With the release of the No. 1 central document, many investors are beginning to pay close attention to the theme investment opportunities staged annually.
Many fund managers said that the central “No. 1 document” takes the protection of national food security as the core main line, so that the policy support sustainability and strength of the planting industry chain can be reconfirmed, and the sectors such as breeding, agricultural machinery and equipment and infrastructure may benefit to varying degrees.
No. 1 central document issued a heavy release of
public offering has been laid out in advance
In February 22nd, the CPC Central Committee and the State Council issued the opinions on doing a good job in promoting the key work of Rural Revitalization in 2022, which is the No. 1 central document of the nineteenth guiding agriculture, rural areas and farmers since twenty-first Century.
Affected by this news, Huaxia feed soybean meal ETF rose 4.26% in a single day. Since this year, the ETF has increased by 23.01%, leading the whole market.
From the past market performance, the promulgation of “Document No. 1” helped the performance of the agricultural sector. According to wind data, in 16 of the 17 years from 2004 to 2020, Shenwan agriculture, forestry, animal husbandry and fishery sector achieved cumulative positive earnings in 20 trading days after the promulgation of Document No. 1. Only in 2018, there was a slight decline of 0.19%, with an increase rate of 94% (16 / 17); In 2017, the agriculture, forestry, animal husbandry and fishery sector increased by an average of 9.2%, while the Shanghai Composite Index rose by 2.8% over the same period, outperforming the market by 6.4 percentage points.
For the agricultural sector, public funds have been laid out in advance and have been increasing their holdings in some leading companies since the second half of last year. According to wind data, by the end of 2021, the total market value of the agriculture, forestry, animal husbandry and fishery sector held by public funds was about 40 billion yuan, a significant increase of about 40% compared with 28.8 billion yuan at the end of the third quarter of last year; Compared with 22.5 billion yuan at the end of 2020, it is close to doubling the growth. The increase in the market value of positions is mainly due to the increase in the number of positions and the market value expansion of the sector. At the end of 2021, the public fund held 1.73 billion shares in the agriculture, forestry, animal husbandry and fishery sector, a net increase of 650 million shares compared with the third quarter. In terms of market value, in the fourth quarter of last year, the overall increase of CITIC agriculture, forestry, animal husbandry and fishery sector exceeded 10%.
For individual stocks in agriculture, forestry, animal husbandry and fishery sector, the top ten stocks heavily held by public funds in the fourth quarter of 2021 were Guangdong Haid Group Co.Limited(002311) , Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , Beijing Dabeinong Technology Group Co.Ltd(002385) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Shandong Denghai Seeds Co.Ltd(002041) , Winall Hi-Tech Seed Co.Ltd(300087) , Tecon Biology Co.Ltd(002100) , Jinyu Bio-Technology Co.Ltd(600201) , Fujian Sunner Development Co.Ltd(002299) . Among them, Wens Foodstuff Group Co.Ltd(300498) is the largest position increase by public funds.
At present, there are seven funds that have been established for three years and named “agriculture”. From the return in recent three years, the income of Cathay Pacific agriculture, ICBC Credit Suisse agricultural industry has doubled, and the return of Yinhua agricultural industry a and harvest agricultural industry in recent three years is also about 95%.
policy dividend continues to be available
focus on aquaculture, agricultural machinery equipment and infrastructure
In 2022, the No. 1 central document was landed. What important information was disclosed in the central document No.1? How does it affect the agricultural sector? What investment opportunities deserve attention?
Liu Hong, director of Qianhai Shenzhen open source agriculture and Hong Kong theme selection fund, said that the core of the No. 1 central document in 2022 is to stabilize the staple grain supply and stabilize the supply of seeds, to implement the seed industry vigorously, to support pig production, to accelerate the expansion of the cattle and sheep industry, and to enhance the quality of fishery development, covering almost all aspects of the agricultural sector, and to help agriculture at the policy level. It is conducive to the sound development of agricultural industry. From the perspective of investment, agriculture as a whole is expected to have greater investment opportunities. In terms of livestock and poultry breeding, after the decline of pig prices in the second half of last year, the whole industry suffered serious losses. It is expected that the production capacity will be cleared in the first half of this year, so as to usher in the rise of prices in the second half of this year, and the performance of relevant listed companies is expected to reverse. At the same time, the policy support for large-scale breeding enterprises is still in place, whether in terms of capital or land support, so as to ensure their long-term growth space. Overall, the investment opportunities of livestock and poultry breeding sector are relatively significant. At the same time, with the relatively severe overseas situation, rising international grain prices and the support of Chinese policies for the planting industry, companies in the relevant planting chain will also have greater investment opportunities.
