Muyuan Foods (SZ:002714) Zhongyuan Securities·2024-08-06 10:30Investment Rating - The report maintains an "Accumulate" rating for the company, indicating an expected relative price increase of 5% to 15% compared to the CSI 300 index over the next six months [14]. Core Views - The company has turned profitable year-on-year, with a total revenue of 56.866 billion yuan in the first half of 2024, representing a 9.63% increase year-on-year. The net profit attributable to shareholders reached 829 million yuan, marking a turnaround from losses [5][6]. - The tightening supply of pigs has led to a significant increase in pig prices, with the average price in July 2024 reaching 18.78 yuan/kg, a 31.67% increase year-on-year. This price increase is expected to continue driving profitability in the second half of 2024 [5][6]. - The company's breeding costs have decreased, with the cost of raising pigs dropping to around 14 yuan/kg, down from an average of 15 yuan/kg in 2023. This reduction is attributed to improvements in disease control, nutrition, breeding, and operational efficiency [6]. Summary by Sections Financial Performance - In the first half of 2024, the company achieved a total revenue of 56.866 billion yuan, up 9.63% year-on-year, and a net profit of 829 million yuan, marking a return to profitability. The operating cash flow also turned positive, reaching 15.474 billion yuan [5][6]. - For Q2 2024, revenue was 30.594 billion yuan, a 10.56% increase year-on-year, with a net profit of 3.208 billion yuan, indicating a strong recovery [5]. Market Dynamics - The supply of pigs has tightened, with the number of breeding sows decreasing by 6.01% year-on-year as of June 2024. The total number of pigs slaughtered in the first half of 2024 was 36.4 million, down 3.07% year-on-year, contributing to rising prices [5][6]. - The average price of pigs has been on an upward trend since February 2024, with the industry entering a phase of overall profitability [5]. Cost Management - The company has successfully reduced its breeding costs, which are now around 14 yuan/kg. This is expected to further improve as the company continues to invest in technology and efficiency [6]. - The slaughtering business generated 9.981 billion yuan in revenue in the first half of 2024, a 15.06% increase year-on-year, contributing to the overall revenue growth [6]. Future Outlook - The report projects net profits for the company to be 15.953 billion yuan, 17.931 billion yuan, and 16.468 billion yuan for 2024, 2025, and 2026 respectively, with corresponding EPS of 2.92 yuan, 3.28 yuan, and 3.01 yuan [6][7]. - The company's valuation is considered reasonable based on the PE ratios of comparable companies in the industry, with expected PE ratios of 16.33, 14.53, and 15.82 for the next three years [6][8].