Shuanghui Development (000895): Swine Fever Short-term Impact on Slaughter Volume Long-term Positive Concentration Increase

Shuanghui Development (000895): Swine Fever Short-term Impact on Slaughter Volume Long-term Positive Concentration Increase

Key points for investment: Short-term effects of swine fever affect slaughter volume, and increase the concentration in the long term. Affected by African swine fever, the price of pigs and pork has increased significantly in the past three months.43%, an increase of about 3 ppt over pork prices.

Inventory drought + rapid increase in hog prices + impact of African swine fever epidemic, so the slaughter volume will be placed in the first half of this year.

8%, and the amount of pigs slaughtered is 6.

At 2%, the overall slaughter volume decreased.

According to our research, the slaughter volume of Shuanghui Q2 remains at a normal level. However, due to the low price of pigs in the same period last year, the slaughter volume is at a high level. It is expected that the slaughter volume of Q2 will improve this year.

Slaughtering gross profit margin decreased or stayed the same 18Q4-19Q1 due to the effect of African swine fever, the spread between provinces and regions. As a leader in slaughtering regulations, Shuanghui merged part of the interprovincial supply of pork business.

Entering 19Q2, the price spreads in various regions have narrowed. It is expected that the gross profit margin of Q2 will decrease slightly from the previous quarter. In the upward cycle of pig prices, the company also released some frozen meat inventory to stabilize the gross profit margin.

The price of meat products can be raised again, and the cost can be controlled. In April this year, the company raised the price of meat products again, with a range of 2-3%. This is the second price increase after the initial price increase, which involves high,北京夜網 middle and low-end products.Product sales have been affected for a short time, but as the industry leader in meat products, it has only the right to speak. If the cost continues to rise in the future, it may not rule out the possibility of further price increases.

As for the cost of meat products, the company is expected to moderately increase the use of imported pork from the United States and low-priced stock meat in the early stage to limit the growth of subsequent costs. At the same time, it will use domestic favorable policies to promote profitability and maintain the stability of the overall profitability of meat products.

Earnings forecasts and estimates We expect the company’s revenue to be 53.5 billion / 588.3 billion / 64.2 billion in 2019-2021, even +9.

8% / 8.

9% / 7.

0%, the profit is 50.

700 million / 52.

100 million / 58.

8 ‰, +3 for ten years.

twenty two.

6% / 12.

9%, the current corresponding 19/20 PE is expected to be 16x / 15x, maintain “Buy” rating.

Risk warning: pork prices rise faster than expected / meat prices increase, sales decline, affecting revenue