Shandong Xiantan (SZ:002746) HTSC·2025-08-26 09:17Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 7.70 [1][4]. Core Views - The company reported a robust growth in chicken sales and a significant increase in profits despite market pressures, with H1 2025 revenue reaching RMB 2.54 billion, a year-on-year increase of 5.24%, and net profit attributable to shareholders at RMB 137 million, up 344.55% year-on-year [1][2]. - The company benefits from new production capacity and a focus on product innovation in its processed food segment, leading to stable sales growth in chicken products and a 16.44% increase in revenue from processed products [2][3]. - The ongoing expansion of production capacity, particularly from the Zhucheng project, is expected to enhance the company's slaughter capacity to 250-270 million chickens, which may lead to a recovery in chicken prices as industry capacity adjusts [3][4]. Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of RMB 2.54 billion, with a net profit of RMB 137 million, reflecting a year-on-year increase of 344.55% [1][2]. - Q2 2025 revenue was RMB 1.43 billion, up 7.20% year-on-year and 29.23% quarter-on-quarter, with net profit reaching RMB 88.71 million, a year-on-year increase of 273.76% [1][2]. Business Segments - Chicken products and processed food segments generated revenues of RMB 2.26 billion and RMB 202 million respectively in H1 2025, with year-on-year growth rates of 5.69% and 16.44% [2]. - The company’s chicken product sales volume increased by 9.34% to 27.95 thousand tons, while processed food sales volume rose by 16.82% to 1.43 thousand tons [2]. Capacity Expansion and Market Outlook - The company is in the process of completing a project that will increase its annual chicken production capacity to 120 million, with total slaughter capacity expected to reach 250-270 million chickens [3]. - The white feather chicken industry has faced losses for over two years, and potential capacity reduction may lead to a price recovery if domestic consumption improves in 2025 [3][4]. Profit Forecast and Valuation - The profit forecast remains unchanged, with expected net profits of RMB 302 million, RMB 338 million, and RMB 325 million for 2025, 2026, and 2027 respectively, corresponding to EPS of RMB 0.35, RMB 0.39, and RMB 0.38 [4][9]. - The company is assigned a PE ratio of 22x for 2025, leading to a target price of RMB 7.70, an increase from the previous target of RMB 7.00 [4].