Profit stall and high growth in the third quarter press pause key

Compared with the results of leading peers in the third quarter, the profit of new hope (000876. SZ) stalled in the third quarter, and high growth pressed the pause key. < / P > < p > the planned capacity of new hope keeps up with the industry leader, and the market also places high hopes on new hope. Otherwise, it is difficult to explain that the market value of the company can more than double that of its competitors when the profit is not even as good as Zhengbang Technology (002157. SZ). Driven by the high outlook of pig cycle, pig companies have set off an upsurge of production expansion, and new hope is “violent expansion” with high debt. Both new hope group and New Hope Group Co., Ltd. (hereinafter referred to as “new hope group”) have a sharp increase in liabilities. Among the leading pig enterprises, new hope’s balance sheet can be said to be the worst. When the pig price is gradually losing its high level, can the new hope of supplementing the price with quantity meet the expectation of the market? According to the performance forecast of new hope, the net profit attributable to shareholders of Listed Companies in the first three quarters of 2020 is expected to be 4.8-5 billion yuan, with a year-on-year increase of 56.27% – 62.78%. Specifically, in the third quarter, the company is expected to make a profit of 1.63-1.83 billion yuan, with a year-on-year increase of only 7.97% – 21.21%. < p > < p > compared with the sharp decrease in the profit growth rate of new hope in the third quarter, the competitors did not slow down the growth pace. The net profit of Longtou muyuan shares (002714. SZ) increased by more than five times in the third quarter; the pig raising profit of Wenshi shares (300498. SZ) increased significantly in the third quarter, and the overall performance growth was not significant due to the large loss of poultry business. < p > < p > tianbang shares (002124. SZ) achieved a profit increase of about 2.4 times in the third quarter. Zhengbang technology, which is closest to new hope’s profit scale, is expected to achieve a net profit of 5.417 billion-5.617 billion yuan in the first three quarters of 2020, of which the profit of 3-3.2 billion yuan in the third quarter, with a year-on-year increase of 8.23-8.84 times. < / P > < p > since the second half of 2019, new hope has basically doubled its growth in a single quarter. However, the company’s growth rate in the third quarter of 2020 is no more than 20% or even single digit growth, which obviously slows down more than one level. According to the company’s quarterly sales data of < 22.16 billion yuan / year-on-year, it is expected to achieve a year-on-year increase of 22.14 billion yuan, which is close to the new year's sales of pigs, P < 0.05. In terms of pig price, the commodity pig price was only 15.84 yuan / kg in July 2019, and rapidly increased to 26.75 yuan / kg in September. In the third quarter of 2020, the commodity pig price was between 33 yuan and 36 yuan / kg. < p > < p > New Hope said on the interactive platform that the company’s profit did not increase significantly in the third quarter, which was mainly due to the higher start-up costs of the pig raising sector, which was to prepare for large-scale marketing in 2021; the profit and loss of the poultry industry in the third quarter was balanced, and there was no loss. < / P > < p > both volume and price rise, but only the rapid decline of profit growth. Guangfa Securities explained as follows: first, the cost of fattening the purchased piglets increased in the third quarter; second, the cost amortization was at a high level. < / P > < p > outsourcing piglets and the increase of expenses all indicate the shortage of reserve in the early stage of new hope. In fact, as early as 2015, the company’s pig business grew rapidly, but the company did not make efforts in the source – breeding pigs. In 2019, especially in the second half of 2019, new hope “Fanran awaking” began to expand rapidly in pig breeding resources, but it was a little late. < / P > < p > in 2016, new hope has completed the investment layout of 9 million production capacity in the whole country, which increased to 14.8 million in 2017, and the reserve scale in 2018 and 2019 was about 25 million and 43.5 million respectively. New hope also specially stressed in the annual report of 2019 that “the maximum capacity that can be achieved in theory has exceeded 60 million heads”. In the first half of 2020, new hope realized and reserved more than 70 million heads of production capacity. < / P > < p > with the growth of production capacity layout, the company’s pig production is also increasing. According to the company’s introduction, new hope pig business has developed rapidly from 2015. From 2015 to 2019, the company sold 872800 breeding pigs, piglets and fat pigs, 1166900 pigs, 2399600 pigs, 2553700 pigs and 3549900 pigs, with year-on-year increases of 52.4%, 33.7%, 105.64%, 48.54% (adjusted statistical caliber) and 39% respectively. The positive expansion of new hope can be reflected in the explosive growth of the company’s productive biological assets. New hope annual report agency Shao said that the company has been actively planning pig breeding since 2015. At the end of 2015, the company’s productive biological assets were RMB 327 million, and those at the end of 2016-2018 were 462 million yuan, 478 million yuan and 518 million yuan respectively, and there was no significant increase until 2018. At the end of the line year, the productive biological assets of new hope increased to 7.951 billion yuan at the end of the first half of the year. The scale of nearly 8 billion yuan ranks first among all the listed pig raising companies, which is nearly 1.5 times of the shares of muyuan, a leading industry leader. At the end of 2019, new hope is only about 60% of the latter. Productive biological assets refer to the biological assets held for the production of agricultural products, including immature productive biological assets and mature productive biological assets. In addition to raising pigs, new hope also has chicken, duck and other white feathered poultry breeding business. Its productive biological assets include breeding pigs, breeding chickens and breeding ducks. However, it is clear that the growth in this asset is mainly related to pigs rather than poultry. < / P > < p > from the changes of productive biological assets, it is not difficult to find that although the new hope has expanded rapidly since 2015, it has not been deployed from the source of breeding pigs, and will not “repent” until 2019, especially in the first half of 2020. Among several pig leaders, new hope is undoubtedly the biggest one in terms of productive biological assets. < / P > < p > all this seems to be like “getting up early and catching up with an evening set”. Since the second half of 2019, pig prices have risen rapidly. Data