On March 7, Muyuan Foods Co.Ltd(002714) ( Muyuan Foods Co.Ltd(002714) ), Wens Foodstuff Group Co.Ltd(300498) ( Wens Foodstuff Group Co.Ltd(300498) ) and other pig enterprises released sales briefings in February. It was found that the price of commercial pigs was still declining, showing a downward trend both month on month and year-on-year.
However, this does not affect the agency’s research enthusiasm for pork stocks. According to the statistics of the reporter of the securities times, since March, institutions have investigated a number of pork stocks, including Wens Foodstuff Group Co.Ltd(300498) , Tangrenshen Group Co.Ltd(002567) , Muyuan Foods Co.Ltd(002714) , Shenzhen Kingsino Technology Co.Ltd(002548) , among which Wens Foodstuff Group Co.Ltd(300498) has been investigated one after another.
Since the Spring Festival in 2022, the decline of pig prices has accelerated and touched the early warning, and the transaction price of pigs in many places has fallen below 6 yuan / kg. In March, the pig price entered the horizontal adjustment period. According to the data monitoring of the pig price system of China pig breeding network, from February 28 to March 6, the price range of three yuan live pigs at home and abroad was 12.64-12.76 yuan / kg.
Recently, the collection and storage of the first batch of central frozen pork reserves in 2022 has been completed, and the collection and storage of the second batch of central frozen pork reserves in the year will also be started. The analysis shows that the first pork purchase and storage period in 2022 is in the off-season of pork consumption. The price of live pigs is high, and the collection and storage is only tens of thousands of tons, which is slightly compared with the monthly output of pork. It is expected to boost the price of pigs in the short term, but the impact on the market is expected to be relatively limited. However, from 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.
institutions investigate several pork stocks
Since the Spring Festival in 2022, the decline of pig prices has accelerated and touched the early warning, and the transaction price of pigs in many places has fallen below 6 yuan / kg. According to the monitoring of the national development and Reform Commission, in the week from February 21 to 25, the national average pig grain price ratio was 4.98:1, falling below 5:1, entering the level-1 early warning range of excessive decline determined in the “plan for improving the regulation mechanism of government pork reserves and ensuring supply and price stability in the pork market”. At the same time, the prices of feed raw materials such as soybean meal, corn and wheat rose sharply, pushing up the cost of pig breeding. At present, the cost per ton of feed has increased by about 400 yuan / ton compared with the fourth quarter of last year, and the cost of pig breeding has increased by about 1-1.2 yuan / kg. According to the statistics of relevant institutions, a pig bred and raised by itself in the Chinese market has a loss of more than 400 yuan / head.
In this context, previously, the bidding transaction for the purchase and storage of the first batch of central reserve frozen pork in 2022 was conducted on March 3 and March 4, with a total of 40000 tons. Meanwhile, the latest news shows that the collection and storage of the second batch of central frozen pork reserves during the year will also be started. According to the information released by huachu.com, the collection and storage will be listed for auction trading of 38000 tons. The trading time is from 13:00 PM to 16:00 pm on March 10.
At the same time, the attention of institutions to pig enterprises is gradually warming up. Since March alone, a number of pig enterprises such as Wens Foodstuff Group Co.Ltd(300498) , Tangrenshen Group Co.Ltd(002567) , Muyuan Foods Co.Ltd(002714) , Shenzhen Kingsino Technology Co.Ltd(002548) , etc. have received institutional attention.
In terms of the number of research institutions, Wens Foodstuff Group Co.Ltd(300498) obtained two research institutions, with a total of 86 research institutions, Tangrenshen Group Co.Ltd(002567) , Muyuan Foods Co.Ltd(002714) and Shenzhen Kingsino Technology Co.Ltd(002548) obtained more than 50 research institutions, and Shenzhen Kingsino Technology Co.Ltd(002548) obtained 21 research institutions.
Fund companies and private institutions are mainly involved in pork enterprise research activities. The research information disclosed by Wens Foodstuff Group Co.Ltd(300498) shows that many head fund companies such as e fund, South Fund, GF fund, Tianhong fund, China Europe Fund and Huaxia Fund participated in the company research, private institutions such as Chongyang investment, Xinhua assets, China Life Insurance Company Limited(601628) asset management Taikang asset management Tuo insurance capital is also listed.
Muyuan Foods Co.Ltd(002714) ‘s research activities also attracted the participation of many star institutions, including Harvest Fund, South Fund, Celestica fund, GF fund and other head public offering institutions, and star private placements such as Gaoyi assets, Danshui spring and Yingfeng capital also actively participated.
For a long time, the frequency of institutional research on pork stocks has increased significantly this year. According to statistics, since the beginning of this year, Tangrenshen Group Co.Ltd(002567) has been investigated by institutions for 10 times, Muyuan Foods Co.Ltd(002714) for 5 times, Shandong Delisi Food Co.Ltd(002330) , Shenzhen Kingsino Technology Co.Ltd(002548) for 4 times, Beijing Dabeinong Technology Group Co.Ltd(002385) , Wens Foodstuff Group Co.Ltd(300498) for 3 times.
