Talk every Monday:
Recently, the central rural work conference was held to study and deploy the work of “agriculture, rural areas and farmers” in 2022, which is of special significance to stabilize the basic situation of agriculture and do a good job in the work of “agriculture, rural areas and farmers”. We believe that the prosperity of the pesticide industry is expected to continue next year under the background of prominent food security issues and continuous improvement of exports.
The supply concentration has gradually increased. Globally, the pesticide industry presents an oligopoly pattern. After years of fierce competition and major mergers and acquisitions, the concentration of the world pesticide industry has become more and more obvious. Although the overall output of pesticides in China is in the forefront of the world, the industry concentration is low. With the intensification of industry competition and the increasing pressure of environmental protection, China’s pesticide industry is entering a new round of integration period, and the industry concentration is expected to be further improved in the future.
Demand is expected to improve in the long run. We believe that there is still much room for improvement in pesticide demand in the future. On the one hand, pesticides can ensure national food security when the area of cultivated land is limited. According to the calculation of FAO, the use of pesticides can cause an average annual food loss of 30% – 40%. Increasing the yield per unit area by applying pesticides can increase the food supply. On the other hand, the improvement of pesticide exports also has a positive impact on demand. China’s China’s one belt, one road agriculture, will become a region where the growth of pesticide exports will increase as the total volume of pesticide exports accounts for about 60% of the total pesticide production in China. With the entry of RCEP and the signing of the trade agreement, the agriculture along the way will become larger than the major countries.
Investment strategy: with the intensification of industry competition and the increasing pressure of environmental protection, the concentration of China’s pesticide industry has gradually increased. Under the background of prominent food security problems and continuous improvement of exports, the prosperity of the pesticide industry is expected to continue next year. It is suggested to pay attention to Jiangsu Yangnong Chemical Co.Ltd(600486) , Lier Chemical Co.Ltd(002258) and other pesticide leading enterprises with high technical barriers and obvious scale advantages.
Market review:
Sector performance: this week, CITIC’s basic chemical sector rose 4.2%, and the composition of the Shanghai Composite Index rose 2.3%. Compared with the Shanghai Composite Index in the same period, the basic chemical sector led by 1.9 percentage points. In terms of sub sectors, the basic chemical sub sector mainly rose this week, with potassium fertilizer, food and feed, other plastic products, rubber additives, cotton fiber and other sub sectors leading the rise; Phosphorus fertilizer, phosphorus chemical industry, polyester and other sub sectors led the decline
Rise and fall of individual stocks: the basic chemical sector led the rise this week, including Changjiang materials, Shaanxi Meibang Pharmaceutical Group Co.Ltd(605033) , Sinomach General Machinery Science & Technology Co.Ltd(600444) , Aba Chemicals Corporation(300261) , Star Lake Bioscience Co.Inc.Zhaoqing Guangdong(600866) ; The leading stocks include Shanshui technology, Jiangsu Lopal Tech.Co.Ltd(603906) , Chengdu Guibao Science & Technology Co.Ltd(300019) , Zhejiang Zhengguang Industrial Co.Ltd(301092) , China Kings Resources Group Co.Ltd(603505) .
Risk tips: the risk of fluctuations in international oil prices, the risk of repeated global epidemics, etc.
