[market this week]
Shenwan agriculture, forestry, animal husbandry and fishery industry (3.93%), ranking of Shenwan industry (1 / 28); Shanghai Stock Index (- 1.19%), CSI 300 (- 2.14%), small and medium-sized 100 (- 2.46%);
[core view]
Aquaculture industry:
Important event: on March 23, Ukrainian Minister of agriculture Leonid leshchenko officially submitted his resignation to the Ukrainian government to resign as Minister of agriculture. On the 22nd, leshchenko said that the planting area of crops in Ukraine this spring is expected to be more than half that in 2021, to about 7 million hectares.
We believe that Ukraine is a major agricultural producer and exporter in the world. In the past 20 years, Ukraine's barley exports accounted for 11.84% of the global trade volume, and its corn exports accounted for 13.29% of the global trade volume. In April, Ukraine entered an important spring sowing period. If the situation in Russia and Ukraine continues to be tense and more than half of the delayed sowing or even abandoned sowing becomes a reality, it will have an irreparable impact on grain production this year. In addition, from the balance sheet of USDA (US Department of Agriculture) in March, the predicted export volume of Ukrainian corn in 21 / 22 is 27.5 million tons, down 17.9% from the previous month, and the overall export volume of global corn has also been reduced. Regional disputes have brought continuous uncertainty to port import and export, and the planting area in Ukraine is expected to decrease to a large extent, which will push up the global Shenzhen Agricultural Products Group Co.Ltd(000061) bulk inflation expectation. For China, China's imports of corn and barley from Ukraine accounted for 29.05% and 25.74% of the total imports respectively. The uncertainty of grain production and export in Ukraine, combined with the transmission of international Shenzhen Agricultural Products Group Co.Ltd(000061) market, will put pressure on the stability of the market of relevant varieties in China.
In terms of trading, we recommend paying attention to investment opportunities in the planting sector, especially soybean, corn and other varieties greatly affected by the international market. In addition, it is suggested to pay attention to the pressure on breeding costs caused by Shenzhen Agricultural Products Group Co.Ltd(000061) bulk price increases, and continue to promote the deregulation of pig production capacity, bringing investment opportunities of cycle reversal. But also pay attention to the fluctuations that may be brought to the sector by the changes in the situation between Russia and Ukraine.
In terms of pigs, the recent adjustment of pig breeding prices is obvious. According to China pig network, as of March 26, the price of live pigs (foreign three yuan) was 12.35 yuan / kg, up 3.7% from last week. However, global supply chain pressure and regional disputes have pushed up the price of Shenzhen Agricultural Products Group Co.Ltd(000061) bulk, indirectly increasing the cost of breeding feed, and the breeding profit is still in the deep loss range. As of March 25, the profit of pig self breeding was -549.21 yuan / head, and the de production capacity of the industry will be accelerated.
According to the feed data, on March 15, the feed industry association announced the feed production situation from January to February 2022. The total output of industrial feed in China was 43.84 million tons, a year-on-year increase of 3.5%. Among them, the output of pig feed was 21.26 million tons, a year-on-year increase of 2.9%. On a monthly basis, the pig feed output in February was 9.24 million tons, a month on month increase of - 23.1%. We believe that the month on month decline in February was due to the suspension of the Spring Festival and statistical factors. The overall feed output and demand of the industry are still at a high level, reflecting that the inventory of the pig industry is still relatively loose. Under the slowdown of demand after the festival, the pig price is difficult to be strong in the short term.
Sales of major listed pig enterprises in February: the pig market weakened with the slowdown of demand after the festival, the pig price decreased, the superimposed feed cost increased, and the breeding loss further expanded. In terms of quantity, after the Spring Festival, the overall demand slowed down, the price of pigs was low, the main enterprises accelerated their marketing before the festival, superimposed the market downturn after the festival, and the marketing shrinkage was obvious. In February, the main pig enterprises sold 2.8333 million pigs (excluding the original animal husbandry), with a month on month decrease of 31.5%. In terms of price, after the pig line in February, it entered the off-season, the overall demand slowed down, and the pig market fell. The sales prices of pigs of major pig enterprises decreased significantly in February. Zhengbang, Wenshi, New Hope Liuhe Co.Ltd(000876) , tianbang were - 9.7%, - 10.9%, - 12.8%, - 13.8% month on month respectively, and muyuan decreased by 16.1% from January to February compared with December last year.
