This week’s view:
Planting industry chain: the central economic work conference was held in Beijing from December 8 to 10, 2021, The meeting pointed out that “we should correctly understand and grasp the guarantee of the supply of primary products, put improving the comprehensive agricultural production capacity in a more prominent position, continue to promote the construction of high-standard farmland, deeply implement the action to revitalize the seed industry, improve the level of agricultural machinery and equipment, and ensure the reasonable income of grain farmers. The rice bowl of the Chinese people should be firmly in their own hands at all times.” Under the background of covid-19 pneumonia epidemic, food security has once again been highly concerned by the state. The central economic work conference raised the revitalization of the seed industry, which further shows the determination of the state to expand and strengthen the seed industry. We believe that the price of Shenzhen Agricultural Products Group Co.Ltd(000061) mainly corn will remain high, and the probability will continue for 1-2 years, and the seed industry will usher in an upward turning point of prosperity; In addition, the approval method for genetically modified varieties has been issued, and the commercialization has entered the countdown stage, which will promote the expansion of the seed industry. The head seed enterprises with strong R & D strength are expected to quickly expand their market share and continue to recommend the seed industry. In terms of target selection, we mainly recommend Beijing Dabeinong Technology Group Co.Ltd(002385) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) with obvious first mover advantage and Shandong Denghai Seeds Co.Ltd(002041) with excellent performance of hybrid maize varieties.
The perennial root of sugarcane in China is three years, but in Brazil and Australia it is five to seven years. This is the reason why the overall supply of sugar was sufficient in the past and the price of sugar did not rise for many years, but the cycle will only be late and will not be absent. It has been five years since the high point of the previous cycle in 2021. Superimposed on the higher than expected rise of oil prices and the large release of global currencies, as well as the frequent occurrence of global extreme climate caused by sunspot movement this year, a new upward cycle of sugar has begun and is expected to last until the second half of next year. In terms of target selection, the steady target focuses on recommending China’s sugar industry leader Cofco Sugar Holding Co.Ltd(600737) , and the elastic target Nanning Sugar Industry Co.Ltd(000911) is expected to benefit fully.
In addition, we continue to recommend chemical stocks Meihua Holdings Group Co.Ltd(600873) with a valuation of only 10 times. We expect that the performance elasticity of next year will come from the cost improvement brought by the new lysine production capacity and the decline of corn price at the end of the year. In the long run, the monosodium glutamate and amino acid industries are limited by the new capacity under the background of carbon neutralization, and the valuation center is expected to rise.
Pig breeding: according to pig Yitong data, the average price of pigs nationwide this week was 17.54 yuan / kg, down 2.87% on a weekly basis. According to the financial data of China Central Television, in October 2021, the number of fertile sows in China was 43.48 million, down 2.49% month on month, 6% more than the normal number of 41 million. It is expected that it may not be adjusted to the appropriate level until the first quarter of next year. Since October this year, driven by the oversold in the early stage and the recovery of consumption, the pig price has rebounded rapidly, and the breeding profit of the industry has changed from negative to positive. In the next few months, the de conversion range of the production capacity of fertile sows may be narrowed. However, considering that the fundamentals of oversupply of pigs have not changed, and the drag of pork consumption on pig prices in the first quarter of next year, especially after the Spring Festival, the trend of reducing the production capacity of fertile sows will continue. At the current time node, the market value of some high-quality pig breeding stocks has fallen to a historically low level, and the configuration window has been gradually opened. For the selection of specific targets, it is recommended in turn: Wens Foodstuff Group Co.Ltd(300498) , Jiangxi Zhengbang Technology Co.Ltd(002157) , Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) . In addition, New Hope Liuhe Co.Ltd(000876) , Tech-Bank Food Co.Ltd(002124) , Tecon Biology Co.Ltd(002100) , Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Tangrenshen Group Co.Ltd(002567) , Hunan New Wellful Co.Ltd(600975) , Shenzhen Kingsino Technology Co.Ltd(002548) are expected to benefit fully.
Risk statement
The recovery process of pig production capacity is less than expected, the product sales is less than expected, and the commercialization process of GM is less than expected.
