The company’s performance enjoyed substantial surge in 2008, which was mainly because 1) Raw material price of forage rally greatly increased that of feedstuff, and 2) Price and quantity of live pig & piglets surged.
Viewing from business structure, the company’s revenue and profit were mainly sourced from forage business, of which the revenue and profit reported 93.98% and 83.89% of the total.
In terms of period, we consider forage industry is at the most prosperous point at the moment.
We predict its 2009-2010E EPS to be Rmb0.26 and Rmb0.42, representing dynamic P/E ratio at 39x and 24x based on closing price of Rmb10.03 on the previous trading day. Given that climate of forage industry might slide in Q2 2009, and that uncertainties of live pig price rebound is complicated, we temporarily lower its rating to “Neutral” for the moment.