Matters:
In February 22, 2022, Xinhua reported that the CPC Central Committee and the State Council had made good suggestions for the key work of Rural Revitalization in 2022, that is, the No. 1 central document issued in 2022. The Party Central Committee believes that to calmly cope with the changes in the century and the epidemic situation in the century and promote the stable and healthy development of economy and society, we must focus on the major strategic needs of the country, stabilize the basic situation of agriculture, do a good job in the work of “agriculture, rural areas and farmers”, continue to comprehensively promote the revitalization of rural areas, and ensure the stable production and increase of agricultural production, the steady increase of farmers’ income and the stability and tranquility of rural areas. Guoxin agricultural viewpoint: 1) in Document No. 1 of 2022, we believe that the core point lies in Rural Revitalization and seed industry revitalization. The Rural Revitalization Strategy is not only related to the issues of agriculture, rural areas and farmers, but also related to the trend of China’s overall economy, because rural areas contain a broad consumer market. At the same time, with the aging of China’s population and the problem of fewer children, the food supply must be in our own hands. It is the general trend to reasonably improve farmers’ income. Therefore, we believe that agriculture may usher in a historical window of urban feedback, and the agricultural growth stocks with excellent management will benefit the most. The core recommendations are Guangdong Haid Group Co.Limited(002311) , Muyuan Foods Co.Ltd(002714) and Yihai Kerry Arawana Holdings Co.Ltd(300999) . 2) The importance of intellectual property protection in the seed industry continues to rise, and the seed industry may usher in a new round of policy dividends. It is expected that the pattern of the industry will be reshaped after the implementation of GM; Considering the upward boom of grain prices such as wheat, corn and rice, the seed industry will usher in the resonance between cycle and growth. It is suggested to allocate by sector. 3) Risk tip: the uncertainty risk caused by bad weather, the potential risk caused by uncontrollable animal epidemic, and the promotion of GM landing is less than the expected risk. 4) Investment suggestions: from top to bottom, we are optimistic about the planting and seed sector in the cycle. Among them, the seed industry recommends: Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Shandong Denghai Seeds Co.Ltd(002041) , Beijing Dabeinong Technology Group Co.Ltd(002385) ; Planting recommendation: Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) . Recommend excellent growth stocks of the management from bottom to top, with core recommendations: Guangdong Haid Group Co.Limited(002311) (core growth stocks in the field of large agriculture), Muyuan Foods Co.Ltd(002714) (pig leader with low cost and rapid expansion), Yihai Kerry Arawana Holdings Co.Ltd(300999) (kitchen food leader).
Comments:
Rural Revitalization may continue to promote cities to feed agriculture, and the core growth stocks with excellent management will benefit.
It is mentioned in the document that to do a good job in the work of “agriculture, rural areas and farmers” in 2022, we should take the thought of socialism with Chinese characteristics in the new era as the guidance, fully implement the spirit of the 19th CPC National Congress and all previous plenary sessions of the 19th CPC National Congress, deeply implement the spirit of the central economic work conference, adhere to the general tone of seeking progress while maintaining stability, base ourselves on the new development stage, implement the new development concept, build a new development pattern Promote high-quality development, promote common prosperity, adhere to and strengthen the party’s overall leadership over the work of “agriculture, rural areas and farmers”, firmly adhere to the two bottom lines of ensuring national food security and preventing large-scale return to poverty, highlight annual tasks, targeted measures and effectiveness orientation, give full play to the leading role of rural grass-roots party organizations, and do a solid and orderly job in rural development, rural construction We will focus on rural governance, promote new progress in Rural Revitalization and take new steps in agricultural and rural modernization. We believe that the Rural Revitalization Strategy is not only related to the issues of agriculture, rural areas and farmers, but also related to the trend of China’s overall economy, because rural areas contain a broad consumer market. At the same time, with the aging of China’s population and the problem of fewer children, food supply must be in their own hands. It is the general trend to reasonably increase farmers’ income. Therefore, agriculture may usher in a historical window of urban feedback, and the agricultural growth stocks with excellent management will benefit the most, Guangdong Haid Group Co.Limited(002311) , Muyuan Foods Co.Ltd(002714) Yihai Kerry Arawana Holdings Co.Ltd(300999) and other enterprises with excellent management are expected to usher in new opportunities for development.
