NEW HOPE(SZ:000876)2024-08-12 03:30Investment Rating - The investment rating for New Hope Liuhe is maintained at OVERWEIGHT with a target price of RMB10.55, indicating an expected outperformance compared to the benchmark [1][6][7]. Core Insights - The report highlights that the private placement plan, revised to raise RMB3.8 billion, aims to enhance biosecurity at pig farms and repay bank debts, which is expected to improve the company's debt-to-asset ratio and support high-quality growth [2][3]. - The company has seen a reduction in pig farming costs and improved profitability in its feed operations, leading to an upward revision of the profit forecast for 2024 to RMB1.14 billion [1][3]. - The anticipated recovery in the balance sheet is supported by strategic investments and divestments from non-core segments, contributing significantly to profits [2][3]. Summary by Sections Financial Performance - Revenue for 2024 is projected at RMB120.13 billion, reflecting a decrease of 15.22% from 2023, while net profit is expected to rise to RMB1.14 billion, a significant increase of 356.27% compared to 2023 [5][12]. - The earnings per share (EPS) is forecasted to be RMB0.25 for 2024, with a return on equity (ROE) of 4.49% [5][12]. Cost Management - The total breeding cost is estimated to decrease to RMB15.5 per kilo in 2Q24, down RMB1.9 per kilo quarter-on-quarter, driven by lower feed prices and improved farming performance [3][12]. - The domestic feed segment is expected to contribute RMB700-1,000 million in annual profit over the next two years, with overseas feed output projected to exceed 6 million tonnes [3][12]. Market Position - The company is strategically focusing on hog and feed segments, aiming for high-quality growth, which is expected to yield good profits in pig farming for the second half of 2024 [3][12]. - The stock is valued at 1.85 times the estimated book value for 2024, which is above the average of its peers at 1.22 times [1][6].