LIHUA(SZ:300761) Guoxin Securities·2024-07-25 00:30Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [6][19]. Core Views - The company's yellow feather broiler business maintained a sales growth rate of over 10%, with continuous improvement in breeding costs. The pig farming business has seen a recovery, achieving profitability in Q2, leading to an approximate 200% year-on-year increase in net profit attributable to shareholders for H1 2024 [7][8]. - The report anticipates a resonance in the prosperity of yellow feather broilers and pigs in the second half of the year, driven by tight supply and improving demand. The supply of parent stock chickens has decreased by 2.38% year-on-year, maintaining a bottom level, while the pig price has been rising, which is expected to boost poultry demand [7][22]. - The company is positioned as a leading player in the domestic yellow chicken farming sector, with steady expansion in output and continuous cost improvements, likely benefiting from the recovery in livestock and poultry markets [10][19]. Summary by Sections Financial Performance - The company expects to achieve a net profit attributable to shareholders of between 5.50 billion to 6.00 billion yuan for H1 2024, representing a year-on-year increase of 192.97% to 201.42%. The net profit after excluding non-recurring gains and losses is expected to be between 5.15 billion to 5.65 billion yuan, an increase of 182.91% to 190.96% [20][21]. - The growth in profitability is attributed to a 10.69% year-on-year increase in yellow feather broiler output and improved breeding costs, alongside a recovery in the pig market, with increased sales volume and prices [8][20]. Supply and Demand Dynamics - The supply of parent stock chickens has been reduced due to a low market in 2023, with the current stock at 21.48 million sets, down 2.38% from the previous year. This tight supply, combined with improving demand from the pig market, is expected to drive up the prices of both pigs and poultry [22][7]. - The report highlights that the pig cycle has begun to show positive trends, which is anticipated to further stimulate demand for poultry products, particularly yellow feather broilers [22][7]. Profit Forecasts - The profit forecasts for the company have been revised upwards for 2024-2026, with expected net profits of 10.3 billion, 14.4 billion, and 8.9 billion yuan respectively, compared to previous estimates of 7.9 billion, 12.4 billion, and 8.3 billion yuan. The corresponding EPS is projected to be 1.24, 1.74, and 1.05 yuan, with current PE ratios of 18, 13, and 21 times [10][7].