Makihara (002714): bullish on the company’s hog prices and prices

Makihara (002714): bullish on the company’s hog prices and prices

Event: On February 27, the company announced the 2018 results flash: and achieved operating income of 133.

880,000 yuan, an increase of 33 in ten years.

32%; net profit attributable to shareholders of listed companies5.

20 ppm, a 78% decrease in one year, and realized zero benefits.

17 yuan.

Among them, Q4 single quarter achieved operating income42.

$ 2.5 billion.

35%; net profit achieved 1.

70 trillion, down 30 a year.

74%, in line with our previous expectations for the company’s fourth quarter earnings.

The number of pigs slaughtered in 2018 was 11.1 million, an increase of 52 per year.

14%, slightly lower than the initial market consensus (12-14 million heads).

In 2018, the company released 1101 pigs.

110,000 heads, an increase of 52 in ten years.

14%.

Among them, the commodity pig 1010 was listed.

910,000 heads, 86 piglets.

350,000 heads.

Q4 produced 336 pigs in a single quarter.

600,000 heads, an increase of 68 in ten years.

72%, an increase of 15 from the previous month.

99%.

Among them the commodity pig 326.

09 million heads, 9 piglets.

880,000 heads.

In general, the number of pigs slaughtered by the company in 2018 showed a quarter-to-quarter growth trend, with Q1 / Q2 / Q3 / Q4 pigs slaughtered 221.

50/252.

90/290.

30/336.

600,000 heads.

But the company’s highest average selling price is 11.

61 yuan / kg, down 19 from 2017.

96%.

The hog price volatility in 2018 is more an industrial change. There are two preliminary changes: First, the contraction in the first half of the year was due to a reduction in excess supply.

In the first half of 2018, the supplementary consumption increased due to the increase in supply during the off-season. The national hog price experienced a “cliff-like” decrease, and the company’s average hog sales price also fell from January to February 13.

65 yuan / kg fell to 9 in April.

99 yuan / kg, the company’s first quarter replacement since listing in Q2 2018.

The second is the impact of the African swine fever epidemic.After the occurrence of African swine fever in August 2018, especially the first African swine fever epidemic in Henan Province on August 14, the company’s main production capacity distribution area was restricted by the inter-provincial transportation of Henan Province (Henan is a pig out area).Pig prices have fallen sharply.

The company sold only 77 pigs in September.

The average selling price of 400,000 heads of pigs from August 13th.

21 yuan / kg fell to 10 in December.

64 yuan.

Falling hog sales prices are the main factor in the company’s 2018 performance decline.

We expect hog prices to increase significantly in the second half of 2019.

Main logic: The swine fever epidemic in Africa has intensified and continued to consume hog breeding output. Large-scale fill-ups have not yet occurred in the short term. There may be gaps in the hog market supply after pork inventory is digested and drive hog prices up.

The Ministry of Agriculture and Rural Affairs announced that 111 swine fever outbreaks have occurred in Africa (as of 2019.

2.

28), there is no effective vaccine.

Initially, the severely affected Northeast region was also a region where pigs were transferred out, and production capacity was broken down.

After the transportation blockade was gradually lifted, small and medium-sized breeding households put off a lot of overweight pigs before the Spring Festival, and the price of hogs in Northeast China completed the “last fall” and took the lead to 淡水桑拿网 rise.

New outbreak areas in the south also appeared earlier.

The sows are more susceptible to African swine fever virus due to their physiological structural characteristics. Many sow farms must be “cleared” after sows are diseased.

We expect that the price of hogs will increase in the second half of 2019, and will remain around 12 months (assuming that starting from the replacement sow replacement pen, it will be converted into commercial hog supply).

It is estimated that the number of pigs slaughtered in 2019/2020 will be 14/18 million, respectively. If the price of pigs increases as scheduled, the company’s performance will obviously rebound.

The company’s potential production capacity continues to increase rapidly.

From the company’s three quarterly report on fixed assets and construction in progress, it still maintained a high growth rate: at the same time, it was 19 separately.

68% and 82.

78%.

In particular, projects under construction reached 27.

US $ 3.8 billion, which has made redundant reserves for the continuous high growth of pig production in the next few years.

In the short term, the company’s main production capacity is distributed in Henan, and the African swine fever epidemic in Anhui is serious. It is expected to affect the company’s effective utilization of hog production capacity in 2019.

It is estimated that the company will sell 14/18 million heads in 2019-2020.

2019-2020 will be a “good opportunity” for the company to “gradually release production capacity and expand the growth of sales prices”, and the company’s performance will rise significantly.

Investment suggestion: The company’s pig breeding costs have obvious advantages in some places, and the company will maintain rapid growth in production capacity in the next few years.

It is expected that the price of hogs will rebound sharply in the second half of 2019 and maintain at least 2020. It is optimistic that the company ‘s hog breeding business will “rise in volume and price”.

We estimate that the company will produce 14/18 million pigs in 2019-2020, with revenues of 133 in 2018-2020.

88/215.

60/306.

900,000 yuan (assuming an average sales price of 14 yuan / kg in 2019-2020, 15 yuan.

50 yuan / kg, 151 before adjustment.

89/222.

21/300.

At $ 9.4 billion, the net profit attributable to owners of the parent company was 5.

20/23.

58/61.

8.6 billion (respectively 20 in 18/19/20 before adjustment).

09/25.73/59.

8.3 billion), EPS is 0.

25/1.

13/2.

97 yuan, the company’s performance has a V-shaped reversal basis, currently corresponding to the corresponding PE in 2018/2019/2020 is 184X / 41X / 15X, maintaining the “overweight” rating.

Risk factors: The increase in the price of hogs exceeds expectations; the actual hog production volume of the company is lower than expected.