I. core view
Rating and Strategy: geographical conflicts may promote the continuous rise of global grain prices, highlight the importance of China’s agricultural industry and maintain the “optimistic” rating of the planting sector. Pig prices stopped falling and grain prices rose. The pig industry continued to lose money, and the capacity was eliminated or accelerated. The reversal logic of pig prices during the year was strong, maintaining the “optimistic” rating of the breeding sector. Combined with the valuation, the breeding sector is recommended.
1. Aquaculture industry chain
1) pig industry: maintain the “optimistic” rating, focusing on Muyuan Foods Co.Ltd(002714) and Tecon Biology Co.Ltd(002100) . Last week, the average price of pigs in Jiangxi Province was 12.27 yuan / kg, up 0.21 yuan per week; Piglets were 23.7 yuan / kg, up 0.52 yuan per week; Binary sows were 32.62 yuan / kg, up 0.02 yuan per week. The head of self breeding and autotrophic model lost 549 yuan, 2 yuan more than last week. Pig prices have stopped falling recently, and the space for further decline may be limited. Geographical conflicts have driven up food prices and breeding costs. It is expected that the unit cost of slaughtered fat pigs may rise by 0.6-1 yuan / kg from August to September. The rise in costs combined with the downturn in pig prices has expanded the losses of the pig industry, and the production capacity has been reduced or accelerated. Maintain the judgment on the recent acceleration of capacity removal and the bottom reversal of pig price in the third quarter. In terms of valuation, the average market value of individual stocks is still below the historical average, with a good margin of safety, maintaining the “optimistic” rating of the sector. Focus on Muyuan Foods Co.Ltd(002714) and Tecon Biology Co.Ltd(002100) and pay attention to Wens Foodstuff Group Co.Ltd(300498) , Tangrenshen Group Co.Ltd(002567) , Shenzhen Kingsino Technology Co.Ltd(002548) and Fujian Aonong Biological Technology Group Incorporation Limited(603363) .
2) yellow chicken industry: maintain the “optimistic” rating and recommend Jiangsu Lihua Animal Husbandry Co.Ltd(300761) . In February, the price of Lihua yellow chicken was 14.16 yuan / kg, down 0.3 yuan / kg per month; Wen’s yellow chicken costs 14.63 yuan / kg, up 0.65 yuan per month. The price of yellow chicken has been above the cost line since the fourth quarter of 2021 and is expected to remain stable in the first half of the year. In the medium and long term, environmental protection constraints and the transformation of live birds to fresh ice will raise the industry threshold, accelerate the withdrawal of small and medium-sized production capacity and optimize the competition pattern. Maintain the “optimistic” rating of the industry, focus on recommending Lihua, and pay attention to Wens Foodstuff Group Co.Ltd(300498) and Hunan Xiangjia Animal Husbandry Company Limited(002982) .
3) dynamic insurance: give a good rating, with emphasis on Wuhan Keqian Biology Co.Ltd(688526) . On the eve of the reversal of the pig cycle, the vaccine boom was under short-term pressure. In the medium and long term, the improvement of large-scale breeding level, the upgrading of vaccine technology and the listing of new products will drive the expansion of the animal protection market. At the same time, the new GMP certificate certification, feed prohibition and breeding restriction, as well as the improvement of the biological security level of the breeding industry will promote the reform of the animal protection industry and optimize the competition pattern. PE stocks are currently at the bottom of history, with a high margin of safety in valuation, and are given a positive rating. Stocks with reasonable valuation and R & D advantages are recommended Wuhan Keqian Biology Co.Ltd(688526) .
2. Planting industry chain
1) planting: maintain the “optimistic” rating, and highlight Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) . Ensuring food security is the main tone of China’s three rural policies. Under the background of policy care, the importance of planting industry is prominent. In the short and medium term, the geopolitical conflict has affected the stability of global grain trade. If the conflict lasts until April to may, it will affect the grain production of major producing countries and the relationship between grain supply and demand in 22 / 23, providing a new driving force for the rise of grain prices. Maintain the “optimistic” rating of the industry and recommend Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) .