We believe that the game of pig sector has entered the stage of 3.0. The classic cobweb model reflects the market logic of price reduction - production reduction - short supply - price increase - production increase - price reduction. 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 logical chain of "cobweb model" of capital market game continues to move forward.
According to our calculation, in history, the average market value of the top pig enterprises listed in the 19-20 pig cycle reached the level of 1200018000 yuan, while the average market value of the top pig enterprises listed in the 15-16 pig cycle reached the level of 8 Tcl Technology Group Corporation(000100) 00 yuan (as shown in the figure below). We believe that the starting background of the 19-20 year pig cycle is relatively special, and the short-term impact of environmental protection and non plague factors on the industry's production capacity is very obvious. At present, if the pig cycle reverses, it is more driven by the profits of cyclical industries. Referring to the valuation, the pig cycle of 15-16 years (i.e. the average market value of about 8000 yuan) is more comparable. We believe that under the current valuation level, the market has reflected a certain expectation of cycle reversal in advance, but the downward profit promotes the de production capacity and the consumption level still need to be continuously observed and verified, and the pig sector will enter a more intense game stage.
In terms of trading, considering that the capital market has reflected the expectation of a certain reversal of pig cycle, it is suggested to pay attention to the fluctuation caused by the short-term price reduction and production reduction. From the perspective of recent breeding profits, the breeding profits of self breeding and outsourcing piglets have entered the deep loss range, and the de production capacity will be accelerated. Bargain hunting intervention is a more appropriate strategy. However, this round of pig cycle will return to the Epic Cycle of 19 years, which does not have the external environment of environmental protection and non plague impact on production capacity. It is suggested to maintain rational expectations.
In terms of broilers, we believe that the supply and demand fundamentals of yellow feather chicken will promote the market cycle upward. 1) On the supply side, the long-term breeding loss in the early stage makes the industry's production capacity obvious. According to the China Animal Husbandry Association, the stock of parents of yellow feather broilers has been in a low position for nearly four years. We believe that the overall production of yellow feather broilers in 22 years will be at a low level in recent years. 2) On the demand side, as the market of live pigs and other animal proteins bottoms out, the substitution squeeze of yellow feather broiler demand will gradually ease and the margin will be better. In addition, the consumption of live poultry suppressed by the epidemic has been fully digested in the past two years, with marginal improvement; In the short term, it is supported by consumption at the end of the year, boosted by long-term economic recovery, and the yellow feather broiler sector is expected to usher in a business cycle. Pay attention to the relevant targets of Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Hunan Xiangjia Animal Husbandry Company Limited(002982) , Wens Foodstuff Group Co.Ltd(300498) and other sectors.
In terms of industrial chain integration, we believe that head breeding enterprises extend to downstream slaughtering and processing, food manufacturing and even terminal sales by virtue of their advantages of upstream integration and large-scale, with continuous enrichment of business and continuous improvement of value.
Head breeding enterprises are expected to rely on their core advantages to continuously improve their competitiveness and open the performance growth curve.
Highlights: China's leading large-scale aquaculture [ Muyuan Foods Co.Ltd(002714) ] with obvious cost advantages, new forces of large-scale aquaculture [ Fujian Aonong Biological Technology Group Incorporation Limited(603363) ] with capacity advantages and expansion potential, [ New Hope Liuhe Co.Ltd(000876) ] and [ Fujian Sunner Development Co.Ltd(002299) ] with rapid progress in industrial chain integration.
Planting industry: the seed industry has ushered in a historic opportunity of "three-phase superposition". During the policy period, on February 11, the State Council issued the "14th five year plan" to promote agricultural and rural modernization. In the chapter "promoting innovation driven development", it once again emphasized the revitalization of the seed industry - strengthening the protection of germplasm resources, carrying out breeding innovation, strengthening the construction of seed industry base and strengthening the supervision of seed industry market. During the industrial period, bulk grain prices remained high, farmers' willingness to grow grain increased, and corn and rice seed stocks, supply and demand were optimized, promoting the prosperity of the seed industry. The technical period is 22 years, and biological breeding is expected to be popularized. It is expected that the biological breeding promotion plan in the near future is expected to be clear: 1) the low version of the plan only involves the promotion in Inner Mongolia and Yunnan; 2) On the basis of the low version, the medium version also popularizes the main corn producing areas in Northeast China; 3) The higher version will be fully released. We believe that considering the national determination to promote the revitalization of the seed industry and the current actual situation of planting, there is a high probability that the Chinese version will be finally launched.
