This week's market
Shenwan agriculture, forestry, animal husbandry and fishery industry (6.56%), Shenwan industry ranking (1 / 28); Shanghai Stock Index (- 0.39%), Shanghai and Shenzhen 300 (- 0.67%), small and medium-sized 100 (0.04%);
Important information
On December 21, according to the data of the Ministry of agriculture and rural areas, the number of fertile sows in November was 42.96 million, which was close to the normal number. In November, the number of fattening pigs aged 5 months increased by 26% year-on-year. The listing two months later corresponds to the supply during the Spring Festival. It is expected that the pig price will be relatively stable during the Spring Festival and will not rise sharply.
On December 22, the Ministry of agriculture and rural areas issued the "14th five year plan" for animal husbandry and veterinary industry. The plan specifies that during the 14th Five Year Plan period, efforts will be made to build a "2 + 4" modern animal husbandry industrial system, focusing on building two trillion level industries and four 100 billion level industries.
On December 24, the decision of the Standing Committee of the National People's Congress on Amending the seed law of the people's Republic of China was deliberated and adopted, and the new seed law shall enter into force as of March 1, 2022. The new seed law focuses on expanding the protection scope and protection links of new plant variety rights, adding substantive derivative variety system, strengthening the crackdown on fake and inferior seeds, improving the tort compensation system and strengthening the protection of germplasm resources.
Core view
Breeding industry: for pigs, the high price of pigs fell in December, and the breeding profit returned to the loss range. In terms of volume, the main pig enterprises had a fast pace of marketing in October. With the recovery of prices in November, the adjustment of sales strategy and the rise of column pressure mood, the overall sales volume of the main pig listed companies decreased by 25.2% month on month in November. In terms of price, according to China pig breeding network, the monthly increase of three yuan outside pigs in November was 11.0%. At the end of the year, the preparation of cured enema was advanced, and the industry's pressure mood increased in November, pushing up the price. However, due to the slowdown in demand and the withdrawal of the market supporting policy, as of December 25, the pig price in December had been corrected by 13%. In terms of listed companies, the average sales prices of major listed pig enterprises improved in November, and the average monthly sales prices of muyuan and Wen increased by 34.3% and 46% respectively. In terms of profit, pig breeding fell back with the rise of prices in December, and the profit returned to the loss range. As of December 24, the profit of pig self breeding was -43.31 yuan / head. However, there was still a significant improvement over October.
We believe that the current pig market has rebounded periodically, but the stock is still at a high level, and the overall supply and demand is still relatively loose. Without a fundamental change in core capacity, it still takes time for the inflection point of the pig cycle. With the end of the consumption season in the fourth quarter, there will be some downward pressure on pig prices in the future. From the perspective of supply and demand, 1) on the supply side, according to the disclosure of the Ministry of agriculture and rural areas, the number of newborn pigs per month in large-scale pig farms since March has been more than 30 million, and has continued to grow. In November, the number of fertile sows in China was 42.96 million, which decreased month on month for five consecutive months, but the overall number of fertile sows was still higher than the normal number of 41 million. In addition, in November, the national pig feed output was 11.41 million tons, an increase of 4.6% month on month, which reflects that the industry stock is still abundant. Overall, China's pig production will remain abundant for some time to come; 2) On the demand side, with the passage of time, the production and preparation of bacon and sausage will be gradually completed at the end of the peak consumption season. In addition, considering the impact of the recent epidemic control on the overall consumption, the demand in this round of peak season will be callback after the peak.
We believe that the share price of pig plate will maintain a certain range of box shock. Upward, the core capacity of the industry has not fundamentally changed, and the peak season will usher in a high demand, which does not have the basis for a sharp rebound. Downward, the low pig price in the third quarter and the extreme value of plate breeding loss also mean that the most pessimistic expectation of the plate has been released, and there is also a safety margin for the plate downward. Considering the general trend of large-scale pig breeding and the long-term configuration attribute of mandatory consumption, it is suggested to lay out the high-quality target of pig plate.
For broilers, we believe that the supply and demand fundamentals of yellow feather chicken will promote the market cycle upward. 1) On the supply side, the long-term breeding loss in the early stage has significantly reduced the industry's production capacity. According to the China Animal Husbandry Association, the stock of parents of yellow feather broilers in November was 13.4356 million, which has been at a low point in recent four years. We believe that the yellow feather broiler market will be at a low level in recent years next year. 2) On the demand side, with the bottom of the market for live pigs and other animal proteins, the substitution squeeze of demand for yellow feather broilers will gradually ease and the margin will be better. In addition, the consumption of live poultry suppressed by the epidemic has been fully digested in the past two years, with marginal improvement; In the short term, supported by consumption at the end of the year and boosted by long-term economic recovery, the yellow feather broiler plate is expected to usher in a business cycle. Pay attention to the relevant targets of Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Hunan Xiangjia Animal Husbandry Company Limited(002982) , Wens Foodstuff Group Co.Ltd(300498) and other plates.
