LIHUA(300761) 国信证券·2024-04-24 06:30Investment Rating - The investment rating for the company is "Buy" [1][45]. Core Views - The company has shown a recovery in poultry prices and a decrease in raw material costs, leading to improved performance in Q1 2024 compared to the previous year. In 2023, the company achieved a revenue of 15.354 billion yuan, an increase of 6.28% year-on-year, but reported a net profit attributable to shareholders of -437 million yuan, a decrease of 149.10% year-on-year. The revenue growth was primarily driven by significant increases in the output of yellow feathered chickens, pigs, and geese, while profitability was pressured by overall low poultry prices throughout 2023 [1][16]. Summary by Sections Chicken Business - In 2023, the company sold 457 million commodity chickens, a year-on-year increase of 12.23%, generating sales revenue of 13.201 billion yuan, up 5.13% year-on-year. The average selling price decreased by 8.80% to 13.70 yuan/kg. The complete cost of chicken dropped to below 6.8 yuan due to lower feed costs and improved production efficiency. Consequently, the gross margin for the chicken business decreased by 6.79 percentage points to 6.72% [2][37]. Pig Business - The company sold 855,100 pigs in 2023, a year-on-year increase of 51.51%, with sales revenue of 1.658 billion yuan, up 14.56% year-on-year. However, the average selling price fell by 26.56% to 15.10 yuan/kg. The operating cost per kilogram rose to 16.6 yuan due to temporary disease impacts, resulting in a gross margin decline of 32.09 percentage points to -9.91% [11][17]. Financial Forecasts - The company is expected to benefit from the recovery in the livestock market, with adjusted net profit forecasts for 2024 and 2025 at 790 million yuan and 1.24 billion yuan, respectively. The forecast for 2026 is a net profit of 830 million yuan, with corresponding EPS for 2024-2026 projected at 0.95, 1.49, and 1.01 yuan, respectively. The current price-to-earnings ratios are estimated at 24.1, 15.4, and 22.8 times for 2024-2026 [45][49]. Operational Efficiency - The company maintained a positive operating cash flow of 1.45 billion yuan in 2023, with the cash flow from operating activities accounting for 9.45% of revenue. The inventory turnover days were 63 days, a decrease of 2.8 days year-on-year, while accounts receivable turnover days were 0.55 days, an increase of 0.07 days from the previous year [43][20]. Cost Management - The overall sales gross margin for 2023 was 4.84%, down 9.56 percentage points year-on-year, while the net profit margin was -2.86%, down 9.02 percentage points. The company managed to keep its expense ratios stable, with sales expense ratio at 1.27%, management expense ratio at 4.41%, and financial expense ratio at 0.60% [20][45].