SHUANGHUI(SZ:000895) KAIYUAN SECURITIES·2024-03-27 16:00Investment Rating - The investment rating for the company is "Outperform" (Maintain) [2][3] Core Views - The company's revenue for 2023 was 59.89 billion yuan, a year-on-year decrease of 4.3%, with a net profit attributable to shareholders of 5.05 billion yuan, down 10.11% year-on-year. The fourth quarter of 2023 saw total revenue of 13.75 billion yuan, a decline of 24.0% year-on-year, and a net profit of 730 million yuan, down 53.3% year-on-year. Due to pressure on the slaughtering business, the net profit forecasts for 2024 and 2025 have been adjusted to 5.44 billion yuan and 5.80 billion yuan respectively, with a new profit forecast for 2026 at 6.17 billion yuan. The earnings per share (EPS) are projected to be 1.57, 1.67, and 1.78 yuan for 2024, 2025, and 2026 respectively, with corresponding price-to-earnings (PE) ratios of 16.5, 15.5, and 14.5 times. The company maintains a high profit per ton in its full industry chain layout and structural upgrades, hence the "Outperform" rating is upheld [3][4]. Summary by Sections Slaughtering Business - In 2023, the pig slaughtering volume increased by 12.9% year-on-year, primarily due to the company's expansion and market share growth. Fresh pork product sales reached 1.4052 million tons, up 3.03% year-on-year. However, the decline in pig prices in Q4 2023 led to a 33.0% drop in slaughtering department revenue to 6.99 billion yuan, with operating profit down 88.4% to 37.73 million yuan. For 2024, pig prices are expected to show a trend of being lower initially and higher later, with continued growth in slaughtering volume anticipated, although the slaughtering business may face short-term pressure due to low-price competition from breeding enterprises [4]. Meat Products - The total external sales of meat products for the company in 2023 were 3.23 million tons, an increase of 2.41% year-on-year, while packaged meat product sales decreased by 3.57% to 1.5064 million tons. The decline in meat product sales in Q4 2023 was mainly due to the high base from the 2023 Spring Festival stockpiling occurring in Q4 2022 and lower-than-expected sales during the Mid-Autumn and National Day holidays, leading to inventory digestion. The revenue from the meat product business in Q4 2023 was 5.61 billion yuan, down 17.7% year-on-year, with a profit of 1.33 billion yuan, down 9.1% year-on-year. For 2024, meat product sales are expected to grow due to the implementation of a network expansion plan, product structure adjustments, and increased market investment and innovative marketing. The profit per ton for meat products in 2023 was approximately 4,130 yuan, remaining at a high level, with expectations for steady growth in profit per ton [5]. Financial Forecasts - The financial forecasts for the company are as follows: - Revenue (billion yuan): 62.735 in 2024E, 65.299 in 2025E, 67.934 in 2026E - Net profit (billion yuan): 5.443 in 2024E, 5.800 in 2025E, 6.172 in 2026E - EPS: 1.57 in 2024E, 1.67 in 2025E, 1.78 in 2026E - PE ratios: 16.5 in 2024E, 15.5 in 2025E, 14.5 in 2026E - Gross margin: 17.1% in 2024E, 17.0% in 2025E, 16.9% in 2026E - Net margin: 8.7% in 2024E, 8.9% in 2025E, 9.1% in 2026E [6][10].