This week's market
Shenwan agriculture, forestry, animal husbandry and fishery industry (- 2.12%), ranking of Shenwan industry (3 / 28); Shanghai Stock Index (- 4.57%), CSI 300 (- 4.51%), small and medium-sized 100 (- 4.02%); Important information
On February 5 (the fifth day of the first month), according to the China pig breeding network, the national three yuan price of pigs is 14.25 yuan / kg. During the Spring Festival, the supply and demand of pork are booming. On the fifth day of the lunar new year, the three yuan price of domestic pigs increased slightly by 1.1% compared with the new year's Eve, and the price is basically stable.
On January 24, the Ministry of agriculture and rural areas formulated and published the guidelines for safety evaluation of agricultural gene editing plants (Trial), which further standardized the safety evaluation management of agricultural gene editing plants, which is a milestone for the research and development of biological breeding technology and industrial promotion in China. The regulatory policy for plant safety evaluation of gene editing in China has been greatly simplified, which is expected to further accelerate the industrialization of biological breeding in China.
On January 28, the farmer's daily announced that in 2021, agricultural comprehensive administrative law enforcement agencies at all levels throughout the country had inspected seed bases 13000 times and seed enterprises 16000 times, investigated and dealt with 6581 cases of illegal seeds and transferred 58 cases to judicial organs. The role of agricultural comprehensive administrative law enforcement team in escorting the revitalization of seed industry is becoming more and more obvious.
Core view
Breeding industry: in terms of pigs, supply and demand are booming during the Spring Festival, and the market is running smoothly. Historically, with the weakening demand after the Spring Festival, there is downward pressure on the pig market. In terms of volume, boosted by the demand of the Spring Festival, the overall sales volume is high, the demand slows down after the festival, and the overall sales volume gradually decreases. From the quarterly slaughter of industrial pigs in the past five years, the average slaughter of 160 million pigs in the second quarter was 25.1% lower than that in the first quarter. In terms of price, years ago, the demand for preparation of cured enema basically ended, the epidemic suppressed some demand, the market supporting policy withdrew, and the listing of major breeding enterprises accelerated, easing the overall relationship between supply and demand. In terms of listed companies, the average sales price of major listed pig enterprises in December decreased except Zhengbang, and the average monthly sales price of muyuan and Wenshi decreased by 7.6% and 5.7% respectively. During the Spring Festival, the supply is guaranteed, the demand for fresh meat is strong and the market is stable. On the fifth day of the lunar new year, the three yuan price of pigs in China rose slightly by 1.1% compared with new year's Eve, and the price was basically stable. Historically, the market will gradually decline after the festival. In the past five years, the price of pigs in the month of the Spring Festival was 21.3 yuan / kg, and the average price in the next month and the second month after the festival decreased by 0.9% and 7.4% respectively. In terms of profit, pig breeding returns to the loss range with the decline of the market. As of January 28, the profit of pig self breeding was -311.55 yuan / head, and the capacity of the industry was eliminated or accelerated.
We believe that with the end of the peak consumption season and the repeated suppression of some demand by the epidemic, there will be some downward pressure on pig prices in the future. 1) On the supply side, according to the Ministry of agriculture and rural areas, the number of newborn piglets in large-scale farms in August 21 (corresponding to February 22) was 33.48 million, a year-on-year increase of 31.1%. By the end of 2021, there were 43.29 million fertile sows in China, with a month on month increase of 0.8%, which was still higher than the normal population of 41 million fertile sows. In addition, in November, the national pig feed output was 11.41 million tons, an increase of 4.6% month on month, which reflects that the industry stock is still abundant. Overall, China's pig production will remain abundant for some time to come; 2) On the demand side, with the passage of time, the production and preparation of bacon and sausage at the end of the peak consumption season are basically completed. In addition, considering the impact of the recent epidemic control on the overall consumption, the demand in this round of peak season will be callback after the peak.
