Shengnong Development (002299): The biggest beneficiary of demand replacement in the entire industry chain

Shengnong Development (002299): The biggest beneficiary of demand replacement in the entire industry chain

Report Summary 1. Breeding has achieved breakthroughs, and the advantages of the entire industry chain have been strengthened.

In May 2019, the company announced the establishment of a breeding company, marking the company’s breakthrough in the transformation of ancestor breeder breeding and the integrated industrial chain from breeding to broiler slaughter and processing.

Low-cost breeders will reduce costs and increase efficiency for the company, and the gross profit margin is expected to increase further.

With the completion of breeding shortcomings, as the largest white feather broiler whole industry chain enterprise, the company’s strongest food safety control capabilities and the most complete industry chain advantages have been strengthened.

2. In the short term, prices of chicken and frozen products are expected to accelerate in eight months, and the company’s performance is expected to exceed expectations.

In June, the prices of chicken fry and hairy chickens dropped sharply. The downstream chicken meat benefited from the stability of demand, and the price fell slightly.

We expect that the price of chicken seedlings will reach or even exceed 10 yuan / bill again in August. The price of chickens is expected to approach 6 yuan / kg, and the price of frozen products will exceed 14,000 yuan / ton.

3. In the long run, the biggest beneficiaries of demand growth.

As an important supplier of fast food industry, the company benefited from the strong recovery of fast food industry demand. In 2017, McDonald’s and KFC’s store opening speed and same-store growth returned to the rising channel. Chinese fast food and takeaways rose and sank to third- and fourth-tier cities, driving BaiyuGrowing broiler consumption.

In addition, if the swine output caused by African swine fever is 30%?
40%, the meat supply gap is 1,200 tons?
2000 tons, if half to white feather broiler, add 600 to white feather broiler
10 million tons of market demand, and the annual output of Shengnong accounts for about 10% of China, so for Shengnong means an increase of 60?
With a market demand of 100 Euros, there is also room for doubling the company’s current output.

Profit forecast The alternative demand brought by African swine fever will affect the sector for a long time, and the doubling of market space and high performance will provide the company with strong support gradually.

It is expected that the net profit attributable to mothers for 2019/2020/2021 will be 35.



2.9 billion, corresponding to 2 EPS.杭州桑拿网



65, giving 15 times PE in 2020, with a target price of 52.

20 yuan, effective 28 July 29.

02 yuan as the benchmark, upside 86.

30%, give a buy rating.

Risk Tips 1. Feed material supply and price risks. Increasing raw material prices may adversely affect the company’s cost control; 2. Listing of non-pespicious vaccines: Effective listing of non-pessial vaccines can fundamentally eliminate the spread of non-epidemic diseases and generate dechemicalization progressWill be affected, and alternative demand growth may be less than expected.

3. Epidemic risk: If there is an epidemic such as bird flu in the company’s farm, the company’s profit may be less than expected.

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