Tianbang (002124): Acquired Xingnongfa to expand production capacity and cooperated with Zhejiang Nongfa

This report reads: The company ‘s non-blast prevention and control system can effectively protect fertile sows and gradually accumulate more than expected; gradually, the cooperation between the acquisition of 北京夜生活网 Xingnongfa and Zhejiang Nongfa will further consolidate the company’s capital and technology advantages and guaranteeFollow-up development.

Event: The company intends to acquire 39% equity of Xingnongfa, and has agreed with Zhejiang Rural Development Group Co., Ltd. that the two parties will expand equity cooperation in Xingnongfa’s scale, promote pig production and ensure market supply.

Comment: Maintain overweight.

Maintain the company’s EPS forecast for 2019-2021 to 0.

93, 2.

94 and 3.

86 yuan, given the industry’s 19-year average estimated PE of 27 times, maintaining a target price of 25 yuan and maintaining an overweight rating.

The acquisition of Xingnongfa and Zhejiang Nongfa have deep cooperation to ensure the rapid growth of subsequent listings.

Xingnongfa Animal Husbandry is a high-quality pig breeding enterprise in Zhejiang Province. As long as more than 10,000 heads can breed sows, the company purchases 39% of Xingnongfa Animal Husbandry and expands the company’s power generation, thus deepening the cooperation with Zhejiang NongfaTo actively respond to the call of the Zhejiang Province government to promote the production of live pig supply.

In the future, the company and Zhejiang Nongfa will build an industrial base of 5 million pigs per year on the basis of Xingnongfa Animal Husbandry.

In addition, after 7 iterations of the company ‘s African swine fever epidemic prevention and control system, the company can basically achieve effective prevention and control of the epidemic situation on the sow farm; under the company’s effective prevention and control system, the company can breed sows by the end of 2019 and is expected to reach 20 Ten thousand heads, corresponding to 5.5 million heads of commercial pigs in 2020.

After adjustment, the company is estimated to have a configuration advantage.

The company’s net profit in 2020 is estimated as follows: 1) conservative 2.5 million fattening pigs, with an average profit of 1,000 yuan per head, and net profit is expected to reach 25 billion; 2) 3 million piglets sold, with a conservative average profit of 500 yuan, corresponding to 1.5 billion profit.
The total net profit in 2020 is 4 billion, corresponding to only 4 times the current market value of PE.

After this round of adjustments, the company has industry configuration value.

Considering the increase in piglets for sale in 2020, the company’s turnover will accelerate, and subsequent performance is worth looking forward to.

In addition, considering the upgrade of the company’s African swine fever epidemic prevention and control system and leading technology, it is expected that the sow population will be more than expected in the future, and the subsequent release is expected to exceed expectations.

Wait for the pig price to reach a new high, and double-click on the sharing section Davis.

In the super pig cycle brought by this round of epidemic, listed companies are expected to usher in double-clicked Davis for performance and evaluation: 1) In terms of performance, the average high profit per head is expected to increase from 1,000 yuan to more than 1,500 yuan; 2) In terms of epidemic situationNormalization will speed up the permanent withdrawal of free-range farmers. Listed companies will merge technology and capital advantages, speed up production capacity, and highlight growth attributes that will help increase the company’s size.

Considering that the company’s current market capitalization corresponds to a head market capitalization of 5,200 and 3100 yuan in 2019/2020, respectively, relative to the high point of the cycle boom, the upward space is continuously re-overlaid to give an overweight rating.

Risks: The prevention and control of African swine fever is exceeding market expectations.