2) seed industry: maintain the “optimistic” rating, focusing on Shandong Denghai Seeds Co.Ltd(002041) and Yuan Longping High-Tech Agriculture Co.Ltd(000998) . Policy care, technology upgrading of seed industry, and the listing of genetically modified products is imminent. The commercialization of genetically modified organisms will open up the development space of the seed industry market and promote the optimization of the industry pattern. The leading enterprises have the first mover advantage and are expected to fully benefit and gain more market share. Maintain the “optimistic” rating of the industry and focus on the investment opportunities of corn seed industry. In terms of individual stocks, focus on Shandong Denghai Seeds Co.Ltd(002041) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Beijing Dabeinong Technology Group Co.Ltd(002385) .
II. Market Review
The agricultural index rose sharply, which was significantly better than the big market. 1. Last week, the Shenwan agricultural index rose 3.92%. Over the same period, the Shanghai Composite Index fell by 1.19% and the Shenzhen composite index fell by 2.07%. The performance of the agricultural sector was significantly better than that of the big market; 2. As for the secondary sub industry, in addition to the decline in animal health, the indexes of the other seven sub industries rose, with the planting industry index rising the first; 3. The top 10 gainers are mainly concentrated in the planting and Shenzhen Agricultural Products Group Co.Ltd(000061) processing sectors, while the top 10 losers are concentrated in the animal health sector. The top three stocks in terms of growth were Xiwang Foodstuffs Co.Ltd(000639) , Hainan Jingliang Holdings Co.Ltd(000505) and Tech-Bank Food Co.Ltd(002124) .
III. industry data
Pigs: in the 12th week, the average ex factory price of pigs in Jiangxi Province was 12.27 yuan / kg, with a weekly increase of 0.21 yuan / kg; The average loss of self breeding heads in the main pig producing areas in China was 549.2 yuan. By the end of January 2021, the number of fertile sows in China was 42.9 million, a year-on-year decrease of 3.7%;
Broilers: in the 12th week, the average price of chicken seedlings in Yantai, Shandong Province was 0.86 yuan / feather, with a weekly increase of 0.02 yuan / feather; The average price of white feather meat and wool chicken in front of the shed was 3.93 yuan / kg, with a weekly increase of 0.06 yuan / kg; In the 12th week, the single feather loss in broiler breeding was 0.85 yuan;
Feed: according to the statistics of Boya Hexun, the average price of broiler feed was 4.02 yuan / kg in the 12th week, with a weekly increase of 0.04 yuan / kg; The price of fattening pig is 78 yuan / kg, up by 3.03 yuan / week; Aquatic products: in the 12th week, the sea cucumber in Shandong Weihai bulk wholesale market was 200 yuan / kg, unchanged on a weekly basis; The price of scallops was 8 yuan / kg, unchanged on a week-on-week basis; The price of shrimp was 310 yuan / kg, unchanged on a week-on-week basis; The price of abalone was 110 yuan / kg, unchanged on a week-on-week basis;
Sugar, cotton, corn, soybean meal, wheat and rice: in the 12th week, the spot price of Nanning white sugar was 5776 yuan / ton, unchanged on a weekly basis; The price of 328 grade cotton in China was 22744 yuan / ton, with a weekly increase of 47 yuan / ton; The average purchase price of corn in China was 2756 yuan / ton, up 8 yuan / ton per week; The average spot price of soybean meal in China was 5180 yuan / ton, with a weekly increase of 218 yuan / ton; In the 12th week, the average spot price of Chinese wheat was 3212 yuan / ton, unchanged on a week-on-week basis; The average price of Japonica Rice in China was 2758 yuan / ton, unchanged on a weekly basis;
IV. risk warning
The price changes of raw materials such as sudden epidemic diseases, livestock and poultry, aquatic products and corn are less than expected
