Key investment points
Market review this week
This week (2022 / 2 / 282022 / 3 / 6), the CSI 300 index fell by 1.68%, and the agriculture, forestry, animal husbandry and fishery index rose by 3.49% over the same period, outperforming the CSI 300 index by 5.17 percentage points, ranking second among the 28 Shenwan industries.
In terms of sub sectors, the growth and decline of planting industry / livestock and poultry breeding / feed / animal health care / fishery / Shenzhen Agricultural Products Group Co.Ltd(000061) processing sector this week were 4.62%, 4.19%, 3.67%, 2.22%, 2.12% and 1.11% respectively.
Core ideas of this week
[pig breeding] at the beginning of last week, the news of the first batch of central reserve frozen pork of 40000 tons in 2022 was released, which boosted the confidence of the breeding end in a short time; At present, pigs are in a state of loss. Farmers have a certain mentality of resisting prices and reluctant to sell. They expect to collect and store to boost prices and sell pigs according to the trend. However, nearly a week after the implementation of collection and storage, the average price of pigs across the country has not seen an upward trend. The enthusiasm of large-scale market listing in the later part of the week has increased. We believe that the market's expectation of the rise of pig price after the slaughter has failed. It is expected that the speculation of collection and storage in the later part will gradually cool down. The large-scale market in the early stage may speed up the slaughter again, and the decline of pig price is expected to accelerate again.
Historically, pig production capacity generally accelerated in March, mainly because pork consumption in March was at the lowest point of the year, and the boost to pig prices was limited. We believe that at present, some moderate scale farms have begun to liquidate pig farms, reflecting the fact that they are short of funds. Due to the bullish mood in the early stage, they choose to press the fence and secondary fattening, or cause the pig price to fall further after collection and storage. After the year, the rise of feed price continues to push up the cost by nearly 10%, and the breeding loss is expected to continue to deepen, We may see the elimination of sows with piglets in the second quarter, and the main body of capacity reduction will gradually transition to local moderate scale enterprises with an annual output of 10005000 commercial pigs.
[white feather broiler] this week, the price of meat and wool chicken still decreased month on month, the sales revenue of meat and wool chicken decreased, and the broiler breeding continued to suffer losses. The price of chicken seedlings is still at a low level, the hatching enterprises continue to lose money, the losses of chicken breeding enterprises deepen, and the profits of slaughtering enterprises increase. At present, the supply of broilers is expected to be cut off in the market. Slaughtering enterprises purchase low-cost chicken sources, the sales of frozen chicken products slow down, and the demand for broilers is still weak. It is expected that the price increase of broilers will be limited or continue to suffer losses next week. After the Spring Festival, feed prices rose sharply to curb the enthusiasm of making up hurdles. It is expected that the price of chicken seedlings will stabilize after rising next week, and the rising space is limited.
[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.
[seed industry] 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. It is recommended to pay attention to enterprises that "can breed sows with rich reserves, continuous cost improvement and abundant cash flow" in the next 1-2 quarters.
[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 seed enterprises with rich reserves of transgenic technology and varieties.
Risk tips
Covid-19 epidemic spread risk, international situation change risk, policy implementation less than expected risk, etc.
