Muyuan Foods (SZ:002714) SINOLINK SECURITIES·2024-04-29 03:00Investment Rating - The report maintains a "Buy" rating for the company, with a projected PE valuation of 22x for 2024 and 7x for 2025 [2][3]. Core Insights - The company reported a revenue of 110.86 billion RMB in 2023, a decrease of 11.19% year-on-year, and a net profit attributable to shareholders of -4.26 billion RMB, compared to a profit of 13.27 billion RMB in the previous year [1]. - In Q1 2024, the company achieved a revenue of 26.27 billion RMB, an increase of 8.57% year-on-year, but the net profit attributable to shareholders was -2.38 billion RMB, indicating a worsening loss compared to the same period last year [1]. - The company plans to increase its pig output to between 66 million and 72 million heads in 2024, representing a year-on-year growth of 5.5% to 15.1% [2]. Summary by Sections Performance Analysis - In 2023, the company had a slight increase in pig output, reaching 63.82 million heads, a growth of 4.27% year-on-year. In Q1 2024, the output was 16.04 million heads, up 15.85% year-on-year [2]. - The company’s breeding sow inventory stood at 3.14 million heads as of March 2024, with biological assets valued at 10.64 billion RMB, showing a significant increase compared to the previous quarter [2]. - The company’s total cost per kilogram decreased from 15.6 RMB at the beginning of 2023 to approximately 15 RMB by the end of the year, with a target to reduce it to below 14 RMB in 2024 [2]. Profit Forecast and Valuation - The report forecasts net profits for 2024, 2025, and 2026 to be 11.11 billion RMB, 35.03 billion RMB, and 19.81 billion RMB respectively, indicating a recovery in profitability after a significant loss in 2023 [3]. - The expected earnings per share (EPS) for the same years are projected at 2.02 RMB, 6.41 RMB, and 3.63 RMB respectively [3]. - The report notes that the industry has been undergoing a capacity reduction for 15 months, which is expected to lead to improved pig prices in the second half of 2024 [2].