Huatong Meat(002840) 国信证券·2024-09-01 08:01Investment Rating - The report maintains an "Outperform" rating for Huatong Stock (002840 SZ) [1][4][10] Core Views - Huatong Stock's pig farming business shows a positive trend with steadily declining costs and sufficient capital reserves [1][2][5] - The company's pig farming costs have decreased to nearly 16 yuan/kg in Q2 2024, down from 16 4 yuan/kg in Q1 2024 [1][5] - Huatong Stock's pig sales volume grew steadily, with 1 3364 million pigs sold in H1 2024, including 133,300 piglets [1][5] - The company's net profit turned positive in Q2 2024, reaching 38 million yuan, compared to a loss in the same period last year [1][5] Financial Performance - H1 2024 revenue increased by 1 14% YoY to 4 165 billion yuan, with a net loss of 119 million yuan, a 66 59% reduction in losses YoY [1][5] - Q2 2024 revenue increased by 1 72% YoY to 2 169 billion yuan [1][5] - The company's production biological assets reached 306 million yuan at the end of Q2 2024, a 6 3% increase from Q1 2024 [2] - Huatong Stock's monetary funds stood at 656 million yuan at the end of Q2 2024, a 4 5% increase from the end of 2023 [2] Growth Prospects - The company is expected to achieve a pig sales volume of 3 5 million in 2024, a nearly 50% increase from 2023 [2] - Huatong Stock plans to raise up to 1 6 billion yuan through a private placement, which is currently under review [2] - The company's pig farming assets are valued at approximately 1,500 yuan per head, indicating significant potential for valuation recovery [2] Competitive Advantages - Regional advantage: Zhejiang's pig farming assets are scarce, with pig prices typically 2 yuan/kg higher than the national average during peak cycles [2] - Late-mover advantage: The company has benefited from talent and technological dividends due to its expansion during the industry downturn [2] - Capital advantage: Huatong Stock has diversified funding sources, including convertible bonds, private placements, and government subsidies [2] Financial Forecasts - The company's net profit is expected to reach 910 million yuan in 2024, 2 02 billion yuan in 2025, and 2 04 billion yuan in 2026 [10] - The PE ratio is forecasted to be 12X in 2024, 6X in 2025, and 6X in 2026 [10] - Revenue is projected to grow by 57 9% in 2024, 41 4% in 2025, and 6 6% in 2026 [3]