Key recommendation: China's large-scale aquaculture leader [ Muyuan Foods Co.Ltd(002714) ] with obvious cost advantage, and [ Jiangxi Zhengbang Technology Co.Ltd(002157) ] with strong performance elasticity and burden unloading.
Planting industry: the seed industry has ushered in a historic opportunity of "three-phase superposition". During the policy period, the central government will issue an action plan for the revitalization of the seed industry to promote the development of the seed industry in five aspects: Comprehensively Strengthening the protection and utilization of germplasm resources, vigorously promoting the innovation of the seed industry, supporting the development of advantageous seed enterprises, improving the construction level of seed industry base, and severely cracking down on illegal acts such as deck infringement. During the industrial period, bulk grain prices remained high, farmers' willingness to grow grain increased, and corn and rice seed stocks, supply and demand were optimized, promoting the prosperity of the seed industry. The commercialization of transgenic technology is approaching. On November 12, the Ministry of agriculture and rural areas issued the decision of the Ministry of agriculture and rural areas on amending some seed industry regulations (Draft for comments), which stipulates the approval and business license of genetically modified varieties. The commercialization of genetically modified crops has taken another historic step.
On November 12, the Ministry of agriculture and rural areas issued the draft for comments on revising some seed industry regulations. It means that the supporting policies for the commercialization of GM are constantly implemented, and the commercialization of GM is gradually approaching. We have observed that the revision of seed industry regulations has several characteristics. First, the seed industry regulations are more systematic and comprehensive. Regulations such as variety approval and business license directly include the relevant contents involved in the commercialization of GM, rather than issuing separate measures; Second, the regulatory authorities are more cautious about the approval and promotion of genetically modified organisms. The Measures stipulate that the approval of genetically modified varieties shall directly apply to the "National Crop Variety Approval Committee", with a high approval level; Third, the examination and approval efficiency should be improved as much as possible under the prudent requirements. For the approved receptor, "the suitable planting area applied for approval is within the suitable planting area of receptor varieties, the test procedure can be simplified, and only one-year production test is required".
In the medium and long term, we are firmly optimistic about the prospect of the national seed industry and the improvement of the fundamentals of relevant seed enterprises. Under the banner of seed industry revitalization, the iteration and reconstruction of the industry are constantly implemented from top to bottom, which is highly deterministic. "Iteration" is the iteration of biological breeding technology. The draft of seed industry regulations on November 12 exceeded expectations in many aspects, and will continue to promote commercialization in the future. "Reshaping" is the reshaping of the industry pattern. On November 24, the National Conference on promoting the work of supporting excellence of seed enterprises once again stressed that "we should improve and strengthen a number of seed industry leading enterprises with integrated innovation ability and adapt to market demand, and create the backbone force for the revitalization of seed industry". Dragon seed enterprises with scientific research advantages will become more and more prominent. "Top down" is the implementation of policies, systems, supervision and law enforcement under the banner of seed industry revitalization, and the overall industry will basically get better and better.
In terms of trading, we believe that we should focus on innovative seed enterprises with genetically modified traits and variety reserves. There is a process of transformation and landing of the fundamentals of the seed industry. The overall trend of the probability is upward fluctuation, two advances and one retreat. It is recommended to absorb on bargain hunting.
Key recommendation: seed industry leader with genetically modified trait reserve [ Yuan Longping High-Tech Agriculture Co.Ltd(000998) ], leading genetically modified technology and multiple businesses [ Beijing Dabeinong Technology Group Co.Ltd(002385) ].
Pet industry: pet industry is a high-quality track that caters to social development and consumption trends. According to the white paper on China's pet industry, China's pet industry has a market scale of 100 billion, with a compound annual growth rate of nearly 20%. At present, overseas giants occupy a high share of China's pet food and medical market segments. We believe that the branding of domestic OEM enterprises will continue to accelerate, and have comparative advantages in understanding and deepening Chinese traditional and modern channels. The pet industry will usher in domestic substitution opportunities, and we will continue to follow up and pay attention.
Key recommendation: China's pet food industry leader [ Yantai China Pet Foods Co.Ltd(002891) ].
Grain and oil industry: affected by the Shenzhen Agricultural Products Group Co.Ltd(000061) cycle, the disturbance of global supply chain under the epidemic and other factors, the prices of oilseeds such as soybeans have risen, the cost side pressure of grain and oil enterprises has become prominent, and the squeezed profits have declined significantly. We believe that with the marginal improvement of the pressure on the cost side - the future Shenzhen Agricultural Products Group Co.Ltd(000061) cycle, the demand side - the fourth quarter is the traditional peak season of grain and oil consumption, and the performance of grain and oil enterprises is expected to recover. Focus on integrated supply chain management and operation of leading enterprises.
Key recommendation: grain and oil leader [ Yihai Kerry Arawana Holdings Co.Ltd(300999) ] that is expected to develop in the overall kitchen business.
Risk tip: economic recovery is less than expected, epidemic situation, etc
