LIHUA(300761) 国信证券·2024-08-01 12:30Investment Rating - The investment rating for the company is "Outperform the Market" [4][15]. Core Views - The company has shown stable growth in output and a decrease in costs, leading to a significant increase in net profit attributable to shareholders, which rose by 346% year-on-year in Q2 2024 [1][5]. - The revenue for the first half of 2024 reached 7.805 billion yuan, a year-on-year increase of 12.16%, with Q2 revenue at 4.144 billion yuan, up 16.79% year-on-year [1][5]. - The growth in revenue is attributed to over 10% year-on-year increases in the output of meat chickens, pigs, and geese, while profitability has improved due to lower breeding costs for pigs and chickens [1][5]. Summary by Sections Chicken Business - The output of yellow feathered chickens continues to grow, with the complete cost per chicken dropping below 6 yuan. In H1 2024, the sales price of meat chickens remained stable year-on-year, while the output increased by 10.69% to 235 million chickens, resulting in a revenue increase of 10.09% to 6.794 billion yuan [1][5]. - The complete cost per chicken decreased by 13.48% year-on-year to 6.1 yuan, with Q2 costs further reduced to 5.9 yuan, leading to a gross margin increase of 13.54 percentage points to 13.86% [1][5]. - The company is expected to maintain good profitability in its chicken business, especially with the upcoming consumption peak in the second half of the year [1][5]. Pig Business - The pig business has maintained rapid growth, with sales of pigs in H1 2024 increasing by 18.83% to 434,900 heads, and the average sales price rising by 7.13% to 15.92 yuan/kg, resulting in a revenue increase of 18.50% to 895 million yuan [2][6]. - The complete breeding cost has decreased, with costs dropping below 16 yuan/kg in March and further to 14.8 yuan/kg in Q2, contributing to a gross margin increase of 33.44 percentage points to 15.55% [2][6]. - The company has established a pig production capacity of approximately 1.8 million heads and aims to achieve over 1.2 million heads of output within the year [2][6]. Goose Business - The goose business has also shown growth, with 960,500 geese sold in H1 2024, a year-on-year increase of 12.92%, although revenue slightly decreased by 1.02% to 82 million yuan [6]. - The gross profit for the goose business increased by 10.81% year-on-year to 16 million yuan due to improved costs and favorable market conditions [6]. Financial Forecasts - The company is expected to benefit from the recovery in the livestock industry, with projected net profits for 2024-2026 being 1.03 billion, 1.44 billion, and 870 million yuan respectively, corresponding to EPS of 1.24, 1.74, and 1.05 yuan [2][5]. - The current price-to-earnings ratio (PE) is projected to be 19, 14, and 22 times for the years 2024, 2025, and 2026 respectively [2][5].