Investment Rating - The investment rating for Wens Foodstuffs is "BUY" with a target price of RMB25.53, indicating a potential upside of 29% from the closing price of RMB19.78 as of August 12, 2024 [2][7]. Core Views - Wens Foodstuffs has experienced a significant rise in meat pig selling prices, with the average price reaching RMB18.95/kg in July, which is above the industry average. The estimated per-head profit for meat pigs is nearly RMB600 [2][3]. - The report anticipates buoyant demand for pigs and broilers in the second half of 2024 due to tight supply dynamics and an approaching peak consumption season, which is expected to sustain earnings growth for Wens [2][4]. - The financial projections for Wens indicate a net profit of RMB10.0 billion in 2024, increasing to RMB13.4 billion in 2025, and RMB13.1 billion in 2026, with a book value per share (BVPS) of RMB6.48, RMB8.29, and RMB10.16 respectively [2][5]. Summary by Sections Financial Performance - Revenue is projected to grow from RMB89.92 billion in 2023 to RMB104.68 billion in 2024, and further to RMB125.67 billion in 2025 [5]. - The net profit is expected to recover from a loss of RMB6.39 billion in 2023 to RMB10.04 billion in 2024, and reach RMB13.36 billion in 2025 [5]. - The diluted EPS is forecasted to improve from -0.96 in 2023 to 1.51 in 2024, and 2.01 in 2025 [5]. Market Dynamics - The report highlights a potential contraction in hog supply in the second half of 2024, which is expected to drive up prices and enhance profitability for Wens [2][4]. - The demand for yellow-feather broilers is projected to increase due to early-stage destocking and seasonal consumption patterns, contributing to a favorable pricing environment [2][4]. Competitive Position - Wens Foodstuffs is noted for its solid cost advantage in hog breeding, which is expected to further enhance its per-head profit margins [2][4]. - The company is likely to continue making progress in breeding, production, and management, which will contribute to a steady decline in breeding costs [3][4].
Wens Foodstuffs(300498):Rise in Meat Pig Selling Price Beat Average; Per~Head Profit Leading