ZHENGBANG TECHNOLOGY(002157) 华鑫证券·2024-09-03 09:00Investment Rating - The report maintains a "Buy" rating for Zhengbang Technology (002157 SZ) [2] Core Views - Zhengbang Technology's performance has significantly improved, with losses narrowing substantially in H1 2024, driven by the support of Twins Group and the recovery of the domestic pig farming market [2] - The company's cost control measures have shown effectiveness, with Twins Group assisting in resuming production and operations, leading to a positive turnaround in gross profit margin [2] - Despite short-term pressure on pig sales, strategic adjustments are expected to capitalize on the market recovery, with pig prices entering an upward cycle [2] - The company's financial health has improved significantly, with a reduction in debt crisis and a return to a healthy development track [3] Financial Performance - In H1 2024, Zhengbang Technology reported a net loss attributable to shareholders of RMB 127 million, a significant narrowing from the previous year [2] - The company achieved a net profit of RMB 47 million in Q2 2024, marking a turnaround from losses [2] - The operating cost in H1 2024 was RMB 2.888 billion, with Q1 and Q2 costs at RMB 1.236 billion and RMB 1.652 billion, respectively [2] - The company's asset-liability ratio decreased to 50.67% in H1 2024, the lowest in recent years, indicating improved financial health [3] Sales and Market Performance - In H1 2024, Zhengbang Technology sold 1.5892 million pigs, a 46.83% YoY decrease, with sales revenue of RMB 1.738 billion, down 39.36% YoY [2] - In July 2024, the company sold 229,900 pigs, a 29.31% YoY decrease, but sales revenue increased by 20.55% YoY to RMB 387 million [2] - The number of breeding sows at the end of Q2 2024 was approximately 216,300, with expectations of further strategic adjustments to increase pig production [2] Future Projections - Revenue for 2024-2026 is projected to be RMB 10.288 billion, RMB 13.548 billion, and RMB 15.076 billion, respectively [4] - EPS for 2024-2026 is forecasted to be RMB 0.11, RMB 0.17, and RMB 0.15, with corresponding P/E ratios of 23.9x, 15.2x, and 17.3x [4] - The company is expected to achieve a net profit of RMB 1.021 billion in 2024, with a growth rate of -88.0% YoY, followed by a 56.9% increase in 2025 [6] Industry and Market Context - The domestic pig farming market has seen improved supply-demand dynamics, with market conditions gradually recovering in 2024 [2] - Twins Group's involvement as an industrial investor has provided significant support, helping Zhengbang Technology to resume production and improve cost control [2] - The pig price cycle is currently in an upward trend, with expectations of further market recovery and strategic adjustments by Zhengbang Technology to increase pig production [2]