Shuanghui Development Company
———— Signed by: Hao Ning
Written time: 20230810 (under update) Contact: 15162044273 with wechat
Investment style: Comprehensive investment analysis unit: Qianhai Rushan Investment Committee
Foreword -- Investment Conclusion: (Remarks updated on 20240116)
1、 The company is a leading stock, excellent financial results.
2, the growth of the enterprise is general, and the reaction of new business and pig cycle is required.
3, the overall undervaluation of the stock price, new business development can be expected.
4. There are investment opportunities in the overall valuation judgment.
5. Investment Conclusion:
Shuanghui underestimates it by another 25 yuan, extremely underestimates it by about 20 yuan,
If the financial report improves, the rise of new business, the market turns bull, you can build a position on a low, first see the target price of 30 yuan, 35 yuan two targets. Relative to the company's current share price of about 10%-20%-30% premium space.
Research text:
First, the main business history of the enterprise - cause table analysis
2. Basic financial judgment and analysis -- statement judgment
Third, industry research and market situation - development analysis
Business Valuation and Financial forecasting - Future potential
Five: Technical analysis comprehensive judgment of trading points
Vi. General conclusions and risk tips
7. Cite reference sources
一、The main business history of the enterprise -- analysis of the cause table
The first step, the current main business of the enterprise
1. Click to view Shuanghui's main business development
We can see that the main business developed by Shuanghui is mainly packaged meat products and fresh slaughter products in two categories, one is cooked food products such as various ham sausages, sausages, and the other is raw meat products such as various pork ribs and elbows.
2. Check the proportion of main business revenue and profit:
Among them, the revenue of packaged meat products accounted for about 35% < fresh slaughter products accounted for about 55%, that is, the two main businesses.
But the main profit of packaged meat products accounted for about 70% > fresh slaughter products accounted for about 20%, that is, packaged meat products are small revenue and large profit products, slaughter products are large revenue and small profit products!
The fundamental reason is that the gross profit margin of packaged meat products is about 30% > fresh slaughter products account for about 6%, that is, the gross profit of packaged meat products is about 5 times that of fresh slaughter products!
Other products account for about 10%, mainly new businesses such as aquaculture and prepared dishes
The second step is the past business experience of the enterprise
1, Baidu search Shuanghui enterprise development history, memorabilia, team, know the past, see the future.
https://baijiahao.baidu.com/s?id=1765584503589974938&wfr=spider&for=pc
2. Get several important development clues from the news reports:
第一、 Shuanghui was restructured as a state-owned enterprise in 1984 and started from slaughterhouses, so its core business is slaughterhouse.
第二、 In the 1990s, Shuanghui introduced foreign advanced technology, production lines and packaged ham products, and rapidly rose and expanded, so the core packaged meat products were formed by the strategic decision in the 1990s, and successfully listed!
Third, the soE equity reform in 2005 is the overall environment. The formation of Hong Kong foreign equity and Bandung management equity, for the later capital operation buried the foreshadowing.
Fourthly, 12 years later, the foreign takeover failed, the anti-takeover of Bandung succeeded, and Shuanghui Development acquired Smithfield. This was directly related to the subsequent large dividend compensation for the acquisition of WH International shareholders.
第五、 The dispute between father and son of Bandung's successors is facing the problem of the new generation of management and the future strategic business development! The essence of the struggle for rights is the struggle for future interests, directions, opinions and paths! It can be seen from the document that it is the slaughterhouse that loses money, and the person in charge is the CEO, the prince is not satisfied, struggles for power, the old man helps outsiders, and finally the second young master is a blessing in disguise and becomes the prince.
第六、Obviously, the old era has gone, slaughterhouse profits are not good, then the new management's future strategy can be in packaging products or new business development, is the core!
The third step is the future business strategy of the enterprise
1. Search for Shuanghui's future development plan and business plan from news reports, announcements, annual reports, main analysis, etc.
2. There are always four conclusions to be drawn from the news:
First, the double main business continues to grow, on the one hand to increase fresh slaughter products, on the other hand to develop new categories of packaged meat products.
