase of 3.

8 times).

The company’s profit is mainly due to the slaughtering business contribution: 1) Slaughtering business: Estimated profit in 2018 is 1.3 billion-13.

At 2 trillion, the tonnage turned losses into profits; the high increase in profit from slaughtering business was mainly due to the sudden increase in chicken meat. In 2018, the company’s average chicken meat sales price was about 9320 yuan / ton, an increase of 11.

6%; estimated slaughter volume is about 4.

500 million birds, only an average profit of 2.

9 yuan; 2) Food business: Estimated profit in 20181.

800 million to 200 million US dollars, a slight decline each year, mainly due to chicken food prices lagging behind the price of chicken raw materials.

The company plans to pay a cash dividend of 10 yuan for every 10 shares, and the latest dividend rate is about 3.

9%.

The performance was in line with expectations.

Consumption recovery is blessed with high chicken prices, and profit in 19Q1 may accelerate high growth.

As avian flu vaccine has been added to the immunization and poultry meat consumption has gradually recovered, the price of chicken meat in 19Q1 remains high.

The company expects a profit of 4-4 in 19Q1.

5 times to 6.

400 million to 700 million, the growth rate increased in ten years.

The estimated profit is mainly due to the slaughter business contribution. It is estimated that the company slaughtered broiler chickens in 19Q1.

From 9.9 billion to 100 million pigeons, a single feather is about 6-6 profitable.

5 yuan.

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

Domestic meat consumption shows a structure of about 5: 2: 2: 1 for pork: chicken: fish: beef and mutton.

Affected by African swine fever, domestic hog production is accelerating. The current production capacity has been reduced by 19%, and it may reach 28% in the future.

The contraction of pork supply is expected to drive high growth in chicken consumption, and the boom in the poultry chain may continue until 2020.

Risk factors: Chicken prices are not up to expectations, outbreaks, food safety incidents.

Investment suggestion: Maintain “Buy” rating.

The 成都桑拿网 increase in chicken consumption is expected to drive the company’s earnings to continue to increase.

Taking into account that chicken prices have risen more than expected, the EPS forecast for 2019/20 is revised up to 2.

03/2.

49 yuan (was 1).

56/1.

215 yuan), plus the EPS forecast for 2021 is 1.

56 yuan.

Give an 18X estimate for 2019, raise the target price to 36 yuan, and maintain a “buy” rating.