SHUANGHUI(SZ:000895) Soochow Securities·2024-02-19 16:00Investment Rating - The report assigns a "Buy" rating for the company, Shuanghui Development [1]. Core Views - Shuanghui Development is positioned as a leading player in the meat processing industry, with a strong emphasis on high dividend yields, which have remained in the top three of the industry for three consecutive years. The company is expected to benefit from a shift in market preference from growth to dividend returns as the food and beverage sector enters a phase of moderate growth [1][9]. - The company has a solid competitive advantage due to its comprehensive supply chain and product diversification strategies, which include upgrading product structures and expanding product categories to enhance profitability [2][38]. Summary by Sections 1. High Dividend Strategy - The high dividend yield strategy is sustainable and positions Shuanghui Development as an industry leader. The company has maintained a low valuation relative to the industry and has consistently provided stable high dividends, making it attractive in a declining risk appetite market [9][1]. 2. Business Structure - Shuanghui Development's revenue is primarily derived from its slaughtering and meat product businesses, with slaughtering accounting for approximately 47.5% of revenue and meat products contributing about 43.3% in 2022. The meat product segment is the main profit contributor, accounting for about 88.7% of total profits [18][19]. 3. Slaughtering Business - The company effectively mitigates the impact of pork price cycles by leveraging overseas resources and establishing a nationwide slaughtering base. This strategy enhances price stability and supply efficiency, allowing the company to maintain profitability even during price fluctuations [2][22]. 4. Meat Product Business - Shuanghui Development has been actively upgrading its product structure and expanding its product range, which has led to an increase in profit margins. The company has introduced various new products to meet diverse consumer demands and has strengthened its market presence through enhanced distribution channels [25][2]. 5. Earnings Forecast - The company is projected to achieve revenues of 630 billion, 679 billion, and 722 billion yuan for the years 2023, 2024, and 2025, respectively, with corresponding net profits of 55.2 billion, 60.3 billion, and 64.5 billion yuan. The earnings per share (EPS) are expected to be 1.59, 1.74, and 1.86 yuan for the same years, indicating a favorable growth outlook [2][19].