After the Spring Festival, due to the decline in pork demand and the excessive slaughter of pigs, the pork price in the market has entered a downward channel. As of the second week of March, the national pork price has fallen for five consecutive weeks. As of this week, the national average price of pigs was 12.45 yuan / kg, down 0.15 yuan / kg from 12.6 yuan / kg last Friday.
According to the monitoring of the Ministry of agriculture and rural areas, the number of pigs in January 2022 increased by 23.6% year-on-year, and the number of pigs in February increased by 8.2% year-on-year. The pig price is always determined by the relationship between supply and demand. Under the background of the substantial growth of marketing volume, even the frequent industrial macro-control policies have failed to resist the downward trend of pig price. Since 2022, feed prices have been rising, resulting in further increase in breeding costs and farmers falling into double-sided squeeze.
However, compared with the weakening fundamentals, the market's expectation of "pork stocks" is heating up. Since March, Wens Foodstuff Group Co.Ltd(300498) , Tangrenshen Group Co.Ltd(002567) , Muyuan Foods Co.Ltd(002714) , Beijing Dabeinong Technology Group Co.Ltd(002385) and other pig breeding enterprises have frequently received institutional research. The share prices of related companies also showed relatively strong performance.
Since mid February, the official pig grain price ratio has triggered a national level early warning. In early March, the central government has successively started the collection and storage of two batches of frozen pork in the central reserve, with a cumulative collection and storage volume of 78000 tons. Recently, it is reported that the national development and Reform Commission will work with relevant departments to start the collection and storage of the third batch of central frozen pork reserves within the year, and guide all localities to speed up the collection and storage. The national development and Reform Commission said it would continue to work with relevant departments to regulate reserves, further increase the collection and storage when necessary, promote the return of pig prices to a reasonable range and promote the smooth operation of the pig market.
It is expected that the pork price will continue to decline in the short term, but the central reserve price is expected to continue to decline in the third round. The cold winter of the industry is conducive to accelerating the de industrialization of pig production capacity, and a new cycle is expected to come faster. It is suggested to continue to pay attention to the degree of de industrialization of industry production capacity before the inflection point of the cycle.
According to the calculation of AVIC securities, historically, the average market value of pig enterprises listed at the top of the pig cycle in 19-20 years has reached the level of 1200018000 yuan, while the average market value of pig enterprises listed at the top of the pig cycle in 15-16 years has reached the level of 8 Tcl Technology Group Corporation(000100) 00 yuan. The starting background of the 19-20 year pig cycle is relatively special. Environmental protection and non plague factors have a significant impact on the industry's production capacity in the short term. At present, if the pig cycle reverses, it is more driven by the profits of cyclical industries.
From the historical and recent performance of the capital market, the game of the capital market against the pig sector has gradually evolved from the initial "price increase" (stage 1.0) to "production reduction" (stage 2.0) to "price reduction" (stage 3.0). The capital market has digested the expectation of price reduction at the beginning of the year, and formed a certain expectation of production reduction and upward expectation in the future cycle in advance. "The lower the price, the lower the production and the higher the share price".
The Pacific Securities Co.Ltd(601099) Securities said that the increase in cost combined with the downturn in pig price, the expansion of industry losses, the further tension of enterprise capital chain and the strengthening of the driving force of capacity de industrialization. It is expected that the capacity de industrialization or acceleration will be carried out in the next few months. Therefore, maintain the judgment on the bottom reversal of production capacity and pig price in the third quarter. At present, the average market value of breeding stocks and other indicators are below the historical average, and the safety margin of valuation is high, maintaining the "optimistic" rating of the sector.
According to the analysis of open source securities, the reversal of the pig cycle in 2022 is imminent, and the layout of production capacity is in the de industrialization period. Focus on Muyuan Foods Co.Ltd(002714) , which has the leading breeding cost; Wens Foodstuff Group Co.Ltd(300498) , New Hope Liuhe Co.Ltd(000876) , with accelerated recovery of production indicators and reduced costs; Cycle reversal drives Fujian Aonong Biological Technology Group Incorporation Limited(603363) , with excellent performance flexibility; Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , which has the advantages of breeding cost and capital; Relevant beneficial object Tecon Biology Co.Ltd(002100) .
