"Slow half a beat" missed the most profitable pig cycle, "Pig King"...

Recently, Wen's 2020 annual report and 2021 quarterly report were disclosed
.

In 2020, Wen's net profit was 7.

The past year has coincided with the "strongest pig cycle".
As the former pig raising king, Wen's shares did not seem to make a lot of money due to the high price of pigs.
People can't help but ask, when pig raising was the most profitable, Wen's shares what are you doing?

Combining the recent responses of Wen's shares and the analysis of industry insiders, it can be seen that Wen's shares will increase revenue but not profit in 2020.
On the one hand, because Wen's shares have two main businesses of chicken and pigs, the poultry industry has suffered large losses
.

On the other hand, Wen's "company + farmer" breeding model made it slower to recover after experiencing the impact of African swine fever, and due to factors such as larger size, some of its resumption decisions were "half slower than companies of the same model.

Wen's net profit in 2020 drops by 40%

When many pig companies doubled their net profits due to high pig prices in 2020, Wen's shares gave a different answer
.

On the evening of April 21, Wen's shares released the 2020 annual report, realizing operating income of approximately 74.

On the whole, the increase in revenue of Wen's shares is related to the two-wheel drive layout of the two main businesses of chicken and pigs
.

Affected by factors such as oversupply in the live poultry market, insufficient catering operations under the new crown pneumonia epidemic, and reduced demand for poultry meat consumption, the sales price of live poultry fell sharply compared with the same period last year

The 2020 annual report shows that the main business income of Wen's chicken and pigs accounted for approximately 30% and 60% of the total operating income, respectively
.

When the poultry industry suffered substantial losses, the pig industry did not play a significant role in stimulating it

In addition, Wen's shares mentioned that performance fluctuation factors also include its "company + farmer" production model
.

From the second half of 2019, in order to increase the stickiness of farmers' cooperation and promote the stable and continuous growth of breeding resources, Wen's shares have implemented a long-term cooperation mechanism of "company + farmers"

Regarding Wen's slightly weak operating conditions, on April 16, Fitch, one of the world's three major international rating agencies, adjusted Wen's long-term foreign currency issuer default rating (IDR) outlook from "stable" to " Negative” and confirm the rating as “BBB+”
.

Fitch also confirmed Wen's senior unsecured rating and outstanding bond rating as "BBB+"

Fitch predicts that the slower recovery of Wen's pig herd than its peers may affect market position and cash flow generation, and profit margins will be under pressure
.

At the current rate of recovery, Wen's net operating capital leverage ratio will exceed Fitch's previous rating sensitivity level-1 times

However, Fitch also stated that in 2020, the total cost of Wen's pigs will be 22-23 yuan per kilogram, and it intends to control it within 20 yuan in 2021 by increasing the utilization rate of production capacity and recycling part of self-raising sows.
He Zizhu believes that Wen's shares can reduce costs and ultimately defeat competitors
.
In addition, with the rebound of broiler prices, the profit margin of Wen's broiler business may return to normal from 2021
.

The former "Pig Raising King" was surpassed

It coincides with the strongest pig cycle, but raising pigs does not make money.
The situation of Wen's shares can be said to be the "first share" among the million-dollar pig companies
.
In fact, Wen's shares also had a bright moment in pig raising
.

The financial report shows that in 2016, when the pig cycle market was the highest before the African swine fever, the net profit of Wen's shares was 11.
79 billion yuan, including all businesses, while the net profit of Muyuan, the "fault boss" in the pig industry, was only 2.
322 billion yuan
.
As far as live pig sales are concerned, in 2016, Wen's stocks sold 17.
1273 million pigs for slaughter, and the pig business achieved an operating income of 36.
236 billion yuan, which made it the top spot in the pig industry; Muyuan sold 3.
113,900 pigs throughout the year.
Sales revenue was 5.
602 billion yuan, only a fraction of Wen's shares
.
But in 2020, Muyuan shares sold 18.
115 million live pigs, while Wen's shares sold only 9.
5455 million live pigs
.

