Longda Meat (002726): Channel development, stable revenue growth, rising pig prices, future prospects

Longda Meat (002726): Channel development, stable revenue growth, rising pig prices, future prospects
Event On April 13, Longda Meat announced its March 2019 sales briefing. The briefing stated that Longda Meat, a wholly-owned subsidiary of Longda Meat, sold a total of 2 pigs in March 2019.490,000 heads, achieving 0 sales income.4.3 billion.In March, the average selling price of Longda breeding commercial pigs was 15.42 yuan / kg, an increase of 30 from February 2019.90%.2019Q1 will gradually sell live pigs 7.410,000 heads, and gradually realize sales income1.1.1 billion Our analysis and judgment “The whole industry chain” enhances profitability, diversifies customer channels, and expands Longda Meat is a breeding pig breeding, feed production, pig breeding, slaughter segmentation, meat food processing and sales, food safety testing and sales channel constructionAs one of the “full industry chain” meat food processing enterprises.The company’s main business is pig breeding, pig slaughtering and meat processing. The main products are commercial pigs, chilled pork, frozen pork and meat products.Under the “whole industry chain” model, the company has continuously expanded the scale of its own standardized pig breeding base to realize the comprehensive and coordinated development of breeding, slaughtering, processing and sales, ensuring the safe and reliable supply of pork raw materials, efficient and standard slaughtering processes, and stable growth in product sales.Comprehensive integration of upstream and downstream to achieve a higher level of profitability. The company strengthened the diversified development of sales channels and brand building, and realized the extensive layout of the sales network.The company has established long-term cooperative relationships with large and medium-sized shopping malls and supermarkets such as Shandong Jiajiayue, Yantai Zhenhua Mass Trader, and RT-Mart. It also has established supply and marketing relationships with many food processing companies such as Shanghai Hermel, Typhoon Shelter, Shanghai Meilin, and Xiamen Chengtai.At the same time, the company has increased the development of catering customers. The main catering customers include Yum! Operating income has grown steadily, achieving operating income of 87 in 2018.RMB 780,000, an increase of 33 in ten years.56%, maintaining steady and rapid growth.The nature of the increase in operating income is: (1) further expansion of sales channels, in particular to strengthen the development efforts of distributors and chain catering companies, to achieve the growth in sales of chilled frozen meat and frozen prepared meat products; (2) imports by the company’s holding subsidiariesThe trading business achieved substantial improvement; (3) The company completed the acquisition of 70% equity of Weifang Zhenxiang in November 2018, and merged Weifang Zhenxiang’s operating income from November to December3.6.9 billion yuan. The company achieved net profit attributable to mothers in 20181.7.4 billion, a decline of 7 per year.38%.The reason for the slight decrease in net profit attributable to mothers was the fall in hog prices in 2018, which resulted in a 55% decline in the company’s breeding profit.68%, there was an increase in related profit indicators. The gross profit margin decreased, and the expense ratio increased slightly. From the perspective of gross profit margin, the company’s operating income in 2018Q1-3 was 58.91 trillion, operating cost is 54.77 ppm with a gross margin of 7.56%, compared with a gross profit margin of 9 in the same period in 2017.05% down 1.For 49 single pigs, the decline in the price of hogs while keeping the cost of breeding basically unchanged is the main reason for the decrease in gross profit margin.In terms of expense ratio, the company’s 2018Q1-3 expense subsidy4.52%, compared to 4 in the same period in 2017.48% rose by 0.04 points.The sales expense ratio and management expense ratio of the company in Q1 2018 were 2 respectively.79%, 1.82%, increasing by 0 each year.50ptc, lowered by 0.58 points.The nature of the increase in the sales expense ratio is the increase in the company’s sales volume leading to an increase in freight and other costs, as well as the increase in the company’s sales expenses in the current 北京夜网 period; the management expenses remained basically stable, but due to the increase in operating income in 18Q1-3, the management expense ratio decreased.The financial expense ratio is -0 from 2017Q1-3.22% increased to -0.09%, an increase of 0 in ten years.13pct.The increase in the financial expense ratio is primarily due to the increase in financing in the current period leading to increased income. Investment suggestion: We expect Longda Meat’s operating income to be 110 in 2019-2020.8.7 billion, 134.9.4 billion, an increase of 26 each year.30% and 21.70%; net profit attributable to mothers is 2.48 ppm and 3.140,000 yuan, an increase of 42 in ten years.53% and 26.61%, corresponding to PE of 32.8 times and 25.9x.Covered for the first time, giving “overweight” rating. Risk warning: the spread of African swine fever epidemic, the company’s meat products and slaughter business expansion is less than expected.