Market review this week
Last week (2022 / 2 / 212022 / 2 / 25), the CSI 300 index fell by 1.67%, and the agriculture, forestry, animal husbandry and fishery index fell by 3.27% in the same period, underperforming the CSI 300 index by 1.6 percentage points, ranking 21st among 28 Shenwan industries.
In terms of sub sectors, the growth and decline of planting / Shenzhen Agricultural Products Group Co.Ltd(000061) processing / fishery / animal health / feed / livestock and poultry breeding sectors last week were 0.39%, 0.07%, - 1.04%, - 1.89%, - 3.68% and - 5.25% respectively.
Core ideas of this week
Accelerate pig breeding or de production capacity
How to view the recent slight rise in pig prices?
After the recent deep drop in pig prices, there has been a slight rebound. On the one hand, according to our analysis, the pork collection and storage is about to start. According to the historical law, the pork collection and storage will probably boost the pig price in the short term. At present, the breeding end and slaughtering end are optimistic about the trend of pig price after the collection and storage work is started in early March. Farmers resist the price and reluctant to sell, and the slaughtering end's mood of reducing the price has also converged; On the other hand, based on the reduction of sows after June 2021, the market speculated that the supply of pigs began to decrease in April this year, and then bullish on the pig price from April to may, resulting in the reappearance of the phenomenon of fence pressing and secondary fattening; Secondly, the recent continuous rise in the price of feed raw materials has also formed a certain support for pig prices. However, we believe that the boosting effect of pork collection and storage on pig prices is limited. The current market pressure and secondary fattening only delayed the release of supply, and the situation of excess supply has not changed under the background that the demand recovery is less than expected. The pig price may rise slightly in early March, and then fall again with the full release of pressure and secondary fattening.
What is the current market game?
The current market dispute is the extent of capacity removal in February. At present, the market is not satisfied with the data that the number of fertile sows in China decreased by 0.9% month on month in January, and believes that the extent of capacity removal is far from enough to start a new cycle, and the new cycle inflection point may be delayed. At present, the production capacity in the north is faster than that in the south, and retail investors are faster than large-scale farms. The loss state of breeding subjects is not fierce enough, and the industry takes the initiative to eliminate binary sows is still relatively few. We believe that the statistics of eliminated sows ignore the ternary sows with less parity or cause data distortion. Recently, we observed that some moderate scale farms have begun to liquidate pig farms, reflecting the fact that they are short of funds. The data of sows depopulation in February may exceed market expectations. At present, some enterprises are blocking the market in April and may, but out of bullish sentiment, they choose to press the column and secondary fattening, or cause the pig price to fall further after collection and storage. The recent rise in feed prices continues to push up costs, and the breeding loss is expected to continue to deepen. We may see the elimination of sows with piglets in the second quarter, The main body of capacity removal will gradually transition to local moderate scale enterprises with an annual output of 10005000 commercial pigs.
[white feather broiler] after the Spring Festival, the consumption of chicken is weak, the delivery of frozen chicken products is slow, and the enthusiasm for purchasing hairy chicken is weakened. It is expected that the price of hairy chicken will be weak next week, and there is limited room for further decline. In March, the market is expected to be out of stock during the Spring Festival, or slow down the sales rhythm of frozen products. At present, low-cost chicken seedlings stimulate the enthusiasm of making up the fence, but the higher feed cost is restrained. It is expected that the price of chicken seedlings will be adjusted in a narrow range next week, the increase will continue to be limited, and there is still a possibility of decline.
[animal protection] the research and development process of CSFV vaccine in Africa is accelerated, and the investment opportunities in the sector are highlighted
Recently, the Ministry of agriculture and rural areas has issued documents to relevant research institutions and units, requiring the protection rate of non plague vaccine to reach 80%, the mortality rate of the control group to be no less than 80%, and providing sufficient protection for the intellectual property rights of the vaccine. We believe that subunit vaccine has absolute advantages in safety, and generally there will be no problems similar to the strengthening of gene deletion vaccine strains, When the protection rate reaches the standard, the probability can pass the emergency evaluation and enter the application stage of veterinary drug products. At present, African classical swine fever is still the biggest threat to the pig industry. Large pig farms have a high acceptance of non classical swine fever vaccine. We expect that 600 million pigs will be sold every year, all of them will be immunized twice, 25 yuan per injection, and 80% penetration rate, which will give birth to 24 billion market space, add more than 10 billion profits, and be divided up by several enterprises involved in R & D, and the competition pattern of the industry may usher in a major adjustment.
[planting chain] how does geopolitical risk affect China's Shenzhen Agricultural Products Group Co.Ltd(000061) price?
Internationally, the drought in the main soybean producing areas in South America has caused the soybean output in Argentina, Brazil and Paraguay to be far lower than originally expected, affecting the global soybean supply and boosting the soybean price. The price of soybean meal in China has exceeded 5000 yuan / ton to a record high. The recent escalation of tensions between Russia and Ukraine has brought uncertainty to the global Shenzhen Agricultural Products Group Co.Ltd(000061) supply, and the market is optimistic about corn Wheat, soybeans and other major Shenzhen Agricultural Products Group Co.Ltd(000061) all held high bullish sentiment. However, we believe that the impact of the international Shenzhen Agricultural Products Group Co.Ltd(000061) price rise on China is limited, and China's feed prices may be corrected after the rise. Recently, the General Administration of Customs announced that the import of wheat grown in areas within the Russian Federation without wheat dwarf smut is allowed. We believe that China's wheat self-sufficiency rate is high, coupled with the reduction of import standards, The impact of international wheat price fluctuations is very small. In terms of soybeans, the State Food and materials Reserve Bureau issued a document to start the auction of central reserve edible oil tankers and policy soybeans, which may alleviate the tight supply of soybeans and edible oil in the market to a certain extent. The impact of international geopolitical risks on China's Shenzhen Agricultural Products Group Co.Ltd(000061) prices is limited.
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 undervalued 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 of making 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 pay attention to the changes in the stock of grandparents' generation chickens and parents' generation chickens in production. 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 focus on Pulike Biological Engineering Inc(603566) , which has obvious advantages in subunit vaccine research and development, and 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 be opened, 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 leader Yuan Longping High-Tech Agriculture Co.Ltd(000998) , as well as 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.
