Market review this week
Last week (2022 / 2 / 7-2022 / 2 / 13), the CSI 300 index rose by 0.82%, and the agriculture, forestry, animal husbandry and fishery index rose by 5.26% in the same period, outperforming the CSI 300 index by 4.44 percentage points, ranking ninth among the 28 Shenwan industries.
In terms of sub sectors, the livestock and poultry breeding / planting / animal health / Shenzhen Agricultural Products Group Co.Ltd(000061) processing / feed / fishery sectors rose or fell by 8.23%, 4.29%, 3.83%, 2.09%, 1.18% and 0.9% respectively last week.
Core ideas of this week
[pig breeding] on February 8, the national development and Reform Commission issued a document to start the collection and storage of pork reserves as appropriate and guide local governments to carry out the collection and storage according to regulations. However, we believe that the special production cycle, market concentration and consumption rigid demand attribute of pork determine that it is one of the most difficult products to be regulated by the price department of the national development and Reform Commission. The market supporting effect of the pork purchase and storage policy is limited. According to historical experience, after each start of pork purchase and storage, the pig price will probably rebound slightly in the short term, but will basically continue the downward trend in the end, Therefore, we maintain the judgment that the one-day pig price fell to 10 yuan / kg in the second quarter of this year. Judging from the feed output in 2021 recently announced by the feed industry association, the pig feed output reached a new high in 2021, which indicates that the base of pig stock is still large. The pressure on pig supply in the first half of 2022 is not small. Superimposed with the off-season of post holiday meat consumption, pig prices are bound to accelerate the bottom. Considering that the feed costs such as corn and soybean meal remained high in the first half of the year and the capacity of the industry may be accelerated under deep losses, we may see the industry actively eliminate sows with offspring in the second quarter. The price of eliminated sows is expected to reach a new low, and the expectation of a new round of cycle reversal is continuously strengthened.
[white feather broiler] this week, slaughtering enterprises have resumed operation one after another, with a relatively low operating rate. The trading volume after the festival is small, mainly with an appropriate amount of replenishment. The frozen chicken products have increased steadily, and the slaughter volume of broiler chicken has decreased, supporting the chicken price; After the Spring Festival, the enthusiasm to fill the hurdles increased, and the price of chicken seedlings rebounded at a low level. The slaughtering enterprises will return to normal next week, and some frozen products will be strong. However, the supply of chicken is increasing. It is expected that the price of chicken will be adjusted after next week. After the Spring Festival, the chicken seedling supplement is normal, and the supply of chicken seedlings in chicken farms is restored, but the risk of loss is increased in the future. It is expected that the price of chicken seedlings will stop rising next week, and the power to continue rising is limited.
[animal protection] pay attention to the new progress in the research and development of non plague subunit vaccine.
The review and evaluation of veterinary drugs for emergencies and the review and evaluation of veterinary drugs for emergencies can be initiated by the Ministry of agriculture, and the review and evaluation of veterinary drugs for emergencies can be given priority. The evaluation center shall carry out emergency evaluation according to the requirements of the Veterinary Bureau of the Ministry of agriculture, focusing on the safety, effectiveness and quality controllability of veterinary drugs, and non key data may not be provided temporarily. If it is suggested that it can be used for emergency, the Veterinary Bureau of the Ministry of Agriculture shall put forward review opinions according to the evaluation opinions of the evaluation center, and issue technical standard documents after being approved by the leaders of the Department in charge. Relevant veterinary drug manufacturers shall apply for temporary veterinary drug product approval number in accordance with the measures for the administration of veterinary drug product approval number.
At present, some enterprises have submitted the application for emergency evaluation of African classical swine fever genetic engineering subunit vaccine to the Ministry of agriculture and rural areas. The subunit vaccine has absolute advantages in safety. Generally, there is no problem similar to the strengthening of gene deletion vaccine strain. Once the emergency evaluation is passed, it is likely to directly enter the application stage of veterinary drug products. We have observed that the Ministry of agriculture and rural areas has recently adjusted the emergency evaluation criteria to promote the rhythm of non plague vaccine R & D and commercial application. If it is successfully commercialized in the future, it will drive the expansion of the whole vaccine sector and usher in major adjustments in the industry competition pattern. It is recommended to focus on Pulike Biological Engineering Inc(603566) with the advantage of subunit vaccine research and development.
[seed industry] we believe that the short-term valuation correction of the seed industry sector will not change the long-term trend of the industry. The intensive introduction of seed industry policies in 2021, the release of national corn and rice variety approval standard (revised in 2021) and the adoption of the draft amendment to the seed law are aimed at encouraging seed industry innovation and combating deck infringement, We believe that the intellectual property protection mechanism of seed industry will continue to be strengthened in the future, which is conducive to seed enterprises with technological innovation ability to seize a higher market share. In 2022, China’s corn supply and demand remained tight, the price fluctuated at a high level, and the price of soybean meal continued to strengthen due to the rise of us beans. We believe that under the high grain price, China’s biological breeding related support policies are expected to be further introduced.
Investment advice
[pig breeding] cost reduction and efficiency increase in 2022 is still the main theme of the industry. We select the target according to the enterprise’s “changes in sow stock” and “cost improvement”. The former determines whether it can step on the right pace next year, while the latter determines whether it can survive the cold winter and profit space next year. We mainly recommend the leader Muyuan Foods Co.Ltd(002714) (with significant cost advantage and seriously underestimated head average market value), And other pig enterprises with abundant cash flow, large room for cost improvement and predictable marketing.
[white feather broiler] the industrial chain has experienced a loss for one year. The deep loss in the downstream inhibits the enthusiasm to make up the fence. The decline in the price of chicken seedlings affects the profits of the incubator, or forces the chicken breeding farm to take the initiative to reduce the production capacity. We may see the month on month contraction of the supply of chicken seedlings in the third quarter of 2022, and follow-up pay attention to the changes in the stock of grandparents and parents. Recommend enterprises that focus on the layout of the whole industrial chain business and the target of the upstream main chicken seedling sales business.
[yellow feather broiler] even if the industry accelerates the clearing of production capacity at the low point of the cycle, the head enterprises still expand against the trend. It is expected that the market share of the head enterprises will further increase after the gradual withdrawal of free range farmers in the future. It is recommended to pay attention to the leading leaders in continuous capacity expansion and cost control, as well as enterprises that comply with the development trend of frozen fresh sales.
[dynamic insurance] the sector has fallen to a reasonable range due to the drag of pig price. It is expected that the reversal of pig price in the second half of 2022 will lead to the upward prosperity of the industry, and the sector is expected to usher in valuation repair. It is suggested to lay out at a low level. It is recommended to pay attention to Pulike Biological Engineering Inc(603566) with obvious advantages in subunit vaccine research and development, as well as industry leaders with rich product reserves.
[seed industry] with the intensive introduction of favorable policies and the improvement of supply and demand fundamentals, the industry has ushered in an upward cycle. It is expected that high-quality seed enterprises will usher in a performance release period in the next few years, the curtain of genetically modified organism breeding will open, the corn seed industry will usher in strong capacity expansion expectations, and the leading seed enterprises may usher in a high-speed growth stage. It is recommended to pay attention to the leading Yuan Longping High-Tech Agriculture Co.Ltd(000998) and other seed enterprises with rich reserves of transgenic technologies and varieties.
Risk tips
Covid-19 epidemic spread risk, international situation change risk, policy implementation less than expected risk, etc.
