Whether the A-share pig breeding sector with the lowest performance in 2021 can usher in the turning point of the cycle this year has become the focus of the market. As of the closing on February 15, except for Muyuan Foods Co.Ltd(002714) (002714. SZ), the top listed pig enterprises have disclosed the pig sales briefing in January.
On the whole, all major pig enterprises achieved month on month and year-on-year growth in pig sales in January. However, pig enterprises are still facing the situation of “volume increase and price decrease” due to the continuous shock and falling pork price.
At present, the peak season of pork consumption has passed, and at the time of declining demand, the national pig price has fallen rapidly after the festival, once again falling below the break even point of the whole industry. According to the data of China pig breeding network, on February 15, the price of Sanyuan live pigs across the country was reported as 12.57 yuan / kg, down 12.22% month on month and more than 60% year-on-year.
From the past years, the first quarter after the Spring Festival to the second quarter is often the off-season of pork consumption, adding that the overall pig supply is in the stage of surplus, and there is still downward pressure on pig prices. With the gradual opening of the second wave of capacity removal, the performance “cold winter” of listed pig enterprises in 2022 has just begun.
pig prices fell to a new low in the year, and the sales of listed pig enterprises in January “increased in volume and decreased in price”
Due to the substantial preparation of pork before the Spring Festival, all listed pig enterprises achieved a month on month increase in pig sales in January.
According to the sales briefing, in January, New Hope Liuhe Co.Ltd(000876) (000876. SZ) sold 1292600 pigs, up 20.62% month on month and 76.61% year-on-year. The company said that the year-on-year increase in pig sales was mainly due to the normal release of production capacity. Compared with the middle of 2020, the supply of piglets in the middle of 2021 increased significantly.
In addition, Wens Foodstuff Group Co.Ltd(300498) (300498. SZ) sold 1506100 pigs (including hairy pigs and fresh products), with a month on month increase of 22.75% and a year-on-year increase of 50.01%; Jiangxi Zhengbang Technology Co.Ltd(002157) (002157. SZ) sold 958700 pigs (including 69800 piglets and 888900 commercial pigs), up 19.07% month on month and 21.86% year-on-year.
The sales of live pigs in January of Tech-Bank Food Co.Ltd(002124) (002124. SZ) decreased by 18.01% year-on-year and increased by 3.7% month on month. A total of 381300 commercial pigs were sold (including 7479 piglets). “Pig king” Muyuan Foods Co.Ltd(002714) has not disclosed the sales briefing, and the company usually chooses to disclose the sales from January to February in March each year.
Although the sales volume of pigs in the head pig enterprises increased significantly, the decline of pig prices still dragged down the sales revenue. During the reporting period, the sales revenue of Jiangxi Zhengbang Technology Co.Ltd(002157) and Tech-Bank Food Co.Ltd(002124) both fell month on month, with a year-on-year decline of more than 60%. New Hope Liuhe Co.Ltd(000876) achieved a sales revenue of 1.638 billion yuan, a year-on-year decrease of 34.66% and a month on month increase of 6.78%. Wens Foodstuff Group Co.Ltd(300498) sales revenue fell by nearly 40% year-on-year.
In October last year, the price of three yuan pigs across the country fell to 10.63 yuan / kg, the lowest point so far in this cycle. Since then, pig prices have rebounded, with a range rebound of nearly 80%. Since this year, pig prices have fluctuated and fell again, falling to about 12.57 yuan / kg from 16.43 yuan / kg in early January.
\u3000\u3000 “After a large stock of pork before the Spring Festival, the overall demand after the festival is at a low level. The supply and demand pattern is still strong and the demand is weak, resulting in the rapid decline of pig prices across the country. Since July last year, the number of fertile sows in the current cycle fell for the first time month on month and lasted for several months, but the number of fertile sows still needs to be closely monitored, which is not the only standard to judge the trend of the cycle. Obviously, the last round of pig prices reversed The bomb has hindered the process of capacity removal, and there is great downward pressure on pig prices in the off-season of consumption. ” An agricultural breeding industry analyst told reporters.
