1.1 Market Review
Market: in 2021, agriculture underperformed the market, with poor overall performance
In 2021, Shenwan agricultural index fell by 4.93%. Over the same period, the Shanghai Composite Index rose 0.6% and the Shenzhen Component Index rose 0.99%. Throughout the year, the agricultural performance lagged behind the big city. Specifically, the eight secondary sub industries rose less and fell more, of which five sub industries fell, and only three comprehensive sub industries of forestry, fishery and agriculture rose. Among the falling sub industries, feed, Shenzhen Agricultural Products Group Co.Ltd(000061) processing and animal protection decreased the most, while aquaculture and planting decreased the least. Fundamentals: in the first three quarters of 2021, the performance of Listed Companies in the weight sub sector declined as a whole
1) In 2021, affected by the downward trend of pig price, the performance of feed and breeding of quanchongzi plate decreased. In the first three quarters of 2021, the net profit attributable to the parent company of feed breeding sector increased by – 93% and – 137% year-on-year; 2) The favorable policies intensively released by the seed industry have not affected the performance of listed companies. In the first three quarters, the net profit attributable to the parent company of seeds, Shenzhen Agricultural Products Group Co.Ltd(000061) processing and forestry decreased by 87%, 59% and 13% year-on-year. Only the performance of animal protection, comprehensive agriculture and fishery was growing. Therefore, the performance decline of key sub sectors is the main reason for the poor overall performance of the agricultural sector.
Fundamental outlook and rating: in 2022, the pig industry is expected to usher in a new round of pig cycle. The prosperity of yellow chicken industry is likely to rise. After the seed industry policy is implemented, genetically modified seeds will be mass produced and listed and finally reflected in the performance. Starting from the fundamentals, give optimistic rating investment strategies and suggestions for agriculture: focus on the breeding industry and seed industry
Live pigs: the pig cycle is about to reverse in 2022, and the industry boom is expected to enter the upward channel in the second half of the year; At the bottom of the cycle in the first half of the year, companies with safe operation, low cost and stable volume increase are preferred. They mainly focus on muyuan with low cost and stable volume increase, and Tiankang and Wenshi with diversified business, stable operation and obvious cost reduction. They also focus on Fujian Aonong Biological Technology Group Incorporation Limited(603363) , New Hope Liuhe Co.Ltd(000876) , Tangrenshen Group Co.Ltd(002567) , Shenzhen Kingsino Technology Co.Ltd(002548) .
Yellow chicken: the industry boom reached the bottom in 2021, and the probability continued to rise in 2022 under the background of the weakening impact of covid-19 epidemic; Companies with large volume increase flexibility are preferred, with emphasis on Jiangsu Lihua Animal Husbandry Co.Ltd(300761) and Wens Foodstuff Group Co.Ltd(300498) and Hunan Xiangjia Animal Husbandry Company Limited(002982) at the same time.
Seed: the genetically modified policy is basically implemented. With the promotion of commercialization, the industry is expected to enter a new growth period. Leading enterprises have leading advantages in R & D and product layout, and the market share is expected to expand. Focus on Beijing Dabeinong Technology Group Co.Ltd(002385) and Yuan Longping High-Tech Agriculture Co.Ltd(000998) with leading advantages, Syngenta with upcoming IPO, and Shandong Denghai Seeds Co.Ltd(002041) with germplasm resources and variety combination advantages.
2.1 super pig cycle, pig price and profit fluctuate sharply
Pig prices fell rapidly since March 2021 and hit the low point of the first three cycles in early October
In 2018, affected by the non plague, the industrial capacity began to go, with a range of more than 40% by October 19. Pig prices rose unilaterally since reaching the bottom in February 19. In November, they touched the historical high of 42 yuan / kg, then fluctuated in the range of 30-40 yuan / kg for 14 months, fell unilaterally after March 21, and fell below 11 yuan / kg in early October, touching the low point of the cycle. The industry has suffered a total loss since June, and the capacity deregulation has started again. Characteristics of this round of pig cycle: sharp fluctuations in pig prices and profits
Pig prices rise fast and stay high for a long time, making the industry profitable. The profit of pig in autotrophic mode is up to 2600 yuan. In 19 / 20 years, the average profit of autotrophic model was 1013 / 2244 yuan and that of outsourcing model was 916 / 1060 yuan;
Pig prices fell fast. Due to the high cost of making up the column in the early stage, the industry suffered a rapid and deep loss. The loss of pigs in outsourcing mode is up to 1570 yuan, and that in autotrophic mode is up to 770 yuan. In the first three quarters of 21 years, the average loss of purchased piglets was 582 yuan;
2. The capacity deconcentration will be started in 2022, and the new cycle can be expected in 2022
In the middle of 2021, the industry capacity deregulation started
Pig production capacity has continued to rise since October 19 and continued to decline after peaking in June 21. By the end of November, the number of fertile sows in China was 42.96 million, down 1.2% month on month, 4.8% higher than the normal number; The pig production cycle is stable for 10 months. According to the production cycle, it is expected that the high slaughter volume of fat pigs and the bottom of pig price will appear from April to May of 22 years.