Second, adding two new businesses, one slaughtering upstream aquaculture, including raising chickens and pigs, to match the upstream industry chain and thicken profits, is a good thing.
Third, another new business is prefabricated dishes, which is not only a concept, but an extension of downstream packaged meat products, a consumer product with high profits, and a new market.
Fourth, we see the news such as Taobao Tmall cooperation, 20230803 news, to vigorously start sales.
The above four are in the extension of the main business and the main business industry chain, the strategy is conducive to improve profits.
Step 4: Industry status and competitiveness analysis
1. Brand and scale advantage
The company is a national key leading enterprise in agricultural industrialization, and in 2022, it was selected as "BrandZ™ Top 100 Most Valuable Chinese Brands", "Top 500 Chinese Brand Value", "Fortune China Top 500", and won the "Shennong China Agricultural Science and Technology Progress First Prize", "Henan Province Outstanding Private Enterprise" and other honors.
At present, Shuanghui Development is the industry leader, ranking the first in the meat industry in terms of total assets, net profit and operating income. In terms of products, its low-temperature meat products market accounts for 15%, and its market share exceeds the sum of the bottom ten competitors. High temperature meat products industry accounted for 60% of the market, has been the top.
2. Layout and network advantages
At present, the company has built more than 30 modern meat processing bases and supporting industries in 18 provinces (cities), including Henan, Heilongjiang, Hebei, Shandong, Anhui, Hubei, Jiangxi, Shanghai, Shaanxi, Sichuan and Guangxi, mainly producing and operating pig resources in the region
Rich, meat consumption potential is huge, the company by improving the industrial layout, in-depth development of regional market, to promote the six regional development strategies.
3, equipment and quality control advantages
The company has introduced advanced technology and equipment from developed countries such as Europe and American countries to transform the traditional meat industry and build modern meat
Processing base, and continue to introduce the world's cutting-edge technology, automation upgrade and intelligent transformation, to maintain the industry leading advantage.
The company takes the lead in introducing ISO 9001, HACCP and ISO 14001 management systems in the meat industry
4. Technology and innovation advantages
The company has a national technology center, national recognized laboratory and postdoctoral mobile station, technical research, product development and
Innovation ability is in the forefront of the industry. The company continues to invest in the field of product innovation and research and development, and has now developed a national adaptation
Market and local characteristic market of ham sausage, ham, sausage, canned, sauce brine cooked food, catering food, fresh products 1000
Multiple products.
5. Talent and management advantages
The management of the company is basically an expert engaged in slaughtering and meat processing industry for a long time. He has a deep understanding and understanding of the meat industry, and has rich experience in enterprise management and long-term development ideas.
Conclusion: Shuanghui development is the first in the industry segment, with obvious moat.
2. Basic financial judgment and analysis —— fruit table judgment
The first step is the financial reporting of the enterprise
1, financial fraud hidden dangers, audit opinions
With flush ask financial search Shuanghui development audit opinion type, show the standard unqualified opinion, safe.
The second step, the core financial index analysis of the comprehensive strength, with the billion cattle network.
1. The first indicator: the Roe is used to measure the comprehensive competitiveness of the enterprise.
Generally, less than 10% is mediocre, 10% -20% is general, and more than 20% is excellent. The average Roe of Shuanghui development is 26.5%, which is excellent.
2. The second indicator: the long-term change trend of revenue, judging the good or bad growth of enterprises.
If the revenue occasionally decreases, long-term rise, we say that the growth of the enterprise is good;
If the revenue often increases or decreases changes, showing a weak rise or cycle state, we will say that the enterprise growth is medium;
If the revenue often increases and decreases, showing a decline or weak decline, we say the growth of the enterprise is bad.
We see shuanghui development revenue long-term stable growth, occasionally back, indicating that the growth of the enterprise is good.
However: there is no obvious trend, indicating that there is no explosive revenue growth, need to judge sustainable growth.
3, the third index: deduct the long-term change trend of non-net profit, judge the growth of enterprises good or bad.