Speaking of the position change of "Pig Raising King", Feng Yonghui, chief analyst of China Live Pig Warning Network, told the Beijing News reporter, "Wen's shares are a pity, and they missed the hottest pig cycle in the history of pig raising
.
When they made the most money, they had no pigs.
When I had pigs, there was no shortage of pigs in the market, and the period of huge profits has passed
.
” During this period, some companies profited from the pig cycle and made 20 to 30 billion a year, but Wen’s shares as the former pig king only Earning billions, "The formation of this reversal lies in the different breeding models.
It can be said that the advantages and disadvantages of the two breeding modes of self-reproduction and self-raising and'company + farmer' are fully reflected in the new round of pig cycle
.
"

Feng Yonghui introduced that "company + farmer" means that the company is responsible for providing seedlings, feed, and technical support, but most of the real pig production operations are still in the farmers' homes, not in the company
.
Therefore, the prevention and control of this kind of breeding model for the epidemic situation, the management and efficiency of pig production are not as good as self-reproduction and self-raising
.

From the end of 2018 to the beginning of 2019, after the impact of African swine fever, the production capacity of major pig companies listed companies dropped significantly.
After the entire industry entered the state of rehabilitation in the second half of 2019, the production capacity of Muyuan shares in the "self-reproduction and self-support" model was adopted.
The increase has accelerated significantly.
“The entire system of breeding pigs, breeders, venues, etc.
are all
owned by their own .
This advantage allows Muyuan to quickly select a large number of high-quality breeding pigs.
Together with the unified operation of the front-line team, it promotes Muyuan’s prevention of the epidemic.
Leading in the control and rehabilitation stage
.
" Feng Yonghui said
.

In contrast, in the process of rapid expansion of "company + farmer" pig enterprises, most of the output needs to cooperate with farmers and enterprises, so in the process of re-raising, they will face the risk of shortage of breeding pigs and require outsourcing support
.
Outsourcing also means an increased risk of the epidemic, because the African swine fever has a long incubation period, and some can only be detected after one or two months after the purchase
.
"One of the reasons why Wen's pig stock has not been mentioned is that under this model, the quality and safety of pigs cannot be fully controlled
.
" Feng Yonghui said
.

In fact, Wen's shares have not noticed the shortcomings of the "company + farmer" model over the years, and is trying to reduce the degree of risk by upgrading the model
.
In the 2020 annual report, Wen’s shares stated that the company’s breeding model has evolved from a version 1.
0 "company + farmer" model to a version 2.
0 "company + family farm" model, and is now gradually upgrading to version 3.
0 "company + modern farming".
The "community" model will be iterated to the 4.
0 version of the "company + modern industrial park + professional farmer" model in the future
.

Wen's shares pointed out that the core of each model iterative upgrade is to strive to improve the farming scale, mechanization, automation and intelligence level of cooperative farmers, and to further reduce the overall breeding cost on the premise of ensuring the overall benefits of cooperative farmers
.
On April 23, Liang Zhixiong, President of Wen's Co.
, Ltd.
, replied to investors at the 2020 annual results online briefing that by the end of 2021, Wen's Co.
, Ltd.
plans to produce about 30% of the poultry breeding community, and the pig breeding community to take up The ratio is around 15%
.

Huaxi Securities analysts Zhou Sha and Shi Teng pointed out in the research report that the "company + modern breeding community" breeding model developed by Wen's shares can effectively solve the disadvantages of the scattered and inconvenient management of cooperative farmers and improve the level of biological safety prevention and control of cooperative farmers.
Provide support for the company's capacity expansion
.
In Feng Yonghui's view, although the risk of "company + modern breeding community" is not as low as self-reproduction and self-support, compared with "company + farmer", this model makes cooperation from loose to more concentrated and more subject to group management.
The effect of the upgrade mainly depends on the degree of improvement of the management level
.

