巨星农牧：公司简评报告：出栏量快速增长，成本保持优势

Investment Rating - The report gives a "Buy" rating for the company, marking its initial coverage [3]. Core Views - The company has shown a reduction in losses in Q1 2024, with the Dechang project commencing production. The revenue for 2023 was CNY 4.041 billion, a year-on-year increase of 1.83%, while the net profit attributable to shareholders was a loss of CNY 645 million, a significant decline of 508.18% [5][13]. - The company is positioned as a leading player in the southwest region of China, focusing on pig breeding and collaborating with PIC to enhance breeding efficiency [5][19]. - The company is experiencing rapid capacity expansion while maintaining cost advantages, with a projected decrease in breeding costs for 2024 [6][30]. - A reversal in the pig cycle is anticipated, with profitability in the breeding sector expected to gradually recover [40]. Summary by Sections 1. Q1 2024 Performance and Project Updates - In Q1 2024, the company reported a revenue of CNY 949 million, a year-on-year increase of 6.16%, with a net loss of CNY 138 million, an improvement of 32.85% compared to the previous year [5][13]. - The Dechang project is on track, expected to support future growth [5][13]. 2. Strategic Focus and Partnerships - The company has shifted its focus to pig breeding under the new control of Juxing Group, enhancing its long-term development prospects [19]. - Collaboration with PIC has led to improved breeding efficiency, with key performance indicators surpassing industry averages [23][24]. 3. Capacity Expansion and Cost Management - The company has achieved a compound annual growth rate (CAGR) of 104% in pig output from 2020 to 2023, while maintaining competitive production costs [6][30]. - A fundraising plan aims to raise up to CNY 1.2 billion for capacity expansion and technology development, with expected outputs of 820,200 pigs and 25,900 piglets post-project [36][38]. 4. Market Outlook and Profitability - The supply pressure in the pig market is easing, with expectations for improved pig prices in 2024 compared to 2023 [40][41]. - The company forecasts significant increases in pig output and net profit from 2024 to 2026, with projected net profits of CNY 557 million, CNY 1.738 billion, and CNY 1.169 billion respectively [6][10].