Biological shares (600201) 2019 third quarterly report comments: performance in line with expectations As the scale of pig farm capacity gradually resumes, the company bottoms out

Matters: The company announced the third quarter of 2019: Q1-3 achieved a total of 8 revenues.

4.8 billion, down 40.

8%; net profit attributable to mother 2.

480,000 yuan, down 63.

5%, of which Q3 achieved revenue 3.

3.7 billion, down 49.

8%, achieve net profit attributable to mother 0.

780,000 yuan, down 75.

6%.

Comment: The company’s performance continued to be dragged down by non-plague de-capacity.

At the end of September, the national sow breeding stocks fell by 38.

9%, the live pig inventory decreased by 41.

1%, the decline was further expanded.

Affected by this, the company’s operating data continued to be subdivided.

2019Q1-3 realized 杭州桑拿养生会所 revenue 8.

4.8 billion, down 40.

8%; of which Q3 achieved revenue 3.

3.7 billion, down 49.

8%, the decline has continued since Q2 of 2009; Q1-3 of 2019 achieved net profit attributable to mothers2.

480,000 yuan, down 63.

5%, of which Q3 achieved net profit attributable to mother 0.

780,000 yuan, down 75.

6%, the decline was narrower than Q2.

9.

Specifically, the performance of different business segments continued to differentiate. Among them, the demand for core products such as foot-and-mouth disease vaccine and ring vaccine continued to weaken. The overall performance of Q3 pig vaccine is expected to decrease by about 60%; and the prosperity of the poultry industry continues to rise due to pork substitution demandThe price of bird flu vaccine mixed with bird’s flu vaccine changed from trivalent to trivalent.

2019Q1-3 gross margin decreased by 11.

65 pct, the cost rate increased by 8 during the same period.

45.

The company’s overall gross profit margin for Q1-3 in 2019 was 62.

83%, down 11.

65 pcts, of which Q3 gross margin is 54.

14%, down 20.

95 pct, compared to Q2 instead of 7.

44.

Expenses for the company during Q1-3 2019 are 29.

33%, an increase of 8.

45.

The selling expense ratio is 14.18%, the same increase of 4.

31 pct, management expense ratio (plus R & D expenses) 16.

44%, an increase of 3.

47 pct, financial expense ratio -1.

29%.

The stable production and guarantee of live pigs has been fully promoted. The dawn of the animal protection industry has begun, and the company’s performance can bottom out and rebound.

Policy resolutions, the Ministry of Agriculture and Rural Affairs and other ministries and commissions have successively introduced 17 measures to support the development of the pig industry, and 23 provinces have also introduced targeted measures to stabilize the production and supply of pigs. Among them, Hunan, Zhejiang and other provinces have more clear annual listing targets and dismantling.To various city councils.

Q3 pig farms increased the intensity of commercial pig breeding. In September, the number of pigs on pig farms with a scale of more than 5,000 in the country increased by 0.

6%, the number of capable sows can increase by 3.

7%, pig feed crops increased by 10%, production capacity may gradually recover.

The company’s 2019H1 direct sales customers have covered 10,000 large-scale pig farms. It is expected to take the lead in benefiting from the recovery of industrial capacity and the acceleration of scale. The bottoming out of performance is expected.

The new park is about to be put into production, and the forward-looking layout barriers are consolidated, which is expected to lead a new round of progress.

The company actively promotes the continuous upgrade of vaccine process manufacturing, relies on Siemens intelligent manufacturing application system to enable the full life cycle of vaccine manufacturing, and builds a national high-level biosafety laboratory and a P3-level production workshop in the park to lead the industry, which is expected to become the company’s R & D innovation and industrial applicationInnovative and continuous catalysts, make full use of high standards, qualified product roadmaps and leading industrialization capabilities, consolidate the company’s core competitive advantages, support high growth in future performance, and simultaneously promote suspension culture + purification and concentration process technology upgrades to lead the industryA new round of change.
Earnings forecasts, estimates and investment ratings.

Taking into account the actual recovery of production capacity in the downstream aquaculture industry, we expect to achieve revenue in 19-21.

01/15.

45/22.

73 (previous value was 12.

18/16.

65/22.

10) Ten thousand yuan, net profit attributable to mother 2.

90/4.

94/8.

31 (previous value was 3.

46/5.

36/7.

65) Ten thousand yuan, corresponding EPS is zero.

26/0.

44/0.

74 yuan.

Considering the follow-up performance to repair high growth, we will give 53 times PE in 2020 (a 50% premium over the industry average) and raise the target price to 23.

32 yuan, raised to “strong push” level.

Risk reminder: The recovery of pig production capacity is less than expected, and the company’s market development is not up to expectations.