The above analysts told reporters that it is expected that pig prices will still face downward pressure at least before the end of the second quarter. “The process of the second wave of de capacity is an important factor determining the downward space of pig prices. In the medium and long term, the process of periodic bottom grinding is slow, and the situation of relative excess supply is difficult to be completely reversed. Pig prices may rebound periodically and seasonally in 2022, and the annual average price is expected to remain relatively low.” He said.
pig enterprises continued to spend the winter in the first half of the year
In 2021, with the sharp and rapid decline of pig prices, the performance of listed pig enterprises ranked the bottom in the whole industry. The Jiangxi Zhengbang Technology Co.Ltd(002157) and Wens Foodstuff Group Co.Ltd(300498) are expected to have the highest losses of 19.7 billion yuan and 13.8 billion yuan respectively, and the amount and scale of losses are the penultimate and fifth in the whole market respectively.
Among them, the huge loss of Jiangxi Zhengbang Technology Co.Ltd(002157) leads to negative net assets. From February 7 to 8, the share price of Jiangxi Zhengbang Technology Co.Ltd(002157) fell continuously. On February 9, the share price of the company fell to 6.6 yuan, the lowest since February 2019. As of the closing on February 15, Jiangxi Zhengbang Technology Co.Ltd(002157) shares reported 7.21 yuan, with a total market value of 22.7 billion yuan.
The loss of the whole industry and the bottom of the cycle are undoubtedly confirmed, but the process of grinding the bottom of pig prices is long and painful. If the inflection point does not appear for a day, it will be difficult for listed pig enterprises to turn around their losses. After the reporter’s statistical announcement, it was found that the planned marketing volume of mainstream listed pig enterprises in 2022 is expected to increase by more than 30% compared with that in 2021.
Muyuan Foods Co.Ltd(002714) according to the equity incentive plan recently launched, the performance assessment target set for this equity incentive is that the growth rate of pig sales in 2022 and 2023 is no less than 25% and 40% based on 2021, with corresponding values of 50.33 million and 56.37 million respectively. In 2021, the company realized the sales of 40.263 million pigs, including 36.887 million commercial pigs and 3.095 million piglets, 281000 breeding pigs.
This means that the supply of only the head listed pig enterprises is still growing. The company should not only ensure the planned growth of the slaughter volume and lay the foundation for the “profit run” after the cycle reversal, but also face the challenges of operating costs and tight cash flow caused by the depressed pig price.
Taking Wens Foodstuff Group Co.Ltd(300498) as an example, the company said in the recent survey minutes that the company will continue to adjust the cost in four aspects: cost, dead Amoy, feed and seedling this year, and make some structural adjustments in areas with high cost and high operating pressure, so as to optimize the current scale and reduce the cost.
“From the perspective of the industry breakeven line, if the pig price is higher than 13 yuan / kg, effective elimination cannot be formed, and the inflection point of the cycle fundamentally depends on the process of capacity elimination.” The above analysts told reporters, “after the Spring Festival, the national development and Reform Commission has said that it will start the collection and storage of frozen meat according to the situation. In the short term, the collection and storage has limited boost to the pig price, but the collection and storage is expected to stabilize the market sentiment, stabilize the bottom of the pig price and reduce the risk of panic pressure or selling.”
In the secondary market, the existing market funds have arranged pork stocks in advance. Since the beginning of this year, the stock prices of nine pork stocks have increased by more than 10%, and Fujian Aonong Biological Technology Group Incorporation Limited(603363) (603363. SH) has recorded a cumulative increase of 57.17%, leading the rising sector; Leshan Giantstar Farming&Husbandry Corporation Limited(603477) (603477. SH) set a record intraday high on February 11, followed by a cumulative increase of 48.39% this year; Muyuan Foods Co.Ltd(002714) rose 10.91% in total, Wens Foodstuff Group Co.Ltd(300498) and New Hope Liuhe Co.Ltd(000876) rose 9.76% and 6.64% respectively, significantly outperforming the main stock indexes.
For the rebound of the pig sector, the aforementioned analysts said that although the process of cycle bottom grinding is painful, the worst period of the whole sector is probably over. “Combined with the cycle trend and the valuation cost performance of pig enterprises, at present, the valuation of mainstream companies is at the bottom range, and the purchase of breeding stocks by funds is the expectation of Bo, the rising logic of emotional repair, and the repair of performance still needs to wait.” The analyst said, “there are many factors affecting the cycle. During the bottom grinding period, listed pig enterprises should reduce investment, maintain effective production capacity and smoothly get through the bottom of the cycle.”
