China-Singapore Jingwei, April 29 (Dong Wenbo) As one of the star companies on the GEM, the performance of Wen's shares, a 100 billion agricultural and animal husbandry giant, has finally been disclosed. In 2023, when the aquaculture industry encountered cyclical challenges, Wen's shares suffered a huge loss of 6.39 billion yuan, and the loss in the first quarter of this year continued, but the loss narrowed.
The loss in 2023 will be 6.39 billion yuan
According to the 2023 annual report, Wen's annual operating income reached 89.902 billion yuan, a year-on-year increase of 7.40%, the net profit loss attributable to shareholders of listed companies was 6.390 billion yuan, and the net profit attributable to the parent company in the same period last year was 5.289 billion yuan, turning from profit to loss, a year-on-year decrease of 220.81%, and the basic earnings per share was -0.9707 yuan, compared with 0.8206 yuan in the same period last year. The net cash flow from operating activities was 7.594 billion yuan, down 31.43% year-on-year.
Wen's Co., Ltd. is a modern agricultural and animal husbandry enterprise group with broiler and pig breeding as its main business. According to its annual report, during the reporting period, the company sold 1.183 billion broilers, a year-on-year increase of 9.51%, accounting for 9.1% of the total number of broilers slaughtered in the country, ranking first among the listed companies in the same industry, and sold 26.2622 million pigs, a year-on-year increase of 46.65%, accounting for 3.6% of the total number of pigs slaughtered in the country, ranking second among the listed companies in the same industry.
Since the sales of broilers and pigs have increased, why will Wen's shares have a huge loss in 2023?
In this regard, Wen's shares mentioned three main reasons:
(1) The sales price of live pigs decreased sharply year-on-year, the decline in product prices was greater than the decline in breeding costs, and the profits of the company's pig breeding business suffered deep losses;
(2) The production of the company's chicken business continued to remain stable, the comprehensive cost of breeding remained good, and the core production performance indicators remained high, but the sales price of chickens decreased year-on-year, and the profit of chicken business decreased year-on-year;
(3) In accordance with the relevant provisions and requirements of the Accounting Standards for Business Enterprises, the Company carried out impairment tests on consumable biological assets and productive biological assets, and made provision for impairment, which decreased compared with the same period.
This is the so-called "chicken cycle" and "pig cycle".
The simple understanding is that the meat and poultry, pig market is a fully competitive market, the market price of the product is mainly affected by the supply, at the same time, due to the long production cycle of meat and poultry and pigs, the adjustment of the total supply of the industry often lags behind the changes in the industry capacity and market prices, that is, the total supply of the industry gradually increases after the increase in production capacity, and the total supply of the industry continues to increase to a certain extent, the price of the product begins to fall, and the farmers withdraw from the deep loss to a certain extent, and the excess capacity is cleared, the total supply of the industry declines, and the price begins to rise again.
According to Wen's shares in the annual report, in the meat and poultry industry, the overall supply in 2023 is sufficient, but the consumption is less than expected, and the market price is sluggish;
In terms of the pig industry, due to oversupply, pig prices hovered at low levels for a long time in 2023, which was the first full-year loss year since 2014. At the same time, due to the African swine fever epidemic continues to affect the stability of pig production, resulting in an increase in breeding costs, affected by factors such as international environmental turmoil and the decline in raw material production, the price of feed raw materials has risen sharply, and the comprehensive cost of pig breeding has further increased.
Operating cash flow up 520% in Q1
Along with the annual report, there is also a quarterly report of Wen's shares.
In the first quarter of this year, Wen's shares achieved operating income of 21.842 billion yuan, a year-on-year increase of 9.37%, a net profit loss attributable to the parent company of 1.236 billion yuan, a loss of 2.749 billion yuan in the same period of the previous year, a significant year-on-year loss, and basic earnings per share of -0.1868 yuan, a year-on-year increase of 55.64%.
In the first quarterly report, the more eye-catching data is that the net cash flow generated by Wen's shares from operating activities was 2.259 billion yuan, a year-on-year increase of 520.19%. According to the company, the main reason was the increase in cash inflow due to the increase in sales of main products.
Source: Wen's first quarterly report
In the first three months of 2024, the cumulative sales amount of live pigs of Wen's shares was 12.309 billion yuan, compared with 9.891 billion yuan in the same period last year, and the cumulative sales amount of broilers recorded 7.651 billion yuan, compared with 7.729 billion yuan in the same period last year.
The first month of the second quarter of 2024 is coming to an end, can breeding enterprises have a big improvement this year?
At present, among the breeding enterprises that have disclosed their first-quarter results, Luoniushan's net profit attributable to shareholders of listed companies was 110 million yuan, a year-on-year increase of 128.81%. However, Luo Niushan said that one of the reasons for the profit was to recover part of the equity disposal funds of rural credit financial institutions and reverse the corresponding credit impairment losses, involving an amount of 64.45 million yuan.
Lihua Co., Ltd. turned losses into profits in the first quarter, achieving a net profit attributable to shareholders of listed companies of 80.0315 million yuan, a year-on-year increase of 120.47%.
The net profit loss attributable to shareholders of listed companies in the first quarter was 2.379 billion yuan, compared with a net loss of 1.198 billion yuan in the same period last year, and the loss further expanded. Sunner Development achieved a net profit attributable to shareholders of listed companies in the first quarter of -61.9237 million yuan, a year-on-year change from profit to loss.
For the market outlook, Zhang Binmei, chief analyst of agriculture at Guosheng Securities, said that the long-term situation of the cycle is still clear, and short-term disturbances will not change the fact that pig production capacity and supply will decline. It is expected that the pace and weight of the industry in May may return to normal, and the decline in supply and the weakening of the multiplier effect may support the pig price response and reasonable supply and demand pricing logic, and the boom trend is expected to be established again.
Xie Zhiyou, an analyst in the agriculture, forestry, animal husbandry and fishery industry of Galaxy Securities, believes that the loss of self-breeding and self-raising narrowed in April, and he is concerned about the potential impact of rainfall in the south. From the perspective of the supply side, there will be an inflection point in the supply of fat pigs in March 2024, and the supply in 24Q2 will show a contraction trend.
Wu Li, chief analyst of emerging industries at Tianfeng Securities, reminded that with the recent acceleration of the digestion of large pig inventory, the follow-up supply pressure may continue to decrease, and the reversal of pig prices is gradually approaching. Pay attention to the big cycle, face up to the existing cumulative de-escalation and the current situation of losses, and strengthen the profit logic of the cost reduction of pig enterprises. It is expected that the current round of existing production capacity may be enough to support the reversal of the large cycle, and with the continuous optimization of the cost of pig enterprises in the industry, the follow-up average profit is expected to continue to repair and amplify.
Wen's shares also said in the annual report that it is expected that the overall supply of the pig industry may decline in 2024, and the market may be expected to gradually improve. In addition, with the recovery of the mainland economy and consumption, the supply and demand of yellow-feathered broilers may improve in 2024, and the market price may recover. (Sino-Singapore Jingwei APP)
(The views in the article are for reference only and do not constitute investment advice, investment is risky, and you need to be cautious when entering the market.) )
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