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pork enterprises tend to be cautious in capital expenditure
From the research information disclosed by pork enterprises, the enterprise capital chain is a topic of concern for institutions.
Since the second half of 2021, the capital chain of the pork industry has been relatively tight. The whole industry has experienced losses, resulting in the depletion of cash flow and the decline of balance sheet.
In this regard, Tangrenshen Group Co.Ltd(002567) in the institutional research activities, it was mentioned that the company was one of the first pig raising enterprises to pay attention to capital safety. Since 2020, it has raised nearly 2.8 billion yuan in the form of convertible bonds and fixed growth to support the construction of pig and feed production capacity of the company; Through industrial funds and medium and long-term project loans, it is used for the construction of pig raising projects.
According to the company, on the whole, the company’s capital is relatively safe. By the end of September 2021, the book capital of the company was about 2.9 billion yuan, and the asset liability ratio was about 54%, which was at a relatively low level in the same industry. At the same time, the company’s feed industry has a good cash flow, which can bring more net cash inflow to the company; The bank credit line is 10 billion yuan, including working capital loans and project loans.
Muyuan Foods Co.Ltd(002714) said that at present, the company’s cash flow is stable, which can basically realize the balance of revenue and expenditure, and ensure the daily normal production and operation expenses and debt repayment. In the face of the long-term downturn in pig prices, the company has made full predictions. At present, the non-public offering work is being carried out in an orderly manner. At the same time, the company continues to strengthen cooperation with financial institutions. At present, the company has carried out business cooperation with more than 160 banks, with a credit balance of more than 20 billion. The company’s fund management has always followed the concept of “wide reserve and narrow use”, does not establish the safety margin of future cash flow on the optimistic estimation of the market situation, and takes sufficient countermeasures to ensure the stable operation of the company.
At the same time, Muyuan Foods Co.Ltd(002714) is also reducing capital expenditure. According to Muyuan Foods Co.Ltd(002714) introduction, since last year, the company has taken relevant measures to cope with the decline of pig price from the two aspects of “increasing revenue and reducing expenditure”. The main measures include adjusting the pace of project construction to reduce capital expenditure, strengthening cooperation with banks, continuously optimizing internal management level to improve the company’s breeding performance, etc.
Wens Foodstuff Group Co.Ltd(300498) also mentioned in the research activity that considering the current downturn of the pig industry, the company’s capital expenditure is relatively cautious and its capital strength is preserved. The initial capital expenditure of the company in 2022 is planned to be 4-5 billion yuan, which is slightly lower than that of last year. It is mainly invested in convertible bond raised investment projects and projects under construction that have not been completed. In terms of types, it focuses on pig breeding communities, pig slaughtering projects and chicken breeding projects. The company said that at this stage, it will not increase the investment and construction of pig breeding farms, and is mainly committed to reaching full production and making good use of the existing production capacity.
when will the inflection point of pork price come
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 holds high bullish sentiment on major Shenzhen Agricultural Products Group Co.Ltd(000061) such as corn, wheat and soybeans. In this context, many institutions expect that, as raw materials, the rising price of corn will promote the rise of feed prices, there is still pressure to increase the cost of pig breeding, and the breeding enterprises may continue to suffer losses. At the same time, the trend of de production capacity of pigs remains unchanged.
Among them, Zheshang Securities Co.Ltd(601878) believes 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 may continue to deepen.
Huaxi Securities Co.Ltd(002926) also said that Ukraine is the world’s major exporter of corn and wheat. The Russia Ukraine incident is expected to exacerbate the turmoil in the global grain market, affect China’s import of corn, or exacerbate the tight supply and demand pattern. However, judging from the current time node, Huaxi Securities Co.Ltd(002926) believes that the market value of some high-quality pig breeding stocks has fallen to a historically low level, and the configuration window has gradually opened.
In the institutional research activities, some listed companies talked about their views on the future pork price. Among them, Muyuan Foods Co.Ltd(002714) believes that the current pig price is low, which is due to both the relative oversupply and the demand side. The change of price is determined by the marginal change of supply and demand. At this stage, the marginal change of supply has a greater impact than the marginal change of consumption. The main contradiction is the relative surplus of supply. However, in the past year, covid-19 epidemic broke out in many places with high frequency, and the consumer catering side was also obviously affected, which had an impact on the current pig price. The company expects pig prices to improve in the second half of the year.
Wens Foodstuff Group Co.Ltd(300498) it is estimated that the pig price will remain at a low position in the first half of 2022, and the deregulation of industrial capacity will accelerate. It is optimistically estimated that after the third quarter of 2022, pig prices may enter the upward channel of the next cycle; It is pessimistic to estimate that 2022 is still at the social average breakeven line, and it may take 2023 to enter the upward channel of the next cycle.