The process of resuming production is "half a beat" slower than pig companies of the same model

The Beijing News reporter noted that among the 12 Shenzhen Stock Exchange-listed pig companies that disclosed monthly pig sales briefs, the top five pig sales in 2020 were Muyuan (18.
115 million heads), Zhengbang Technology (9.
5597 million heads), and Wenshi shares.
(9.
5455 million heads), New Hope (82925 million heads), Tianbang shares (3.
0778 million heads)
.
If self-propagation and self-raising and the "company +" breeding model are the key to widening the gap between Muyuan shares and Wen's shares, then why did Wen's shares be surpassed by Zhengbang Technology before and later under the "company +" model? New Hope is pursuing it?

Feng Yonghui believes that part of the reason is that Wen's original pig industry is too large, and the losses suffered by the African swine fever epidemic are also large
.
In the process of re-raising, Wen's shares have more thoughts.
Decisions such as purchasing a large number of breeding pigs are not as decisive as those of Zhengbang and New Hope.
The decision-making time is relatively late, resulting in a slower process of subsequent production recovery
.
"From the second half of 2019 to the first half of 2020, companies such as Zhengbang Technology and New Hope have begun to purchase a large number of breeding pigs from outside, but Wen's shares are half a year later than them
.
"

The sales data of various companies also confirms the "half beat" of Wen's shares
.
According to the Beijing News reporter’s statistics of the 12 Shenzhen Stock Exchange’s pig companies’ live pig sales in 2020, among the top 10, Nu Skin hopes to grow by 133.
60% year-on-year, and at least as Dabeinong grows 12.
73% year-on-year, but only Wen The sales of live pigs of the shares were not as good as before, with a year-on-year decline of 48.
45%
.

When will Wen's pig production capacity recover? According to Wen's response to the Shenzhen Stock Exchange in April 2021, it is known that Wen's currently has established a new biosafety prevention and control system and achieved good results.
The stock of breeding pigs and meat pigs is gradually increasing, and the utilization of production capacity is gradually recovering
.
However, the production cycle of hogs is relatively long.
From the increase of breeding pigs and hogs to the return of hogs to the original normal level, it will take nearly one year
.

Controversy over executive salary and incentive plans

The annual report shows that in 2020, Wen's Co.
, Ltd.
paid a total of 96.
123 million yuan to 30 directors, supervisors and senior executives.
This salary increased by 32.
824 million yuan from the 63,299,100 yuan in 2019
.
The high salary of the management has aroused concern.
Some media pointed out that “Wen’s management is the highest net worth among the current top pig companies.
There is no one
.
According to the data at the end of June 2020, the company’s directors and supervisors Among the members, 21 people hold a stock market value of more than 100 million yuan, and 9 of them hold more than 2 billion yuan
.
"

In order to stimulate performance growth, on April 15, Wen's shares issued the "Draft of the Third Restricted Stock Incentive Plan", intending to grant about 257 million restricted stocks to incentive objects
.
It is worth noting that the incentive plan granted for the first time by this incentive plan is a total of 3741 people, including 9 members of the Wen family, the actual controller of Wen's shares, and their spouses, parents and children
.
The incentive plan was questioned by some investors.
Some investors left a message saying, "Is this a naked profit sharing?"

In response, the Shenzhen Stock Exchange’s Growth Enterprise Market Company Management Department issued a letter of concern to Wen's shares on April 20, requesting that Wen's share incentives include the reasonableness of Wen's family members, whether the performance evaluation indicators are consistent with the actual situation of the company, and whether there is insider trading.
Behavior
.

On April 22, Wen's shares replied to the Shenzhen Stock Exchange stating that the types of personnel motivated by this incentive plan mainly include directors, senior managers, business department executives, middle managers, grassroots managers, and core technical (business) talents
.
The Wen family members involved in the incentive objects all meet the above categories and related regulations
.
At the same time, there is no insider trading behavior among the relevant personnel of the company
.

