Review of agriculture, forestry, animal husbandry and fishery in 2021
1) Cycle impact, agriculture, forestry, animal husbandry and fishery plate under pressure
Cyclical fluctuations, the operation of agricultural enterprises is affected, and the trend of the plate is under pressure. Breeding: this year, the pig cycle went down and the breeding cost rose. In the third quarter, the plate enterprises suffered serious operating losses. The superimposed cycle expansion brought high liabilities and highlighted the operating pressure. Feed: the prices of corn, soybean meal and other raw materials are rising, reducing profits, passively raising prices and continuing operation. Planting: the superposition of epidemic situation, climate and other factors increased the bulk price, but the planting cost rose simultaneously, and the planting and operation profit did not improve significantly.
Since the third quarter, the breeding board has shown upward signs. Pig prices have risen by 60% since October; The planting intention increased, and the year-on-year increase of Q3 advance collection of major seed enterprises exceeded 20%.
2) The organization is equipped with agriculture, forestry, animal husbandry and fishery as standard, and prefers high-quality leaders in planting and breeding
Agriculture, forestry, animal husbandry and fishery industry belongs to an important field of national economy and people's livelihood and mandatory consumption, and institutions tend to be standard. With the change of pig cycle, the proportion of institutional allocation of agricultural stocks has decreased in recent years. In individual stocks, institutions prefer Guangdong Haid Group Co.Limited(002311) , Muyuan Foods Co.Ltd(002714) and Yuan Longping High-Tech Agriculture Co.Ltd(000998) high-quality breeding targets.
Key directions and investment opportunities in 2022
1) The trend does not change
The revitalization of seed industry is promoted, and the commercialization of biological breeding can be expected. In the next 22 years, the policy, industry and technology cycle is expected to continue to evolve upward, and the seed industry is expected to usher in a high boom. The commercialization of genetically modified organisms has accelerated. Trait enterprises and cooperative variety enterprises with safety certificate reserves in the early stage hope to rely on the first mover advantage and enjoy the dividend of policy promotion in advance.
Pet consumption grows, pet enterprises expand production capacity by brand, and hope to realize their performance. Pet consumption has entered the growth track. It is estimated that by 2023, the CAGR of the industry will exceed 22%. In addition, the trend of online channel penetration is becoming more and more obvious. This year, the sales of pet food and pet products have increased significantly year-on-year. Enterprises increase investment and operation of independent brands, capacity expansion and R & D support, and hope to realize their performance.
The breeding industry is extended, with vertical and horizontal two-way layout to open the growth curve. Large enterprises actively layout the horizontal and vertical integration development strategy, the vertical extension will open up profit space, the horizontal comprehensive service will improve the share and incremental business income, and the core competitiveness will continue to highlight.
2) Start again after periodic baptism
The pig cycle looks to the bottom, and pay close attention to the layout opportunities on the left next year. We believe that the loose capacity of the industry will continue for some time, and the downturn in the later stage may lead to a new round of capacity deregulation. If the capacity is completely removed, H2 hopes to gradually enter the rising channel of the next cycle, and the layout opportunity on the left side of the plate appears.
Yellow feather broilers will usher in fundamental improvement. The stock of parent generation of yellow feather broilers is at a low level in recent years, superimposed with the improvement of demand margin, which is expected to be interpreted upward.
Investment advice
(i) The trend does not change
1. It is suggested to pay attention to: (1) the leading national team of seed industry: focus on the main industry of seed industry, China's double leader in rice and corn seeds [ Yuan Longping High-Tech Agriculture Co.Ltd(000998) ], and the properties of the joint-stock company have obtained the safety certificate; [Syngenta group] (to be listed) is backed by Sinochem and has Syngenta's long-term accumulated breeding and gene transfer scientific research strength. (2) the trait enterprise with leading transgenic technology: [ Beijing Dabeinong Technology Group Co.Ltd(002385) ] corn trait products (combination) has been approved by biosafety regulations nationwide. (3) dominant seed variety Enterprises: [ Shandong Denghai Seeds Co.Ltd(002041) ] focus on their main business, highlight hybrid maize varieties, and accumulate transgenic character transfer and variety reserve.
2. Pet suggestions focus on: [ Yantai China Pet Foods Co.Ltd(002891) ] and [ Petpal Pet Nutrition Technology Co.Ltd(300673) ] have comparative advantages in understanding and developing Chinese traditional and modern channels, and will benefit from pet consumption growth and domestic substitution. Their brand construction and production capacity layout are continuously promoted, production and marketing are strong, and their performance is expected to increase.
3. It is suggested to pay attention to: [ Guangdong Haid Group Co.Limited(002311) ], [ Fujian Sunner Development Co.Ltd(002299) ] and [ New Hope Liuhe Co.Ltd(000876) ] to embrace the development trend of industrial extension of feed breeding enterprises, extend the vertical and horizontal industrial chain, consolidate the core competitiveness and open the business space.
（2） Start again after periodic baptism
1. Suggestions on pig cycle: [ Muyuan Foods Co.Ltd(002714) ], [ Jiangxi Zhengbang Technology Co.Ltd(002157) ]
Closely track the beginning and end of the pig cycle and embrace the general trend of large-scale breeding. In terms of quantity and cost, focus on the varieties with comparative advantages in pig production capacity and breeding cost.
2. Recommendations for broiler cycle: [ Jiangsu Lihua Animal Husbandry Co.Ltd(300761) ], [ Wens Foodstuff Group Co.Ltd(300498) ], [ Hunan Xiangjia Animal Husbandry Company Limited(002982) ]
There are structural allocation opportunities in the broiler plate. The parent generation of yellow feather broilers has been significantly removed, and the superimposed demand margin has improved. Next year, yellow feather broilers are expected to usher in a cycle upward.
Risk statement
1. Repeated outbreaks outside China have led to lower than expected consumption of catering and gifts.
2. The sluggish supply chain outside China has led to an increase in the transportation costs of Shenzhen Agricultural Products Group Co.Ltd(000061) and downstream consumer goods.
3. Uncertain factors such as global climate change, classical swine fever and avian influenza outbreak.
4. The production capacity of pigs was less than expected, and the supply and demand continued to be loose, resulting in the downturn of the market.
5. The pressure on the breeding cost side such as feed raw materials has not been relieved, affecting the breeding profit.
6. The official implementation of biological breeding related policies in the seed industry was less than expected, and the promotion of biological breeding was delayed.
