Shuanghui Development (000895): Cost pressure shows a decline in profitability

Shuanghui Development (000895): Cost pressure shows a decline in profitability

Incident Shuanghui Development announced the semi-annual report for 2019, the company achieved 254 revenue in 19H1.

55 ppm, +7 for ten years.

26%, net profit attributable to mother 23.

82 ppm, at least -0.

16%, of which 134 revenue in 19Q2.

81 ‰, +15 for ten years.

50%, net profit attributable to mother 11.

20,000 yuan, at least -16.


The initial gain is zero.

72 yuan.

The investment key points were driven by price increases, and the company’s revenue realized growth.

The company achieved 254 revenue in 19H1.

34 trillion, ten years +7.

26% (Q1: -0.

71%; second quarter: +15.

50%), Q2 revenue increased significantly.

In terms of categories, meat products of the 19H1 company accounted for 42.

05%), slaughtered (proportion 53.

12%), others (4%).

83%) respectively +4.

21%, +7.

79%, +10.

twenty three%.

Both slaughter and meat products showed a trend of volume reduction and price increase: 19H1 slaughter volume reached 857.

790,000 heads, previously +3.


The Q2 slaughter volume was 385.

09 million heads, at least -11.

57%; the average price of the slaughter head is 2085.

8 yuan / head, +31 for ten years.

60 %%, the price increased but the volume decreased, Q2 revenue of slaughtering business was 80.

3.2 billion, +16 a year.


In terms of meat products: 19H1 meat products revenue was 119.

30,000 yuan, ten years +4.

21%, of which sales were 152.

91 for the first time, at least -1.47%, average price per ton +5.


In terms of different products, fresh frozen products achieved revenue of 150.

390 thousand yuan, ten years +7.

79%, mainly due to the upward impact of pig prices; high-temperature meat product revenue growth rate (+7.

52%) higher than the growth rate of low-temperature meat products (-1.


Rising pig prices put pressure on companies.

The company’s gross profit margin for 19H1 was 19.

50% (21st in the first quarter).

00%, second season: 18.


The decrease in gross profit margin was mainly due to the increase in the cost of meat products (19H1 domestic hog prices continued to increase, with an average hog price of 14 per kg.

3 yuan, previously +16.


The current hog price has exceeded 22 yuan / kg, a record high), and even the company increased the product sales price twice in the year (the average price increase range of the new king and king without starch is 10-30%), and the overlapping structure is optimized.But it absolutely offset the upward pressure on costs.

In terms of categories, the gross profit margin of the slaughter industry in 19H1 was 10.

46%, ten years +0.

18 points; gross profit margin of the meat industry 26.

33% per year -3.

66pct, in which the gross profit margin of high temperature meat products is extended by -2.

42pct, the gross profit margin of low temperature meat products is the highest -5.

97 points.

Among them, the increase in the gross profit margin of the slaughtering industry was mainly due to the effects of early swine fever, which led to the phenomenon of low-price dumping in some markets.

The expense ratio is slightly reduced every year, and the company’s profitability has decreased due to the impact of costs.

The company achieved net profit attributable to mothers in 19H123.

82 ppm, at least -0.

16% (first quarter: +20.

25%; second season: -16.


The increase in cost pressure and the decline in gross profit margin are the main reason for the decline in performance growth.

Among them, the 19H1 company’s overall expense rate growth rate was -0.

The sales / management / finance / R & D expense ratios of 01pct and 19H1 companies are 5 respectively.

31% / 2.

10% / 0.

17% / 0.

12% each year are -0.

03pct / -0.

15pct / + 0.

05pct / + 0.12pct, of which the smallest reduction in the expense ratio is mainly due to the company’s new product high investment period has expired, due to the reduction of employee incentives.

The company’s 19H1 net margin was 9.

75%, of which Q2 net profit is 8.

54%, earnings were weaker than last month.

What the company is looking for: New executives strengthen their structural adjustments, and overall adjustments are conducive to profit improvement.

The main products are high-quality new products, increased research and development institutions, and introduced process adjustments to market-oriented. New product listing is determined by professional tasters and marketing departments based on market response.

At the same time, reducing the number of new products to improve quality and increase the success rate of new product launches. At present, new products launched by high temperature, low temperature and Chinese meat products convert to mid-to-high-end categories with a profit of around 5,000 yuan, and have achieved good market response in the launch area.It is expected to make a significant contribution to revenue and profit in the second half of the year and after full launch in 19 years.

Refining the deep cultivation channels, the company will increase spending on emerging channels (leisure stores, e-commerce) and special supply channels (catering, units), replacing modern 杭州夜网 channels (merchants) and traditional channels with steady growth.

Earnings forecast and investment advice The company is a leading meat product company. The price of pigs goes down + the amount of slaughtering + the structure of meat products. The future performance is expected to be released.

We expect the company’s revenue to be 535 in 2019.

200 million (+9.

4%) and net profit was 49.

30,000 yuan (+0.

3%), corresponding to the closing price on August 12, 2019 (later into the suspension period), the company’s PE in 2019 is 15x.

Maintain the level of “prudent overweight”.

Risks reminder of rising raw material costs, food safety issues, and less than expected sales of meat products