SHUANGHUI(SZ:000895) Huachuang Securities·2024-03-26 16:00Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 34 yuan, compared to the current price of 28.57 yuan [2][3]. Core Insights - The company reported a total revenue of 60.1 billion yuan in 2023, a decrease of 4.2% year-on-year, with a net profit attributable to shareholders of 5.05 billion yuan, down 10.1% year-on-year. The fourth quarter saw a significant revenue drop of 24.0% to 13.75 billion yuan and a net profit decline of 53.3% to 730 million yuan [2][3]. - The company continues its high dividend policy, proposing a dividend of 7.0 yuan per 10 shares (including tax), resulting in a dividend payout ratio of 99.4% and a dividend yield of 5.1% [2][3]. Summary by Sections Meat Products Business - Revenue from meat products decreased by 2.8% in 2023, with sales volume and price changes of -3.6% and +0.8% respectively. The profit per ton increased by approximately 4.4%, with an operating profit margin of 23.6% [3]. - In Q4 2023, revenue from meat products fell by 17.7% to 5.61 billion yuan, with significant declines in both sales volume and price. The drop in sales was attributed to the delayed stocking for the 2024 Spring Festival and lower sales during the Mid-Autumn and National Day holidays [3]. - Despite the sales pressure, the company managed to maintain a profit per ton of 4,135 yuan in Q4, up 10.2% year-on-year, due to low pig prices and ongoing structural adjustments [3]. Slaughtering and Other Businesses - The slaughtering business generated revenue of 30.97 billion yuan in 2023, down 7.5%. The operating profit margin slightly decreased to 2.2% [3]. - In Q4 2023, revenue from the slaughtering business dropped by 33% to 6.99 billion yuan, primarily due to reduced frozen meat shipments amid low pig prices [3]. - The other business segment, primarily focused on chicken and pig farming, reported a significant loss of 340 million yuan in Q4, compared to a profit of 104 million yuan in the same period last year [3]. Outlook for the Year - The company is focusing on reforming its meat product business, emphasizing the development of prepared dishes and new products to drive sales growth. The number of distribution points increased by nearly 200,000 in 2023, with further expansion expected in 2024 [3]. - The company anticipates a return to positive sales growth in 2024, supported by low-cost raw material inventories and a stable profit per ton around 4,000 yuan [3]. - The slaughtering business aims to stabilize profits while expanding market share through cost reduction and deep processing initiatives [3]. Financial Forecast - The company forecasts total revenue of 64.05 billion yuan for 2024, with a year-on-year growth rate of 6.9%. The net profit is expected to reach 5.61 billion yuan, reflecting an 11.1% increase [9][13]. - The earnings per share (EPS) estimates for 2024, 2025, and 2026 are 1.62 yuan, 1.72 yuan, and 1.80 yuan respectively, with corresponding price-to-earnings (PE) ratios of 18, 17, and 16 [9][13].