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China Animal Husbandry (600195): Q2 results improve QoQ growth momentum

25/03/2020

China Animal Husbandry (600195): Q2 results improve QoQ growth momentum

On the evening of August 21, the company released its semi-annual report for 2019.

The company achieved operating income from January to June 2019.

35 ppm, a ten-year increase of -3.

21%; realize net profit attributable to shareholders of listed companies.

62 ppm, an increase of -15 in ten years.

65%; net profit attributable to shareholders of listed companies in place of non-recurring gains and losses is 1.

610,000 yuan, an increase of -15 in ten years.

65%.

Among them, the investment income recognized by Jindawei shares held by the company using the equity method was 8386.

980,000 yuan.

By quarter, 2019Q1 / Q2 company operating income was 8 respectively.

00/10.

35 ppm, a ten-year increase of -14.

85% / 8.

22%; net profit attributable to mothers is 0.

88/0.

740,000 yuan, a growth of -29 in ten years.

25% / 9.

52%.

Our analysis and judgments show that the animal protection products for poultry use have grown, the sales of pig products have improved, and the biological products segment has achieved revenue in 2019H15.

29 ppm, a ten-year increase of -0.

87%, gross margin is 54.

95%, a decrease of 1 per year.

53 points.

In the first half of 2019, the prosperity of the poultry chain increased. The company insisted on increasing the sales of market-oriented poultry vaccine products with high value-added products as the starting point, and strengthened the development of large group customers. The revenue of high value-added products increased significantly.

At the same time, due to the replacement of virus strains in Zhengcai Miao, product prices have increased.

In the first half of the year, the company’s poultry vaccine revenue increased significantly, and its export revenue also increased.

In terms of animal vaccines, affected by the African swine fever epidemic in the first half of 2019, the number of live pigs increased, so animal vaccines decreased and the company’s corresponding product sales also improved.

In the chemical medicine sector, 2019H1 achieved revenue3.

64 ppm, a -15-year increase.

36%, gross margin is 32.

56pct, decrease by 2 every year.

32pct.

Due to the impact of the policy, production of fluoroethanol products has been discontinued since May 1, 2018, and its use has been discontinued since May 1, 2019. As a result, the swine fever epidemic in Africa has led to the replacement of live pigs, and the company’s income from swine chemicals has declined.

The company vigorously promoted the sales of poultry chemicals, and the sales revenue of poultry medicine products increased.

At the same time, the company actively develops new products. Recently, Shengli Bio has passed the US FDA on-site audit with zero defects, creating favorable conditions for expanding exports of chemical products.

The profit of the trading sector is stable, and the income of feed and additives declines. Under the risk of maintaining tight control, the trading sector increases inventory sales, sales volume increases and fluctuations, and the overall profit situation is better.

2019H1 achieves revenue 5.0.6 million yuan, an increase of 18 in ten years.

96%, gross margin is 3.

43%, an increase of 0 every year.

67 points.

The company’s laying hen feed products continue to maintain a competitive advantage, and accelerate the development and promotion of other poultry feeds in anticipation of the trend, anti-lagging products in the field of specialty products.

In the first half of the year, the sales volume and revenue of premixes increased significantly.

2019H1 feed and additives achieved revenue4.

28 ppm, a -12-year increase.

49%, gross margin is 21.

36%, an increase of 5 per year.

08 points.

The profitability decreased slightly, and the expense ratio improved. Due to the decline in the sales of pig vaccines and chemical drugs affecting the company’s profitability, the company’s gross profit margin in 2019H1 was 28.

37%, a decrease of 0 per year.

87 points.

2019H1 company net profit is 9.

57%, a decrease of 1 per year.

86 points.

In terms of expense ratio, 2019H1 company’s sales expense subsidy11.

19%, rising by 0 every year.

40 points; administrative costs 10.

84%, rising by 1 every year.

61pct, mainly for the purpose of accruing technology use fees, the intangible assets amortization and repair costs increase each year; financial expenses 0.

50%, a decline of 0 every year.

67 points.

Jointly established the advantages of Sino-Public Biological Synergy, the development of new products with double O and A two-valent seedlings was successfully developed, and the competitiveness of the company’s mouth seedlings was significantly improved.

In April 2018, the company co-funded the establishment of Zhongpu Biological with Plako and CITIC Agriculture.

China Animal Husbandry Co., Ltd. invested 169.75 million yuan in kind and cash, with a share capital of 48.

5%; Placco invested 162.75 million yuan in cash, with a share capital of 46.

5%; CITIC Agriculture invested 17.5 million yuan in cash, with equity accounting for 5%.

The synergy between China Animal Husbandry and Praxair in product, R & D, channels, brand, mechanism and other aspects will further enhance the company’s market competitiveness of FMD vaccine products.

In March 2019, the company obtained a new veterinary drug registration certificate for swine foot-and-mouth disease type O and type A bivalent inactivated vaccines (O / MYA98 / BY / 2010 strain + O / PanAsia / TZ / 2011 strain + Re-A / WH / 09 strain).
This product was jointly developed by the Lanzhou Veterinary Research Institute of the Chinese Academy of Agricultural Sciences, Zhongnong Witt Biotechnology Co., Ltd., Shaanxi 杭州桑拿网 Meri Zhongcheng Animal Health Co., Ltd., and Zhongmu Industry Co., Ltd. The research and development expenses made up by Zhongmu were 65 million yuan.

The new product has the following advantages: (1) The vaccine virus established and screened has a high degree of matching with the epidemic virus, and has good protection against domestic epidemic strains; (2) The product contains two O-type foot-and-mouth disease vaccine strains, O-type antigen profile(3) A type of vaccine strain is obtained by targeted design and synthesis using reverse genetic technology, which has the characteristics of high yield and high efficiency.

We expect the company’s swine vaccine to achieve higher growth as new products become available.

Investment suggestion: We expect the company’s operating income for 2018 to 2019 to be 44.

9 billion, 46.

4.8 billion, with annual growth rates of 1.

27% and 3.

51%; net profit attributable to mothers is 3.

830,000 yuan (among which, Jin Dawei contributed investment income of about 1.600 million) and 4.

RMB 88,000 (among which, Jin Dawei contributed investment income of about 1 yuan.

700 million), the previous growth rates were -7.

83% and 6.

41%, corresponding to 33.

9x and 31.

9x.

Maintain “Buy” rating.

Risk reminders: policy risks such as vaccine procurement; risks of intensified market competition.