Per reporter: Jin Zhe Per editor: Wen Duo
On the evening of October 25, Xiangjia Co., Ltd. (002982, SZ) released the third quarter report of 2021. In the third quarter, the operating income was 791 million yuan, an increase of 44.59% year-on-year, and the net profit attributable to the shareholders of the listed company was -5.0581 million yuan, a year-on-year decrease of 112.68%.
It is worth noting that the amount of losses in the third quarter has slightly exceeded the sum of the first half of the year. On October 27, He Yechun, secretary of the board of directors of Xiangjia Shares, said in an interview with the "Daily Economic News" reporter that the performance continued to be sluggish mainly due to the loss of live poultry sector and new investment points/subsidiaries, and chill is still the main source of profit contribution, and it is expected that the company can return to profitability this year. As far as the latest situation is concerned, live poultry has reached breakeven at the end of October, and it will pick up in the later stage but should not be too optimistic, and the good market in the livestock and poultry breeding industry still needs time.
<h2>Profit decline in the third quarter: live poultry downturn + subsidiary losses</h2>
From the perspective of financial data, Xiangjia co., Ltd. achieved revenue of 2.186 billion yuan in the first three quarters of this year, an increase of 42.37% year-on-year; net profit attributable to the mother was -10.1091 million yuan, a year-on-year decrease of 105.63%.
In this regard, He Yechun, secretary of the board of directors of Xiangjia Shares, responded that the loss this year is mainly due to the live poultry sector and the new investment of branches/subsidiaries. Excluding the loss factors of subsidiary companies invested by other provinces, the company will not actually lose money from January to September, and it is expected that it should be able to turn losses into profits within this year.
According to the statistics of Guohai Securities Research Report, the sales volume of live poultry in the first three quarters of this year increased by 41.6% year-on-year, and the revenue scale increased by 57.5% year-on-year. However, due to the sharp increase in the price of major feed raw materials such as corn and soybean meal, the cost of breeding is higher.
According to the announcement, the unit price of live poultry of Xiangjia shares in the first half of 2021 was 11.24 yuan / kg, which rebounded from the sales price in 2020, but it was still lower than the sales price of 11.77 yuan / kg in 2018 and 12.57 yuan / kg in 2019. The recent Live Poultry Sales Briefing shows that the current average price of live poultry sales has returned to the threshold of 12 yuan / kg. He Yechun told reporters that compared with the first half of the year, live poultry prices have actually picked up, and the current (end of October) has basically reached the level of breakeven.
In addition, the reporter also learned that the overall revenue of the live poultry sector accounted for more than 20%, and its gross profit margin was negative. The revenue of the chilled plate accounts for more than 60%, but due to the decline in the gross profit margin due to the channel structure, the proportion of traditional supermarket chilled sales has dropped from the original 80% to 50%. Overall, the fresh still maintains a relatively good sales growth rate, and is still the main source of profit for Xiangjia shares.
The previous performance forecast mentioned that the consumer demand for chilled products fell back from the same period last year, so will the pace of subsequent investment in the business slow down? He Yechun said: "Chill is the trend, is the future, the company will not change the strategic planning due to the short-term market downturn." Therefore, Xiangjia will continue to maintain the momentum of opening up the chilled market, further increase logistics and network construction, and further expand the proportion of fresh food in revenue.
<h2>It will take time for chicken enterprises to get out of the "cold winter"</h2>
With the release of the three quarterly reports or performance forecasts, it is not difficult to find that other yellow feather chicken breeding peers have also been struggling in the third quarter.
For example, the third quarter performance forecast of Wen's shares (300498, SZ) shows that it is expected to lose about 6.752 billion yuan to 7.252 billion yuan in the third quarter of 2021, and the net profit attributable to the mother is 265.17% to 277.40% lower than the same period last year. In the conference call on October 15, the relevant person of the company mentioned that this year's poultry business had a good profit in the first quarter, a slight loss in the second quarter, and the third quarter was affected by the price downturn in July and August, the loss was larger, and the profit was restored in September, but the company's poultry business in the first three quarters was still profitable.
Lihua Co., Ltd. (300761, SZ) continued to be under pressure in the third quarter, achieving revenue of 2.695 billion yuan, an increase of 6.72% year-on-year; net profit attributable to the mother was -324 million yuan, a year-on-year decrease of -181.05%. China Galaxy's research report said that due to the rising cost of raw material procurement and the sharp decline in the price of commodity chickens and commercial pigs, the company's chicken and pig business suffered losses.
Focusing on the entire livestock and poultry breeding market, He Yechun told reporters that according to the practice of previous years, the second half of the year is basically better than the first half of the year, and the live poultry has reached breakeven at the end of October, and it is expected that it will continue to pick up in the later stage, but the degree of recovery is not too optimistic, and there is no sign of rapid recovery in consumption. The overall production capacity of the industry is still at a high level, and the good market still needs time.
In the face of the current dilemma of increasing revenue and not increasing profits, the players still choose to expand against the trend. On the day of the disclosure of the third quarterly report, Lihua announced that it intends to raise no more than 1.6 billion yuan from the company's controlling shareholder at 22.71 yuan per share, which will be used for slaughtering, chicken raising, ABP and other projects and supplementary working capital after deducting issuance expenses to promote the growth of poultry breeding capacity.
He Yechun also revealed to reporters that Xiangjia shares have been mainly expanding the scale and expanding the market in the past three years, and the scale of breeding will reach 90 million to 100 million pigeons next year. Although the market is currently sluggish, it will increase investment as planned and achieve the expected target. When the market picks up, the company's scale and market foundation are larger, which can better consolidate the position of the industry.
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