The importance of intellectual property protection in the seed industry has increased, and the seed industry may usher in a new round of policy dividends.
With regard to the seed industry, the document mentioned: vigorously promote the tackling of key agricultural core technologies such as seed sources. We will fully implement the action plan for the revitalization of the seed industry. We will accelerate the general survey and collection of agricultural germplasm resources and strengthen accurate identification and evaluation. Promote the construction of national major innovation platforms in the field of seed industry. Start major projects of agricultural biological breeding. We will accelerate the implementation of key agricultural core technology research projects, implement systems such as “showing leadership” and “ministry provincial linkage”, and carry out pilot long-term R & D projects. Strengthen the construction of modern agricultural industrial technology system. Carry out the pilot of subsidy after R & D and promotion of major varieties. We will implement the seed law, implement the system of substantive derived varieties, strengthen the protection of intellectual property rights in the seed industry, and severely crack down on illegal and criminal acts such as trademark infringement in accordance with the law. We believe that since the central economic work conference in December 2020, the seed industry has received key attention as the core of the industry. In the past year, it has ushered in a number of heavy catalysts, such as the improvement of the approval standards of corn and rice varieties, the adoption of the draft decision on Amending the seed law of the people’s Republic of China, and the implementation of the approval methods of genetically modified varieties, The homogenization of breeding in China is expected to be improved, and the business environment of seed enterprises on the supply side is expected to be better. The industry is expected to usher in a new round of policy dividends in the future, and the leading enterprises will benefit. It is suggested to allocate by sector.
The grain prices of wheat, corn, rice and other major crops are booming, which is good for the planting and seed sector.
With regard to grain planting and the purchase price of staple grain, the document mentioned: stabilize the sowing area and output of grain throughout the year. Ensure that the sown area of grain is stable and the output remains above 1.3 trillion kg. Actively respond to the adverse effects of late sowing of wheat, strengthen field management in winter and spring, and promote the transformation of weak seedlings into strong ones. In 2022, we will appropriately raise the minimum purchase price of rice and wheat, stabilize the subsidy policies for corn and soybean producers and rice subsidies, and achieve full cost insurance and planting income insurance for the three major grain crops, with full coverage in major grain producing provinces and counties. We believe that China’s grain price fundamentals have strong support this year, especially the late sowing of wheat in northern China affected by the weather last winter, which may reduce the output this year. At the same time, China’s corn supply and demand is still tight, and the inventory is at a historically low level. We are optimistic about the upward trend of grain price boom this year.
Investment suggestion: top-down sector key recommendation.
From the perspective of investment, we are optimistic about the planting and seed sector along the cycle from top to bottom: 1) seed industry recommendations: Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Shandong Denghai Seeds Co.Ltd(002041) , Beijing Dabeinong Technology Group Co.Ltd(002385) ; 2) Planting recommendation: Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) . Recommend excellent growth stocks of the management from bottom to top, with core recommendations: Guangdong Haid Group Co.Limited(002311) (core growth stocks in the field of large agriculture), Muyuan Foods Co.Ltd(002714) (pig leader with low cost and rapid expansion), Yihai Kerry Arawana Holdings Co.Ltd(300999) (kitchen food leader).
Risk tips
1. Uncertainty risk caused by bad weather. Agricultural planting enterprises are directly engaged in agricultural planting and production, and seed companies also need planting to produce seeds. In case of bad weather, it may damage the products of the listed company and cause losses to the company.
2. Potential risks caused by uncontrollable animal epidemic. Agricultural livestock and poultry breeding enterprises mainly focus on large-scale breeding. If an uncontrollable animal epidemic occurs, it may cause high mortality of livestock and poultry of listed companies, lower feed demand than expected, and have a negative impact on the planting chain.
3. The promotion of GM landing is less than the expected risk. At present, genetically modified maize and soybean varieties in China have obtained the safety certificate of agricultural genetically modified organisms, and then will enter the variety approval stage. If the subsequent stage is not progressing smoothly, it will affect the process of genetically modified promotion, and then affect the growth of enterprises.
