LIHUA(SZ:300761) GF SECURITIES·2024-06-04 05:31Investment Rating - The report assigns a "Buy" rating to the company [3]. Core Views - The company is a leading player in the yellow-feathered chicken breeding industry, with a stable increase in market share and a long-term cost advantage. In 2023, the company achieved a yellow chicken output of approximately 460 million birds, a year-on-year increase of 12%, with a market share of about 13%, ranking second nationally and first in East China [12][19]. - The company is actively expanding its pig farming business, with a significant improvement in breeding costs. In 2023, the company reported a pig output of approximately 860,000 heads, a year-on-year increase of 52% [19]. - The company is expected to benefit from the rising prices of livestock and poultry, with projected net profits of 1.26 billion, 1.71 billion, and 2.30 billion yuan for 2024 to 2026, respectively [19]. Summary by Sections Yellow Feathered Chicken Business - The company has established a complete industrial chain covering breeding, feed production, and slaughtering. The yellow chicken output has shown a compound annual growth rate (CAGR) of about 11% from 2014 to 2023, with a projected output of approximately 510 million birds in 2024 [12][19]. - The company maintains a leading position in breeding costs within the industry, which is expected to continue decreasing due to the decline in feed raw material costs [12][19]. Financial Performance - The company's revenue for 2023 was 15.354 billion yuan, a year-on-year increase of 6.3%. The revenue from yellow chicken breeding accounted for approximately 88% of total revenue [34][58]. - The net profit attributable to shareholders for 2023 was a loss of approximately 437 million yuan, primarily due to losses in the pig farming business and inventory impairment losses [34][58]. Industry Analysis - The yellow chicken industry is experiencing a recovery, with the current production capacity at a historical low. The supply-demand relationship is expected to improve, leading to a sustained upturn in industry prosperity [19][80]. - The competitive landscape of the yellow chicken industry is becoming more concentrated, with the top four companies accounting for about 49% of the market share [80]. Investment Recommendations - The report forecasts a reasonable value of 30.32 yuan per share for the company, based on a projected price-to-earnings (P/E) ratio of 20 times for 2024 [19].