If the withholding of non-net profit occasionally decreases, long-term rise, we say that the growth of the enterprise is good;
If the deduction of non-net profit often increase or decrease changes, showing a weak rise or cycle state, we say that the enterprise growth is in;
If the non-net profit often increase or decrease changes, showing a decline or weak decline state, we say this enterprise growth is bad.
We see shuanghui development deduction non-net profit long-term stable growth, occasionally back, that the growth of the enterprise is good.
But we look at the growth rate: slow growth, stable, indicating that there is no explosive sustained growth, we need to judge the sustainability of the future!
4. Index 4: cash flow, to measure the sustainability of the operation.
In general, the operating cash flow of most enterprises must be positive! In some banks, the situation could be relaxed.
Investment cash flow depends on the situation, expansion is negative; no expansion can also develop income interest, positive; if selling assets are positive, depends on the situation.
Cash flow of financing activity, should be negative generally, namely need not raise money to operate, or do not go bonus. Of course, if it is a leverage model, it can be considered appropriately.
We see shuanghui development operating cash flow is positive on average, the main business is no problem. I saw the expansion of aquaculture and prefabricated vegetables, which shows that we are investing in expansion, and the investment cash flow is negative.
From our point of view of the dividend payout ratio, Shuanghui pays more dividends, so the financing cash flow is negative.
5, the fifth indicator: Use the dividend rate to judge the dividend of the company's real gold and silver to test the possibility of fraud.
In general, we judge that the dividend of more than 30% or so reaches the average level of A shares.
Medium companies we judge that 40% dividend can be considered good.
If the dividend ratio of more than 50% is already very good, of course, the behavior of hollowing out the company does not count.
We want to combine the profit trend together, to verify the authenticity of cash as the fundamental.
We found that Shuanghui Development has been paying dividends for many years, and the proportion is very high, reaching 70% on average, indicating that it is very excellent.
The third step is to measure the safety of the debt structure of enterprises, using the investment data network.
1, the first indicator: debt ratio to judge the overall security of the enterprise.
If the debt ratio of the enterprise is lower than 40%, it is generally good;
If the debt ratio of the enterprise is 40% -50%, it is generally medium;
If the debt ratio of the enterprise is above 50%, it is generally bad; except for the financial industry.
We can see that the average debt ratio of Shuanghui Development is about 35%, and the overall safety is good.
2. Current ratio and quick ratio to judge the operation efficiency and safety problems of the enterprise.
Generally, the current ratio is greater than 2, and the quick ratio is greater than 1.
We see the overall development of Shuanghui is just satisfied, belongs to the general situation, the main reason is the product inventory and sales contract model.
3, cash ratio and interest-bearing liabilities
That is, if you use the current currency of cash, you can immediately repay the interest-bearing liabilities, indicating that there is no pressure on operating leverage. We can see that a cash ratio greater than 100% is safe.
We see Shuanghui development of a large amount of cash before 2015, and later after a large amount of dividends, the proportion decreased, but it is still greater than the interest-bearing debt is the bottom line!
That is, business behavior, first of all to ensure that the whole enterprise can last for a long time, and then plot to develop! As long as the enterprise always exists and can accumulate, then only opportunities can explode.
4. Financial expenses and goodwill
In fact, if the money and cash are greater than the interest-bearing liabilities, then the financial expenses are generally negative. Interest-bearing debt is not terrible, if the income is far greater than the interest expense, the business is stable, then this leverage is safe. If it is a high-risk rate of fluctuating interest, corresponding to an unstable business model, then the interest-bearing debt is very dangerous.
Goodwill is also often increased by acquisition expansion, which may eventually lead to the recovery problem, so it is likely to cause a large impairment, which is also a danger. Shuanghui development has no related risks!
5. Proportion of non-main assets, or diversified strategic risks.
Many enterprises are diversified expansion, or non-main expansion, resulting in failure. Different companies focus on understanding, because when analyzing the main business, we will probably know that if it is diversified, we should pay attention to its risks.