from the Ministry of Commerce show that in May 2019, the wholesale price of white streaked pigs was still around 20 yuan / kg, and in November, it reached a record high of more than 50 yuan / kg. After < / P > < p > < p > after that, the price of pigs had been repeated from time to time, but never returned to the historical sky high price of more than 50 yuan / kg. In the case of little change in demand side, the main factor affecting pig price is the supply side. Due to the impact of environmental protection and African swine fever, the rapid decline of live pig stocks and reproducible sows led to the abnormal rise of pig prices in this round. With the introduction of encouragement policies, the supply of pigs gradually recovered. According to the data released by the Ministry of Agriculture recently, the number of live pigs and reproducible sows in China has returned to more than 80% of the normal year. According to the monitoring data of the Ministry of agriculture and rural areas, in August, the number of live pigs in China increased by 4.7% month on month, for seven consecutive months, with a year-on-year increase of 31.3%; that of fertile sows increased by 3.5% on a month on month basis, with a year-on-year increase of 37%. At the same time, 26 million piglets were born in August, up 6.7% month on month, 59.5% higher than the low data in January, and 5% month on month growth in August. < / P > < p > the recovery of sows has a decisive impact on the pig cycle. Huaxi Securities pointed out that the core index of the pig cycle is the amount of sows that can be reproduced; at present, pig breeding is in the period of capacity recovery, and it is expected that the fourth quarter will enter the capacity cashing period; the continuous rise of sows on hand, the rapid recovery of production capacity, and the further expansion of the number of pigs on the market, it is expected that the pig price will enter the “downward period” in the fourth quarter. < / P > < p > this is not good news for pig breeding enterprises, especially for new hope, which is later than its competitors in pig breeding layout. The company’s productive biological assets reached 2.511 billion yuan by the end of 2019, but only 592 million yuan at the end of the first half of 2019, basically unchanged from 518 million yuan at the end of 2018. < / P > < p > that is to say, the productive biological assets of new hope burst out in the second half of 2019 and the first half of 2020, and there was not much growth before that. As mentioned above, in the second half of 2019, the price of pigs began to soar. At this time, new hope will “supplement” the breeding pig resources. Is it a matter of hindsight or “emergency treatment”? < / P > < p > in the peak of the industry boom, how much value can assets have once the industry turns thin? Moreover, the new hope is mainly debt expansion, rather than relying on its own blood, and the company’s debt scale is far greater than that of its peers. < / P > < p > New Hope’s capital expenditure will increase significantly in 2019. In 2018, the company paid 3.707 billion yuan in cash for the purchase and construction of fixed assets, intangible assets and other long-term assets. Although there was a significant increase compared with more than 2 billion yuan in the previous two years, the increase of capital expenditure of 9.346 billion yuan in 2019 was more obvious. By the end of the first half of 2020, the company’s amount reached 15.014 billion yuan, continuing to expand aggressively. < / P > < p > while the capital expenditure has risen in a straight line, the borrowing scale of new hope has also made great strides forward. By the end of the first half of 2020, the company’s short-term loans and non current liabilities due within one year totaled 16.6 billion yuan, while the total amount of long-term loans and bonds payable in the same period reached 19.972 billion yuan, which means that the company’s interest bearing liabilities have exceeded 36.5 billion yuan. < p > < p > in the years before 2018, compared with the company’s revenue and asset size, new hope’s long-term liabilities of about 2 billion yuan had little impact, and the short-term loans basically below 10 billion yuan were not a serious problem, and the total interest bearing liabilities of the company were only about 10 billion yuan. In the whole year of 2019, new hope’s interest expenditure will start at 500 million yuan and reach 508 million yuan in the first half of 2020, which is close to the level of the whole year in 2019. < / P > < p > this has not taken into account the operating liabilities of new hope. At the end of the first half of 2020, the company’s accounts payable and other accounts payable have reached RMB 11.878 billion, which is less than RMB 6 billion in 2018. It can be seen that the increase of operating liabilities obviously exceeds the growth of the company’s revenue. < p > < p > although new hope also has feed, white feathered meat and poultry and food business, it is obvious that the main reason for the increase in company’s loan is pig breeding business. In fact, none of the leading aquaculture companies has the scale of borrowing compared with new hope, and the short-term borrowing of the company has even exceeded the total borrowing of most of its peers. < p > < p > in the case of greater debt pressure on major shareholders, new hope can only rely on external borrowing. According to the financial report of new hope group, by the end of the first half of 2020, the company’s short-term loans and non current liabilities due within one year totaled 29.387 billion yuan, which was close to 30 billion yuan. < p > < p > the monetary capital on the book of new hope group is only 15.999 billion yuan, accounting for half of the short-term debt; the company’s long-term loans and bonds payable totaled more than 30 billion yuan, reaching 31.485 billion yuan, that is to say, the total short-term debt of new hope group exceeded 60 billion yuan. The debt pressure of big shareholders is even greater than that of new hope, which is not surprising that new hope relies more on external borrowing. < / P > < p > when accelerating the layout of pig raising business in 2015, new hope has a lot of time to expand its productive biological assets, that is, breeding pig resources, but the company does not act. When the supply of live pigs suffered an extreme blow and the industry boom hit an unprecedented high in history, new hope began to expand the breeding pig resources in a hurry. < / P > < p > from breeding pigs to piglets to fattening pigs, natural growth time is needed. The breeding pigs of new hope began to expand rapidly in the second half of 2019, and had no substantial impact on the company until the first half of 2020. In 2019, the ratio of self-produced piglets to purchased piglets is about 1:2, and the proportion of integrated autotrophic and cooperative stocking is about 1:9. < / P > < p > 2020