LIHUA(SZ:300761) Southwest Securities·2024-04-28 06:00Investment Rating - The investment rating for the company is "Buy" with a target price of 26.10 CNY for the next 6 months [14][22]. Core Views - The company has shown continuous improvement in breeding performance, achieving profitability in Q1 2024 after a loss in 2023. The significant decline in profit in 2023 was primarily due to low prices for yellow feathered chickens and pigs [14][21]. - The company is the second-largest yellow feathered chicken breeding enterprise in China, with a market share of approximately 12.71% in 2023. The expected growth rates for yellow chicken output from 2024 to 2026 are 10%/8%/5% [21][22]. - The overall industry is expected to maintain high profitability due to low production capacity and strong demand for yellow feathered chickens, which are expected to support price increases [14][21]. Summary by Sections Financial Performance - In 2023, the company's revenue was 15.35 billion CNY, a year-on-year increase of 6.28%. The net profit attributable to shareholders was -0.44 billion CNY, compared to 0.89 billion CNY in 2022 [14][16]. - For Q1 2024, the revenue was 3.66 billion CNY, a year-on-year increase of 7.34%, with a net profit of 0.08 billion CNY, marking a return to profitability [14][16]. Business Segments - The company sold 457 million meat chickens in 2023, exceeding its target and achieving a year-on-year growth of 12.16%. The total number of pigs sold in 2023 was 850,000, a year-on-year increase of approximately 50% [14][21]. - The average economic cost of yellow feathered chickens decreased to 6.3 CNY per jin, and the total cost of pig farming fell below 16 CNY per kilogram [14][21]. Future Outlook - The company aims to increase its pig output to 1-1.2 million heads in 2024 and 2 million heads by 2025, supported by a breeding stock of approximately 60,000 sows as of March 2024 [14][21]. - The expected gross profit margins for the chicken segment from 2024 to 2026 are projected to be 13%/14%/12%, while for the pig segment, they are expected to be 6%/8%/8% [14][21].