Da Bei Nong (002385) Annual Report Comments: Industry downturn, poor performance, waiting for pig prices to increase

Da Bei Nong (002385) Annual Report Comments: Industry downturn, poor performance, waiting for pig prices to increase

Event: Dabeinong announced the 2018 annual report.

In 2018, the company achieved revenue of 193.

2 billion (+2.

99%); net profit attributable to mother 5.

07 billion (-59.

93%); 1 after deduction.

1.7 billion (-杭州桑拿88.

26%).

  Of which single quarter: company income 50.

84 billion (-5.

1%), net profit attributable to mother 0.

6.6 billion (-84.

4%), after deducting non-zero.

1.7 billion (-92%).

  The company expects the first quarter: expected 0 to 0.

40,000 yuan, a profit of 1 in the same period last year.

800 million.

  The feed business is under pressure.

In 2018, the overall downstream of feed was turbulent, the price of aquatic products was high and then low, the price of pigs was low and affected by non-pesticidal diseases, and the price of poultry rose from low due to shrinking stock.

In this environment, the feed sales volume of the entire industry has slightly shifted, and some varieties such as pig feed have been significantly decomposed. The company’s key products are pig feed front-end feed, which 成都桑拿网 interferes with the quantity and profit.

Highest sales 459.

75 inches (+3.

56%) of which pig feed was 374.

25 inches (+1.

38%), aquatic product 45.

44 baselines (+19.

34%), ruminant 30.

72 digits (+14.

41%), poultry feed 8.

51 benchmarks (-6.

12%).

Company feed income is 166.

700 million (+1.

66%), gross margin decreased by 3 units to 19.

45%, the gross profit margin of pig feed decreased by 3.

58 units.

  Pig farming expanded rapidly, and the downturn caused losses.

The company’s “pig raising business” has been implemented for 4 years, and Zhang Lizhong, the former head of the pig raising department, has continued to make rapid progress since taking over as president.However, the hog price gradually bottomed in 2018, and the average price was only 12.
.

7 yuan / kg; non-pesticidal outbreaks after August, further impact.

  In 2018, the company’s system totaled 1.68 million heads (113 holding subsidiaries).

130,000 heads, a year-on-year increase of 76%).

(Continued on the next page) However, it is estimated that due to the impact of diseases and other diseases, the productive biological assets will be changed from 1.

400 million to 0.

9.5 billion.

The company is expected to produce 230,000 sows at full capacity by the end of 2019; the target is to produce 5 to 6 million pigs by 2020.

Due to the increase in deposit costs during the rapid expansion process, we estimate that the cost of the company’s pig farming department is still relatively high at present.

6 billion.

  Seed business growth stagnates, waiting for policy changes.

The company’s seed business growth stagnated in 2018, with total sales of 1740.

650,000 kg (-31.

7%), of which the corn is stable, and the early growth of rice is significantly intensified due to double reform and fierce competition in the industry.

However, the company’s seed sector has a wealth of technology reserves, and its approval progress is leading. If there is a change in the subsequent genetic modification policy, it will bring huge opportunities for the company.

  Financial expenses have increased, and equity incentive expenses and investment income have significantly affected profits.

In 2018, the overall business of the company was not good, with a pressure gap. Accounts receivable increased by 28% every year without substantial increase in sales volume.

The credit environment tightened, and long-term and short-term borrowings increased by about 6.

500 million, resulting in financial expenses increased to 2.

5 billion (+ 57%).

The remaining non-recurring items affecting profits are mainly the provision of equity incentive expenses in the first quarter1.

200 million, and the rural credit interconnect in the third quarter6.

62% equity (before capital increase) price 3.

6.4 billion transfers, after-tax income increased by 2.

35 billion.

  Investment suggestion: In 2018, both pig feeds are under pressure and the company’s performance is not good.

However, the overall pig price is currently bullish, and the company is expected to encounter the upward trend of the pig industry in the later period, with the volume and profit increasing, and the feed business will also be supported.

In addition, the company’s seed business is generally sluggish at present, but there are opportunities for policy transformation in the future.

Overall, we believe that the company will seek to improve the situation in the future as the industry warms.

After adjustment, the company’s EPS is expected to be 0 from 2019 to 2021.

2, 0.

43 and 0.

49 yuan, corresponding to the closing price of PE 38 on April 23, 2019.

7 times, 18.

2 times and 16.

1x, maintaining the level of “prudent overweight”.

  Risk warning: animal disease, fluctuations in pig and poultry prices, changes in commodity prices, policy changes