Xu Wenhui, manager of modern agriculture plus fund of Agricultural Bank of China, said that the central “No. 1 document” focuses on ensuring national food security, reconfirming the sustainability and strength of policy support for the planting industry chain, and the sectors such as breeding, agricultural machinery and equipment and infrastructure will also benefit to varying degrees. Specific investment opportunities include the following:
First, in terms of cultivated land, the document attaches great importance to ensuring the guaranteed area and giving priority to ensuring food production, which is conducive to continuously boosting the seed demand of crops such as corn and rice. The policy of tackling key technical problems in seed, protecting intellectual property rights and comprehensively implementing the revitalization of seed industry, including promoting the industrialization of biological breeding and the research and development of high-quality varieties, is more clear, which is conducive to the switching from the core driving force of seed industry development to the upgrading of R & D and innovation, and is beneficial to biological breeding enterprises and seed industry leaders with the ability of sustainable research, development and innovation.
Second, in terms of grain prices, it is required to raise prices and stabilize subsidies, which is conducive to improving farmers’ demand and premium ability for high-quality corn and rice seeds. The increase of grain prices will also directly benefit the performance improvement of grain planting enterprises.
Third, it is clear to vigorously implement the soybean and oil production capacity improvement project. In the past two years, China’s vegetable oil industry has been trapped by the rise of raw material prices. It is expected that the oil area will increase significantly in the next two years, the situation of high external dependence will be gradually improved, and the oil related industries will focus on benefiting.
Fourth, ensure the supply of “vegetable basket” products and stabilize the long-term support policies for pig production. The document mentions vigorously promoting the transportation of vegetables from the south to the north, and requires that African classical swine fever be included in the key prevention and control scope again, which has a positive impact on the sustainable and healthy development of vegetable supply industry and pig industry chain.
Fifth, in terms of agricultural machinery and equipment, it is required to improve technical research, promote Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) development, and continue to implement agricultural machinery purchase subsidies. It is expected that the production and R & D of relevant equipment manufacturing enterprises will be further supported.
Sixth, in terms of infrastructure construction, the core of old infrastructure construction points to rural flood control and reconstruction of dangerous bridges, which is expected to increase the construction of water conservancy and highway infrastructure; The new infrastructure mentioned photovoltaic and other energy infrastructure for the first time, refined the construction of digital countryside, expanded the application scenarios of Rural big data, and benefited the scenery equipment, data center, etc.
Liu Min, a researcher in the agricultural industry of deppon fund, believes that the No. 1 document continues the two themes of food security and Rural Revitalization this year, and proposes to promote the revitalization of the seed industry, encourage intensive breeding and emphasize the stable development of pigs. The innovation of agricultural production is the biggest focus, among which seeds have become the key sector for the second consecutive year. The content of this year’s document is roughly the same as that of “going all out to promote the revitalization of seed industry” in September 21. The difference is that it puts forward the accurate identification and evaluation of seed resources, promotes the construction of national major innovation platform for seed industry, and carries out long-term R & D pilot. According to the progress of policy implementation last year, this year is an important year for the approval of genetically modified varieties. In the fastest case, genetically modified varieties are expected to be listed around 23 years. China is a large agricultural country but not strong, so the reform of China’s seed industry is no less significant than the localization of semiconductor field. Therefore, the biggest opportunity for investment comes from the genetically modified industry chain. For example, the seed industry itself can layout traits or seed companies, especially those enterprises with first mover advantage in the layout of genetically modified seeds. Secondly, we can pay attention to the pesticide and chemical fertilizer sector. Due to the adjustment of seeds, the types of pesticide and chemical fertilizer required have also changed, and the industry will accelerate the concentration and benefit advantageous enterprises. In addition, the pig sector is expected to usher in a profit reversal, and there will be opportunities for valuation repair.
Liu Yangxian, manager of Wanjia fund, said it was not hard to see that the No. 1 central document in 2022 kept a high degree of emphasis on seed industry, and continued to be a separate paragraph, and refined the relevant policy requirements. In addition, the non seed industry mainly focuses on the emergence of the contradiction between the supply and demand of staple grains, the deterioration of the contradiction between the supply and demand of corn, the stable production capacity of pigs, the unveiling of non plague seedlings, etc., which also reflects the improvement of the country’s tolerance for the rise of grain prices, and the grain prices are expected to remain high in 2022. Generally speaking, although the No. 1 document over the years has a short-term impact on the stock price, we can see the medium and long-term policy direction. The subsequent policy dividends of the seed industry continue to be expected, and the sector is moving from thematic speculation to high growth performance.