We believe that the game of pig sector has entered the stage of 3.0. The classic cobweb model reflects the market logic of price reduction - > production reduction - > short supply - > price increase - > production increase - > price reduction. From the historical and recent performance of the capital market, the game of the capital market against the pig sector has gradually evolved from the initial "price increase" (stage 1.0) to "production reduction" (stage 2.0) to "price reduction" (stage 3.0). From January 1 to 15, although the price of pigs decreased by 12.95%, the Shenwan breeding sector increased by 3.26%, and the specific pig listed companies increased significantly. Obviously, the capital market has digested the expectation of price reduction at the beginning of the year and formed a certain expectation of production reduction and upward expectation in the future cycle in advance. "The lower the price, the lower the production, and the higher the share price". The logical chain of "cobweb model" of capital market game continues to move forward.
In terms of trading, considering that the capital market has reflected the expectation of a certain reversal of pig cycle, it is suggested to pay attention to the fluctuation caused by the short-term price reduction and production reduction. However, on the whole, the low pig price in the third quarter and the extreme value of the sector breeding loss also mean that the most pessimistic expectation of the sector has been released, and there is a safety margin down the sector. From the recent breeding profits, the self breeding and outsourcing piglet breeding profits have entered the loss range one after another, and the capacity removal will be accelerated. Bargain hunting intervention is a more appropriate strategy. However, this round of pig cycle will return to the Epic Cycle of 19 years, which does not have the external environment of environmental protection and non plague impact on production capacity. It is suggested to maintain rational expectations.
In terms of broilers, we believe that the supply and demand fundamentals of yellow feather chicken will promote the market cycle upward. 1) On the supply side, the long-term breeding loss in the early stage makes the industry's production capacity obvious. According to the China Animal Husbandry Association, the stock of parents' generation of yellow feather broilers was 13.4356 million in November, which has been at the low point of nearly four years. We believe that the overall production of yellow feather broilers in 22 years will be at a low level in recent years. 2) On the demand side, as the market of live pigs and other animal proteins bottoms out, the substitution squeeze of yellow feather broiler demand will gradually ease and the margin will be better. In addition, the consumption of live poultry suppressed by the epidemic has been fully digested in the past two years, with marginal improvement; In the short term, it is supported by consumption at the end of the year, boosted by long-term economic recovery, and the yellow feather broiler sector is expected to usher in a business cycle. Pay attention to the relevant targets of Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Hunan Xiangjia Animal Husbandry Company Limited(002982) , Wens Foodstuff Group Co.Ltd(300498) and other sectors.
In terms of industrial chain integration, we believe that head breeding enterprises extend to downstream slaughtering and processing, food manufacturing and even terminal sales by virtue of their advantages of upstream integration and large-scale, with continuous enrichment of business and continuous improvement of value. Head breeding enterprises are expected to rely on their core advantages to continuously improve their competitiveness and open the performance growth curve.
Key recommendations: China's large-scale aquaculture leaders with obvious cost advantages [ Muyuan Foods Co.Ltd(002714) ], and [ New Hope Liuhe Co.Ltd(000876) ] and [ Fujian Sunner Development Co.Ltd(002299) ] with rapid progress in industrial chain integration.
Planting industry: the seed industry has ushered in a historic opportunity of "three-phase superposition". During the policy period, the central government will issue an action plan for the revitalization of the seed industry to promote the development of the seed industry in five aspects: Comprehensively Strengthening the protection and utilization of germplasm resources, vigorously promoting the innovation and tackling key problems of the seed industry, supporting the development of advantageous seed enterprises, improving the construction level of seed industry base, and severely cracking down on illegal acts such as license infringement. During the industrial period, bulk grain prices remained high, farmers' willingness to grow grain increased, and corn and rice seed stocks, supply and demand were optimized, promoting the prosperity of the seed industry. The commercialization of transgenic technology is approaching. On January 21, four regulations related to agricultural genetically modified organisms, including the measures for the administration of safety evaluation of agricultural genetically modified organisms, the measures for the examination and approval of major crop varieties, the measures for the administration of crop seed production and operation licenses, and the provisions on the naming of agricultural plant varieties, were officially implemented.