The non-main business of Shuanghui Development is also breeding and food, which does not belong to diversification, belongs to industrial coordination and is excellent.
Third, industry research and market situation - development analysis
The first step, the overall industry and the international market judgment
Search general method = industry penetration rate + international peer comparison + industry size and increase deceleration + company share and deceleration.
1. Summary of the information we have obtained through this information:
The penetration rate of packaged meat industry has reached 45%. Generally, we believe that 5% is the initial stage, 20% is the growth stage, and 50% is the maturity stage. Obviously, the packaged meat products are already in a very mature market.
Then we know the history and development experience of the ham sausage industry through the previous macro analysis also proved this point.
2. Use the same method to analyze the slaughter meat products business.
The conclusion is as follows:
China's per capita pork consumption ranks first in the world, and pork consumption is the largest of all meats, so this is a strong market.
For many consecutive years, the total number of pigs raised in China has not changed much, stable at 50 to 60 million, and the growth rate of production and consumption is not large, indicating that the market has been saturated and stable.
But the important change is that the slaughtering model shifts from single to centralized, and there is still a long way off, which is conducive to the giants. Secondly, from hot fresh meat to cold fresh meat, which also requires industrial concentration and supply chain control of giant enterprises. Therefore, from this market perspective, the growth rate has still reached about 9%,
Raw meat itself is a mature market, but the slaughterhouse industry is an asset-heavy, low-growth, large-scale incremental market.
https://zhuanlan.zhihu.com/p/619352725
3. Analysis of Shuanghui Development to acquire American slaughtering enterprises and enter the upstream breeding industry.
Nine out of ten, the American slaughtering industry is the result of previous global equity competition, but the US pork price has been lower than that of China. It can be said that American pork can calm cost fluctuations, that is, low cost.
To enter the pig industry, one is to get through the upstream and reduce costs; the other is the high profit attraction of the rising pork prices. This is a good thing!!!!!!!!!!!!
Because the pork market is a mature market with high penetration, but national policy driven and epidemic prevention driven are developing toward scale, that is, the market share of giant enterprises is increasing.
Second, the market position and operation situation of the enterprise
1. When we look at the ten-year net profit statement of the pig industry and the chicken industry, in fact, most of them are still very common. After that, profits soared in some years, namely during price fluctuations, such as pig cycle or chicken cycle.
So in this respect, we still look at the leading effect increment, and then wait until the price cycle increase, and then rise, only when the two resonance, the rest can not.
2. Then we know through the market share that Shuanghui currently accounts for 18%, which is the first. And now the mature market is also the stock market, is the stage of seizing the market share, the company should pay more attention to the quality and brand.
3, the foreign market in 60%, so temporarily China has not fallen into recession, coupled with the stock market competition, leading enterprises advantage stage. At this time, we see that the growth rate of China's meat products is about 5%, the sales growth rate of Shuanghui development is basically 1, and the price growth rate is about 4%, indicating that the whole business is indeed growing slowly.
4. Input and analysis of prepared dish industry.
This industry has the potential to catch on.
Emerging industries, the penetration rate is very low, just emerging, many players, are not formed, and Shuanghui may play a leading efficiency.
The main thing is industrial goods! Can be quickly mass, and high profits, equivalent to expanding new categories, similar to the second growth curve of kneading paper packaging products!!
We can see that prefabricated dishes are in their early stages of growth, with a penetration rate of just over 10% and may explode. At the same time, market data also show that the growth rate is very high, so Shuanghui development to play the advantage may be a big breakthrough. But the current scale is still very small.
4. Corporate valuation and financial projections —— future potential
First, the P/E ratio is historically undervalued
ttm P/E ratio is around 20.3, in fact, most years in the past six or seven years Shuanghui Development P/E ratio between 15-25, the higher years in 35, such as 13 and 2020. Therefore, we believe Shuanghui development will fluctuate between 15 and 25 in the short term. We are now in the underestimation zone.
