MINHE(SZ:002234) HTSC·2024-08-29 04:03Investment Rating - The investment rating for the company is upgraded to "Accumulate" with a target price of RMB 8.26 [1][6]. Core Insights - The company's profitability continues to be under pressure due to a decline in both sales volume and price of chick seedlings, leading to a downward revision of profit forecasts for 2024, 2025, and 2026 [1][2]. - The estimated net profit for 2024, 2025, and 2026 is projected to be -363 million, 205 million, and 147 million RMB respectively, with corresponding EPS of -1.04, 0.59, and 0.42 RMB [1][4]. - The company is expected to gradually achieve profitability in its food processing business, which may contribute positively to overall performance in the future [1][3]. Summary by Sections Financial Performance - In H1 2024, the company reported revenue of RMB 1.048 billion, a year-on-year decrease of 6.53%, and a net profit attributable to the parent company of -186 million RMB, a significant decline of 365% year-on-year [2]. - Q2 2024 revenue was RMB 525 million, down 3.33% year-on-year, with a net profit of -151 million RMB, reflecting a 56% year-on-year decline [2]. Business Segments - Chick Seedlings: In H1 2024, the company sold 129 million chicks, a decrease of 7.8% year-on-year, with an average price of RMB 3.15 per chick, down 9.4% year-on-year. Estimated losses from this segment are between RMB 135 million to 175 million [2]. - Chicken Products: The company sold 44,800 tons of chicken products in H1 2024, an increase of 25% year-on-year, although the decline in selling prices has negatively impacted profitability [2]. Expansion Plans - The company is expanding its chick production capacity, with existing capacity exceeding 300 million chicks and an additional 100 million chicks capacity under construction [3]. - In the downstream food processing segment, the company has achieved a turnaround in its 30,000-ton cooked food production capacity, which is expected to gradually improve profitability as production ramps up [3].