Makihara (002714) 2019 performance forecast comment: effective cost control performance exceeded expectations

Makihara (002714) 2019 performance forecast comment: effective cost control performance exceeded expectations

The pig price continued to rise, and the bottom of the slaughtering volume rebounded. The overlapping cost control was effective. The company expects 19Q4 profit of $ 4.6 billion to $ 5 billion.

Performance exceeded expectations.

Increase earnings forecast, maintain target price of 120 yuan, maintain “Buy” rating.

The combination of three factors resulted in better-than-expected performance.

The company expects to realize net profit attributable to mothers in 2019) of 6 billion to 6.4 billion, which is 19 billion 4 billion yuan attributable to mothers in 19Q4.

Performance exceeded expectations.
The main reasons are: 1) Affected by the African swine plague, domestic pig supply is tight and pig prices have risen significantly.

In 19Q4, the average sales price of the company’s commercial pigs was about 31 yuan / kg, an increase of 176% after that and a 53% increase from the previous month.

2) The company’s epidemic situation was properly controlled, which drove the fatal decline of its pigs, and the bottom of the slaughter volume rebounded.

In 19Q4, the company sold 2.32 million live pigs, an increase of 9 from the previous month.

4%.

3) Cost control is effective.

The total cost of fattening pigs for our pioneering company 19Q4 is about 13-14.

3 yuan / kg, a further improvement over 19Q3.

Depth of production capacity, pig price boom may be longer than expected.

Impacted by African swine fever, domestic sow productivity has been reduced by nearly half.

Although the sow inventory has gradually recovered since October 2019, most of the new sows are ternary sows, and production efficiency has declined.

And due to the lack of effective and effective African swine fever vaccine, the epidemic situation may reoccur. It is expected that the scale of domestic pig slaughter may continue to be low, and the pig price boom is expected to exceed expectations.

Leading expansion is orderly, and the market share is expected to increase rapidly.

As of 2018, the total market share of the top 20 companies in the region’s pig breeding industry was only 8%.

Affected by the African swine fever epidemic, the industry scale is obvious, and large-scale households are eliminating retail investors, and the trend of differences between high-quality and secondary faucets appears.

Judging from the third quarterly report of 2019, high-quality faucets have obvious advantages in reducing the size and repairing speed.

We judge that the next five years will be a golden period for the industry to accelerate its scale.

From the perspective of sow scale, pig production, fixed asset construction, capital expenditure, etc., Makihara is the best among them, with a high future market share.

Risk factors: Livestock and poultry prices rise more than expected; raw material prices fluctuate sharply; livestock and poultry epidemics.

Investment advice: The pig price continues to exceed expectations, the company’s cost control is excellent, and it is expanding back to a high-growth channel. We expect that the company’s profit will increase year by year in the next two years.

It has 四川耍耍网 since raised its EPS forecast for 2019/20/21 to 2.

87/16.

05/20.

72 yuan (was 2).

07/11.

97/15.

88 yuan).

Maintain target price of 120 yuan (equivalent to only 10 times PE in 2020), maintain “Buy” rating.