Muyuan Foods (SZ:002714) Southwest Securities·2024-05-07 01:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 53.13 CNY over the next six months [1][10]. Core Insights - The company experienced a decline in revenue and a shift to net losses in 2023 due to low overall breeding market conditions, with a revenue of 110.86 billion CNY, down 11.19% year-on-year, and a net loss of 4.26 billion CNY [2][4]. - Despite the challenges, the company has a strong cost advantage in pig farming, with a significant reduction in breeding costs from 15.7 CNY/kg in 2022 to around 15 CNY/kg in 2023, and an expected increase in pig sales volume in 2024 [2][4]. - The company is projected to improve its profitability significantly in the coming years, with expected EPS of 2.31 CNY, 2.81 CNY, and 3.06 CNY for 2024, 2025, and 2026 respectively, corresponding to dynamic PE ratios of 19, 16, and 14 [3][4]. Summary by Sections Financial Performance - In 2023, the company sold 63.82 million pigs, an increase of 4.3% year-on-year, but the average selling price dropped by 17.6% to 14.5 CNY/kg [2]. - The company’s slaughtering capacity utilization improved, with 13.26 million pigs slaughtered in 2023, an 80% increase year-on-year, leading to a revenue of 21.86 billion CNY from meat products, up 48.54% [2][4]. Future Projections - Revenue is expected to rebound with forecasts of 132.77 billion CNY in 2024, representing a growth rate of 19.76% [4][9]. - The company anticipates a pig output range of 66 to 72 million heads for 2024, supported by a stable breeding capacity of around 80 million heads per year [2][4]. Valuation Metrics - The report provides a comparative valuation, assigning a PE of 23 for 2024, which is lower than the average of 23.6 for comparable companies in the industry [10][11]. - The projected net profit for 2024 is expected to recover to 12.62 billion CNY, marking a significant turnaround from the losses in 2023 [4][9].