In response to the downward pig cycle, how will the combination of Muyuan Foods Co.Ltd(002714) and Henan Shuanghui Investment & Development Co.Ltd(000895) leaders in pig breeding and slaughtering affect the development pattern of the whole industry if they want to build a model of industrial chain cooperation outside China?
On the evening of January 3, 2022, Muyuan Foods Co.Ltd(002714) and Henan Shuanghui Investment & Development Co.Ltd(000895) both announced that the two sides signed the Shuanghui muyuan strategic cooperation framework agreement in Luohe City, Henan Province on January 1, 2022. Based on the principle of complementary advantages and mutual benefit, the two sides give full play to their industrial advantages, improve the industrial chain, enhance the value chain, open up the supply chain and improve product quality Benefit and market competitiveness to achieve win-win cooperation and common high-quality development.
create a model of industrial chain cooperation
According to the announcement, the two sides adhere to the principles of equality, voluntariness and mutual benefit, build a point-to-point direct supply channel for pigs, give full play to the advantages of Shuanghui pig slaughtering and muyuan pig breeding, improve the brand value and market share of both sides, and jointly build a first-class industrial chain cooperation model at home and abroad.
Specifically, Henan Shuanghui Investment & Development Co.Ltd(000895) opens up a green channel, gives priority to the purchase of Muyuan Foods Co.Ltd(002714) direct supply pigs 24 hours a day, and both parties agree on the supply volume, price and transportation mode to realize point-to-point direct supply. When the price of live pigs is low, Henan Shuanghui Investment & Development Co.Ltd(000895) on the basis of adhering to the market-oriented, we can appropriately increase the purchase of live pigs for Muyuan Foods Co.Ltd(002714) ; When the market price rises, Muyuan Foods Co.Ltd(002714) can moderately increase the supply of pigs to Henan Shuanghui Investment & Development Co.Ltd(000895) on the basis of market orientation; At the same time, both parties share the relevant settlement data of pig breeding and after slaughter.
In an interview with the Securities Daily, Shi Xiangying, a pig researcher at huarongda futures, said: ” Muyuan Foods Co.Ltd(002714) and Henan Shuanghui Investment & Development Co.Ltd(000895) Signing the strategic cooperation agreement is not only a big step in the development of both sides, but also a big step in the transformation of the industry pattern. For the enterprises of both sides, the industrial layout of muyuan and Shuanghui is focused on Henan. Through strategic cooperation, we can effectively realize complementary advantages, further reduce the cost of both sides and improve the competitiveness of enterprises; It is conducive to controlling the quality from the source and building the safest, healthiest and greenest meat brand in China and even in the world. Through the in-depth cooperation of the industrial chain, it is also conducive to enhance the ability of both sides to resist the risk of market price fluctuation and stabilize operating profits. ”
Wang Chengqi, deputy director of Henan Provincial Department of agriculture and rural areas, said at the signing ceremony: “Shuanghui deep ploughing slaughtering and processing is the largest meat processing enterprise in China. Muyuan deep ploughing pig breeding is the largest pig breeding enterprise in China. The signing of the strategic cooperation agreement between the two sides is an important page in the development milestone of the enterprise. It is hoped that Shuanghui and muyuan will continue to optimize the cooperation mechanism, resonate with the national strategy, create a win-win model of cooperation and achieve greater success at a new starting point High level and higher quality development. ”
In response to the downward pig cycle, pig raising enterprises usually extend the industrial chain to the downstream. The five listed pig raising enterprises such as Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , New Hope Liuhe Co.Ltd(000876) , Tech-Bank Food Co.Ltd(002124) have laid out the slaughtering industry.
The industry is expected to start a new round of mergers and acquisitions
What impact will the combination of Henan Shuanghui Investment & Development Co.Ltd(000895) and Muyuan Foods Co.Ltd(002714) have on the industry?
Shi Xiangying analyzed to the reporter: “for the industry pattern, the strategic cooperation between muyuan and Shuanghui has broken the industry pattern that pig breeding enterprises and slaughtering enterprises have completed transactions through intermediaries (pig brokers) for a long time, realized the first ‘point-to-point’ block transaction in the industry, and adopted the direct supply mode, which provides a model for in-depth cooperation among enterprises in the pig industry chain.”
“The combination of pig breeding leaders and pork processing leaders will have a huge scale effect, but for competitors in the industry, it may mean increased competitive pressure. The pig breeding industry may have another round of vertical and horizontal merger and reorganization in the future, and competitors will imitate this collaborative model.” Pan Helin, executive dean of the Digital Economy Research Institute of Central South University of economics and law, said in an interview with Securities Daily.
“Affected by the drastic fluctuation of pork price, as the upstream of breeding, Muyuan Foods Co.Ltd(002714) is under great pressure, and Shuanghui’s core business is slaughtering and manufacturing in the middle and downstream. The combination of the two sides is conducive to ensuring the stability of the industrial chain.” Shen Meng, executive director of Xiangsong capital, told the Securities Daily.
Song Qinghui, founder of Qinghui think tank, said in an interview with Securities Daily: ” Henan Shuanghui Investment & Development Co.Ltd(000895) and Muyuan Foods Co.Ltd(002714) The combination of strong and strong forces will have a positive impact on the industry in two aspects. One is to help form a win-win situation of cooperation and jointly create a new benchmark for the industry. On the other hand, it will help give play to the advantages of both sides, form synergy and jointly promote the high-quality development of the industry. ”
Is 2022 expected to usher in the inflection point of the pig cycle?
At the 2022 Shuanghui manufacturer development seminar held on December 28, 2021, Henan Shuanghui Investment & Development Co.Ltd(000895) chairman Wan Long said: “in 2022, the meat industry will enter a new turning point of the pig cycle. According to the established ’14th five year plan’, enterprises will continue to improve the industrial chain upstream, accelerate the upgrading and transformation of the slaughtering industry, change to large-scale, automation and informatization, and further enhance their competitiveness.”
For the inflection point of this round of pig cycle, several institutions have predicted the research report.
Citic Securities Company Limited(600030) the research report said: “in the short term, the rebound of pig price has ended. It is expected that pig price will still weaken in the future. The industry has entered the second round of capacity removal, and the inflection point of the cycle is expected to appear in the middle of 2022.”
Zheshang Securities Co.Ltd(601878) according to the Research Report: “we have observed that the stock of fertile sows has decreased month on month for five consecutive months since July, and the production capacity shows a trend of de industrialization. In the next half of the year, farmers will probably accelerate the elimination due to pessimistic expectations of pig price market. At the same time, due to debt pressure, the scale field may also increase the reduction range of production capacity, and the industry may usher in a cycle reversal in the second half of 2022.”
For the trend of pig industry in 2022, Shi Xiangying said: “In 2021, although the price of pigs fell in a ‘step-by-step’ way, the de industrialization of pig production capacity was still not in place. According to the data of the Ministry of agriculture and rural areas, the number of fertile sows began to decline in July 2021. By the end of November 2021, the national stock of fertile sows was 42.96 million, still higher than the normal stock of 41 million. Based on the data of fertile sows, we believe that 2022 is in the” new and old week ” “During the transition period, the overall pig supply is still sufficient, especially in the off-season when the pig production capacity is fully released and the consumption is superimposed in the first half of the year, the pig price may fall below the breeding cost line again, the number of pigs sold in the second half of the year will gradually decrease and the consumption will gradually pick up, and the pig price may gradually rise above the cost line.”
(Securities Daily)