In the medium and long term, we are firmly optimistic about the prospects of the national seed industry and the improvement of the fundamentals of relevant seed enterprises. Under the banner of seed industry revitalization, the iteration and reconstruction of the industry are constantly implemented from top to bottom, which is highly deterministic. "Iteration" refers to the iteration of biological breeding technology. In January, relevant policies on transgene and gene editing were implemented to support the efficient approval of relevant varieties and show the determination and strength of the policy.
"Reshaping" is the reshaping of the industry pattern. On November 24, the National Conference on promoting the work of supporting excellence of seed enterprises once again stressed that "we should improve and strengthen a number of seed industry leading enterprises with integrated innovation ability and adapt to market demand, and build the backbone force for the revitalization of seed industry". Dragon seed enterprises with scientific research advantages will become more and more prominent. "Top down" refers to the implementation of policies, systems, supervision and law enforcement under the banner of seed industry revitalization. The overall industry fundamentals will be better and better.
Recently, there has been an obvious adjustment in the seed industry sector. The CITIC seed industry index fell by 2.08%, Yuan Longping High-Tech Agriculture Co.Ltd(000998) fell by 4.9%, Beijing Dabeinong Technology Group Co.Ltd(002385) rose by 1.2%, Shandong Denghai Seeds Co.Ltd(002041) rose by 1.5%. We believe that there are three main reasons: first, the early sector has accumulated too high policy expectations, especially for the work and policy expectations of agriculture, rural areas and farmers around food security and seed industry security at the end of 21 and the beginning of 22; Second, it will take time to realize the achievements of the seed industry, especially the achievements of biological breeding. We expect that the approval and promotion of biological breeding varieties can be carried out by the end of 22 at the earliest; Third, the recent style of China's foreign markets has put some pressure on the growth sector.
In terms of trading, we believe that although there is a time cycle for the achievement of the industry performance, the revitalization of the seed industry is sustained and certain. The cashing cycle will inevitably lead to the settlement of "impetuous" funds and fluctuations, but it also brings opportunities for bargain hunting allocation to "long-term" funds. Retreat from the "floating foam" with high short-term expectations, and with the style suppression coming to an end, there will be better trading opportunities. Key recommendations: seed industry leaders with genetically modified trait reserves [ Yuan Longping High-Tech Agriculture Co.Ltd(000998) ], leading genetically modified technology and multiple businesses [ Beijing Dabeinong Technology Group Co.Ltd(002385) ].
Pet industry: pet industry is a high-quality track catering to social development and consumption trend. According to the white paper on China's pet industry, China's pet industry has a market scale of 100 billion, with a compound annual growth rate of nearly 20%. At present, overseas giants occupy a high share of China's pet food and medical market segments. We believe that the branding of domestic OEM enterprises will continue to accelerate, and have comparative advantages in understanding and deepening Chinese traditional and modern channels. The pet industry will usher in opportunities for domestic substitution, and we will continue to follow up and pay attention. Key recommendation: China's pet food industry leader [ Yantai China Pet Foods Co.Ltd(002891) ].
Grain and oil industry: affected by the Shenzhen Agricultural Products Group Co.Ltd(000061) cycle, the disturbance of global supply chain under the epidemic and other factors, the prices of oilseeds such as soybeans have risen, the cost side pressure of grain and oil enterprises has become prominent, and the squeezed profits have declined significantly. We believe that the performance of grain and oil enterprises is expected to recover as the cost side - the pressure in the future Shenzhen Agricultural Products Group Co.Ltd(000061) cycle will improve marginally and the demand side - ushers in the Spring Festival stock season at the beginning of the year. Focus on integrated supply chain management and operation of leading enterprises.
Key recommendation: grain and oil leader [ Yihai Kerry Arawana Holdings Co.Ltd(300999) ] that is expected to develop in the overall kitchen business.
Risk tip: the economic recovery is less than expected, the epidemic situation, etc