On February 28, the Ministry of agriculture and rural areas issued the work plan for the supervision of agricultural genetically modified organisms in 2022. We believe that this year's plan has the following three characteristics. 1) "Stricter". This year's work plan proposed to strengthen the supervision of seed production and operation and "prevent illegal genetically modified seeds from going to the ground" (last year proposed to "strictly prevent illegal genetically modified seeds from flowing into the market"). 2) "Full coverage", the inspection coverage rate of relevant enterprises, scientific research institutions, breeding and production bases should reach 100%. 3) "Industrialization". The plan proposes "creating a healthy and orderly environment for the development of biological breeding industrialization". It can be seen that biological breeding industrialization is approaching, and 22 years is expected to be the first year of implementation.
In the medium and long term, we are firmly optimistic about the prospects of the national seed industry and the improvement of the fundamentals of relevant seed enterprises. Under the banner of seed industry revitalization, the iteration and reconstruction of the industry are constantly implemented from top to bottom, which is highly deterministic. "Iteration" refers to the iteration of biological breeding technology. In January, relevant policies on transgene and gene editing were implemented to support the efficient approval of relevant varieties and show the determination and strength of the policy. "Reshaping" is the reshaping of the industry pattern. At the national conference to promote the work of supporting excellence of seed enterprises, it was once again emphasized that "we should improve and strengthen a number of seed industry leading enterprises with integrated innovation ability and adapt to market demand, and create the backbone force for the revitalization of seed industry". The leading seed enterprises with scientific research advantages will become more and more prominent. "Top down" refers to the implementation of policies, systems, supervision and law enforcement under the banner of seed industry revitalization. The overall industry fundamentals will be better and better.
In terms of trading, we believe that although there is a time cycle for the achievement of the industry performance, the revitalization of the seed industry is sustained and certain. The cashing cycle will inevitably lead to the settlement of "impetuous" funds and cause fluctuations, but it also brings opportunities for bargain hunting allocation to "long-term" funds. Retreat from the "floating foam" with high short-term expectations, and with the style suppression coming to an end, there will be better trading opportunities. Key recommendation: seed industry leader [ Yuan Longping High-Tech Agriculture Co.Ltd(000998) ] with genetically modified trait reserve, and [ Beijing Dabeinong Technology Group Co.Ltd(002385) ] with leading genetically modified technology and multiple businesses.
Pet industry: pet industry is a high-quality track catering to social development and consumption trend. According to the white paper on China's pet industry, China's pet industry has a market scale of 100 billion, with a compound annual growth rate of nearly 20%. At present, overseas giants occupy a high share of China's pet food and medical market segments. We believe that the branding of domestic OEM enterprises will continue to accelerate, and have comparative advantages in understanding and deepening Chinese traditional and modern channels. The pet industry will usher in opportunities for domestic substitution, and we will continue to follow up and pay attention. Key recommendation: China's pet food industry leader [ Yantai China Pet Foods Co.Ltd(002891) ].
Grain and oil industry: affected by the Shenzhen Agricultural Products Group Co.Ltd(000061) cycle, the disturbance of global supply chain under the epidemic and other factors, the prices of soybean and other oilseeds have risen, the cost side pressure of grain and oil enterprises has become prominent, and the squeezed profits have declined significantly. We believe that with the improvement of the marginal demand of grain and oil enterprises in the future, it is expected to improve the performance of enterprises after the epidemic. Focus on integrated supply chain management and operation of leading enterprises.
Key recommendation: grain and oil leader [ Yihai Kerry Arawana Holdings Co.Ltd(300999) ], which is expected to develop in the overall kitchen business.
Risk tip: the economic recovery is less than expected, the epidemic situation, etc