No improvement in performance in the first quarter of 2021

In the above-mentioned incentive plan, Wen's shares set an evaluation target for the incentive objects: the total sales weight of livestock and poultry products in 2021 will increase by 10% compared with that in 2020, or the total operating income will increase by 8% compared with 2020; the total amount of livestock and poultry products in 2022 will be Sales weight increased by 40% compared to 2020, or total operating income increased by 15% compared with 2020
.

In its response to the Shenzhen Stock Exchange's letter of concern on April 22, Wen's shares mentioned its actual performance target, that is, the total sales weight of livestock and poultry products in 2021 will increase by about 8.
75% compared to 2020, and the total operating income will increase by 6.
29 year-on-year.
%, the sales target of pork pigs (including hairy pigs and fresh products) is 11.
88 million heads, a year-on-year increase of 24.
5%; the total sales weight of livestock and poultry products in 2022 will increase by about 37.
97% compared with 2020, and the total operating income will increase by 13.
41% year-on-year.
The sales target is 2016.
5 million heads, a year-on-year increase of 111.
24%
.

But from the current point of view, the operating income of Wen's shares has not improved yet
.
In the first quarter of 2021, Wen's shares realized operating income of approximately 16.
816 billion yuan, a year-on-year decrease of 3.
60%; realized net profit of approximately 544 million yuan, a year-on-year decrease of 71.
28%
.
Wen's shares stated that in the pork industry, affected by changes in the domestic live pig market, the sales price of Wen's pigs dropped by 15.
69% year-on-year.
At the same time, in order to ensure the safe and stable development of the pig industry, Wen's continued to strengthen biosecurity Prevention and control have increased relevant inputs, superimposed on the impact of rising feed material prices, and increased costs and expenses, resulting in a significant year-on-year decrease in the profit of the pig raising business
.

Although the current performance has declined year-on-year, Wen's shares are still optimistic about the subsequent performance
.
Wen's shares stated that around the 2021 business plan goal, it will continue to promote the stable production and efficiency of the poultry business.
Because the impact of the new crown pneumonia epidemic on the supply and demand ends is lower than the same period last year, the sales price of broiler chickens in the first quarter of 2021 increased by 38.
84% year-on-year.
The sales price of ducks increased by 34.
01% year-on-year, and the poultry business performed well, with profits rising sharply year-on-year
.
At the same time, it is also stepping up efforts to promote the resumption of production in the pig industry, and the commercial pig seedlings increased by 46% quarter-on-quarter
.
According to Wen's response to the Shenzhen Stock Exchange on April 22, Wen's set a sales target of 11.
88 million pigs (including hairy pigs and fresh products) in 2021, a year-on-year increase of 24.
5%.
The sales target for 2022 is 20.
65 million.
Head, a year-on-year increase of 111.
24%
.

Many institutions are still optimistic about the follow-up development of Wen's shares
.
Among them, Kaiyuan Securities maintains an "overweight" rating for Wen's shares, and believes that the turning point of Wen's shares is approaching, and 2021 is expected to usher in an upward turning point for sows
.
At the same time, Wen's Co.
, Ltd.
established the breeding pig business department, the first pig industry and the second pig industry department, and the incentive effect was obvious
.
Galaxy Securities maintains a "recommended" rating on Wen's shares.
It believes that benefiting from the return of the average price of yellow chickens, Wen's shares will benefit significantly as a leader in the scale of yellow chickens, and the performance recovery can be expected.
At the same time, as the production capacity of sows increases, Wen's shares The production and cost of pig breeding will gradually improve
.

Regarding Wen's views on the performance changes in 2020, the advantages of the iteratively updated "company + modern breeding community" model and the "company + modern industrial park + professional farmer" model, Beijing News reporters successively called Wen's shares and sent interviews Letter, on the evening of April 22, Wen's shares stated that related questions will not be answered for the time being
.