The downward trend of the pig cycle is resisted by pig enterprises in the way of “replenishing the price by quantity”, but it is still difficult to escape the fate of loss. According to the recent performance forecast, except for the profit of Muyuan Foods Co.Ltd(002714) (002714, SZ), the other listed pig enterprises are basically “wiped out”. The downward cycle is not over, and the profitability and capital reserves of pig enterprises may still be tested. However, some institutions believe that the first quarter is the golden allocation period of pig stocks. Most analysts believe that the oversupply of pigs in 2022 will continue, there is still a risk of bottoming out in the middle of the year, and the fundamentals of pig prices are difficult to reverse.
who is swimming naked in the downward cycle?
In 2021, the pig industry bid farewell to the era of non plague high profit expansion. Although the overall listing of pig enterprises increased by 70% in 2021, most pig enterprises fell into the situation of “losing more when they sell more”.
According to the recent performance forecast released by pig enterprises, Jiangxi Zhengbang Technology Co.Ltd(002157) (002157, SZ) has a loss of 18.2-19.7 billion yuan, becoming the pig enterprise with the highest loss in the performance forecast. According to the net assets of 14.7 billion in the previous three quarters, Jiangxi Zhengbang Technology Co.Ltd(002157) may become negative assets in 2021. Most investors were shocked by the performance of Jiangxi Zhengbang Technology Co.Ltd(002157) . Some investors said: “the loss of pig enterprises was within expectations, but they didn’t expect Jiangxi Zhengbang Technology Co.Ltd(002157) to lose so much, and the amount of loss has quickly caught up with its market value in 2021.” The financial Associated Press reporter found that the loss of Jiangxi Zhengbang Technology Co.Ltd(002157) has reached an all-time high, and the sum of all profits since listing is less than the amount of pre loss in 2021.
Except for Muyuan Foods Co.Ltd(002714) , all listed pig enterprises basically lost money. Among them, Wens Foodstuff Group Co.Ltd(300498) (200498, SZ) lost 13 billion yuan to 13.8 billion yuan, New Hope Liuhe Co.Ltd(000876) (000876, SZ) lost 8.6 billion yuan to 9.6 billion yuan, Tech-Bank Food Co.Ltd(002124) (002124, SZ) lost 3.5-4 billion yuan, and Beijing Dabeinong Technology Group Co.Ltd(002385) (002385, SZ) pig business accounted for a relatively low proportion, with a loss of only 230 million yuan to 450 million yuan.
(Note: due to the limited advance notice information, the calculation formula of head average profit and loss is the lower limit of loss or profit range / listing volume)
For performance losses, most listed pig enterprises attributed the sharp decline in pig prices, Wens Foodstuff Group Co.Ltd(300498) said in the performance forecast: “during the reporting period, the price of live pigs fell sharply. At the same time, due to the continuous rise in the price of feed raw materials, the fattening of some pig seedlings purchased by the company and the continuous promotion of pig breeding optimization, the profit of the company’s pig breeding business fell sharply year-on-year, resulting in deep losses.”
Although the 2021 pig price has entered the downward channel, it is not completely unprofitable. Recently, the Ministry of agriculture and rural areas said that from the perspective of pig breeding income, except for the loss from June to October, the other seven months were more profitable. According to the weighted average of slaughter volume, there was still a profit of 564 yuan per slaughter pig in the whole year, which was higher than the profit level of about 200 yuan in normal years.
It is worth mentioning that the elimination rate of fertile sows in the fourth quarter of Jiangxi Zhengbang Technology Co.Ltd(002157) 2021 was amazing. The performance announcement said that in order to improve the efficiency of sows, optimize resources, reduce costs and ensure the safety of funds, the population was further optimized, with a total of about 2.2 million dead breeding sows and backup sows, with a loss of 6.2-6.8 billion yuan. At the end of the reporting period, the company had 380000 breeding sows, 220000 reserve sows and 100000 GGP + GP in total. But in the previous research activities, Jiangxi Zhengbang Technology Co.Ltd(002157) said that as of the end of the three quarter, the company could produce 1 million sows and 400 thousand backups.
2022 pig enterprises still need to wrap “cotton clothes”
In 2022, the oversupply of pigs will continue. Maintaining cash flow, reducing cost and increasing efficiency are still the main measures for pig enterprises to survive the pig cycle.
Gao Yang, pig analyst of Shanghai Ganglian E-Commerce Holdings Co.Ltd(300226) Shenzhen Agricultural Products Group Co.Ltd(000061) business unit, said that the number of sows eliminated decreased significantly month on month in December 2021, and there was still an appropriate increase in the number of sows added, which led to the increase in the number of fertile sows month on month. In December, the number of piglets increased slightly month on month, and has maintained a strong trend in recent months, which will also lead to the marketing pressure from March to April 2022, which is likely to continue to may or even longer.
For listed pig enterprises, pig prices change at any time, and cost improvement is a constant topic. The breeding cost of most pig enterprises has improved significantly in 2021. It is reported that the goal of Muyuan Foods Co.Ltd(002714) 2022 is to reach 13 yuan / kg in stages, and the cost goal of Wens Foodstuff Group Co.Ltd(300498) 2022 is 15.6 yuan / kg.
(Note: cost improvement dynamics of the top five pig enterprises in 2021 sorted out by the financial Associated Press reporter source: Announcement and research minutes)
At present, except for Muyuan Foods Co.Ltd(002714) , the breeding cost of large pig enterprises is still generally higher than that of retail investors. According to industry insiders, the cost of retail investors is low and has great flexibility in the process of capacity removal. In the future, the pig industry may be “polarized”, and medium-sized breeding plants may be eliminated rapidly due to high cost and low degree of scale.
According to the seasonal law of consumption, the demand will continue to be weak from February to March 2022. Some analysts believe that the pig price may hit the bottom again in the second quarter of this year, and the deregulation of production capacity will intensify. Guotai Junan Securities Co.Ltd(601211) securities recently pointed out that the acceleration of capacity deregulation will begin after the Spring Festival, reiterating the judgment of “the second wave has been started”, “the first quarter is the gold allocation period” and “the first half of the year is better than the second half of the year”. Some institutional sources said that there are funds to buy and the expectation is reversed, but the fundamentals of the downward cycle of pigs in 2022 have not changed.