第三、 Conted from DCF free cash flow as follows,
According to the 20% growth rate of Roe in recent years, the current market value is in the undervalued area, and the market value ratio is 70%.
Third, according to the comparable performance valuation, calculate the possible performance growth rate in the next three years.
Comprehensive p / E valuation, free cash flow discount and performance forecast valuation, probably can be concluded as follows:
When the performance increases steadily, the P/E ratio rises to about 20 times, and the stock price is about 30 yuan; When undervalued, the P/E ratio drops to about 14 times, and the stock price is about 24 yuan.
Five: technical analysis and comprehensive judgment of the trading point.
1. Look at the big market first:
Trend position and space-time period.
The whole bull and bear trend analysis, these two years in a bear market, so according to the law, the next few years is likely to be a bull market.
From the trend and the cycle, it is in the late stage of the downward trend.
2, look at the strong heat of the plate market.
Recently, there is no strong market heat in the market, no large area of rise, continuous rise, there is no large area of news heat, mainly scattered plate heat. Recently there is no hot market in the pork sector!
Look at individual stocks:
3, the trend position and the space-time period.
It can be seen that in recent years, Shuanghui development in the box shock, the recent half year has a slow market.
We judge from the technical analysis, the overall bear market, plate no hot spot, Shuanghui development in the range of shock slow bull market!
From the range price, the low point is about 20 yuan, the high point is 30 yuan, and the middle position is 25 yuan.
Vi. General Conclusions and risk Tips:
The first step, the overall conclusion
1, the enterprise is the leading stock, excellent financial results.
2, the growth of enterprises is general, requiring the reaction of new business and pig cycle.
3, the overall undervaluation of the stock price, new business development can be expected.
4. There are investment opportunities in the overall valuation judgment.
5. Investment Conclusion:
Shuanghui will underestimate another 25 yuan, extremely underestimate about 20 yuan,
If the financial report improves, the rise of new business, the market turns bull, you can build a position on a low, first see the target price of 30 yuan, 35 yuan two targets. Relative to the company's current share price of about 10%-20%-30% premium space.
Step 2, risk warning
Risks and countermeasures facing the company
Challenges and risks that the company may face in the second half of 2023:
One is the market risk. Meat industry as a whole to industrialization, scale, industrialization development, the market competition pattern accelerated change,
Market competition is more intense, the company needs to seize the industry development opportunities, expand the scale of business, to avoid in the future market competition
on the hip.
Second, the risk of raw material supply and price fluctuations. The main raw materials required by the company's production are subject to the growth cycle, stock quantity and market
There is some volatility in field supply and demand factors, which then affects the company's business performance, if the price of meat such as pigs is large
Rising, will likely produce pressure on the company's production and operation costs.
Third, product quality and food safety risks. The sanitary quality control of meat products is from feed supply, livestock and poultry breeding and slaughtering
Reprocessing, deep processing, product transportation to the consumer table chain process, each link needs to strengthen control, strict prevention
Potential health quality problems, once food safety problems, will have an impact on the company's reputation and operation.state-owned
The department has established a quality and safety control system and standards covering supply, production, transportation and marketing, and is equipped with sufficient personnel, funds and materials
And other resources to ensure the effective operation and continuous improvement of the quality and safety management system, effectively ensure product quality and constantly improve
High food safety control ability.carry
Fourth, the risk of consumption transformation. Social consumption continues to upgrade, new types of consumption continue to emerge, and diversified young consumer groups,
Quality, personalized consumer demand, to the company's product research and development and structural adjustment put forward higher requirements.
Fifth, the risk of rising social costs. As the demographic dividend weakens, labor costs rise, and food safety,
The continuous improvement of environmental protection and other standards will affect the operating costs of enterprises.
7. Citing reference information sources
1, Shuanghui development official website, financial reports and other information
2. Investment and research reports of securities companies
3, Internet search, financial website and other information,
Note: The above is only a case study, and the analysis will be updated with the update of time, information and materials, and the conclusion strategy will be changed. It is used for internal reference only, not as investment advice, and it is prohibited to circulate outside.