Leshan Giantstar Farming&Husbandry (SH:603477) Southwest Securities·2024-09-06 08:01Investment Rating - The report maintains a "Buy" rating for the company with a target price of 22.14 CNY over the next six months [1][11]. Core Insights - The company has successfully turned its pig farming business from loss to profit, while the leather business has negatively impacted overall profits. The pig farming segment has seen a reduction in costs and an increase in sales prices, leading to a significant recovery in profitability [2][3]. - The report highlights that the company has achieved a revenue of 2.233 billion CNY in H1 2024, representing a year-on-year increase of 13.13%. The net profit attributable to the parent company has improved by 87.13% year-on-year, with a net profit of -45 million CNY [2][3]. - The report emphasizes the ongoing capacity reduction in the industry, which has led to a rise in pig prices from 15 CNY/kg in April to 20 CNY/kg by August 2024 [2][3]. Summary by Sections Financial Performance - In H1 2024, the company sold 1.0945 million pigs, with a year-on-year increase of 24.69% in the number of market pigs sold. The revenue from pig products reached 2.039 billion CNY, up 22.56% year-on-year [2][3]. - The company’s breeding project has been delivered, and several other breeding farms are expected to be operational in the second half of 2024, which will support further growth in pig farming capacity [2][3]. Cost Management - The company has implemented a dual approach of "technology + management" to enhance production management and reduce costs. Key production indicators such as PSY (Pigs per Sow per Year) have improved, reaching above 29, while the feed-to-meat ratio has decreased to below 2.6 [3]. - The cost of raising market pigs was reported at 6.44 CNY/kg in June and 6.35 CNY/kg in July, with total costs remaining below 7 CNY/kg [3]. Earnings Forecast - The earnings per share (EPS) for 2024-2026 are projected to be 1.41 CNY, 2.34 CNY, and 2.86 CNY, respectively, with corresponding dynamic price-to-earnings (PE) ratios of 13, 8, and 6 times [3][4]. - The report anticipates a significant increase in revenue, with projections of 4.041 billion CNY in 2024, 6.073 billion CNY in 2025, and 8.472 billion CNY in 2026, reflecting growth rates of 50.28% and 39.52% for the following years [4][10].