In the continuous decline of pig prices, pork stocks broke an all-time high.
On March 29, Fujian Aonong Biological Technology Group Incorporation Limited(603363) ( Fujian Aonong Biological Technology Group Incorporation Limited(603363) . SH) rose by the intraday limit, which is the third time that the share price of the stock has touched the limit since March. It has risen by more than 200% since August last year. Paradoxically, the price of pork has not bottomed out during this period, and Fujian Aonong Biological Technology Group Incorporation Limited(603363) expects a huge loss of 1.08-1.28 billion yuan in 2021.
What about the agreed value investment?
Coincidentally, during the period of Leshan Giantstar Farming&Husbandry Corporation Limited(603477) ( Leshan Giantstar Farming&Husbandry Corporation Limited(603477) . SH), the cumulative increase was about 170%, and Tangrenshen Group Co.Ltd(002567) also nearly doubled. And Tangrenshen Group Co.Ltd(002567) last year, it also lost about 1 billion yuan in advance. As of April 1, the concept of tongdaxin pork rose 6.15% this year, far outperforming the market.
Matched with the stock price is the research enthusiasm of the institution. On March 3, 68 institutional investors gathered at Xiamen Ruiyi hotel to investigate Fujian Aonong Biological Technology Group Incorporation Limited(603363) Muyuan Foods Co.Ltd(002714) this year, six research announcements have been released, and Tangrenshen Group Co.Ltd(002567) has released 13.
What the hell is going onP align = "center" 01 p align = "center" pigs trapped in the cycle p align = "center" rise and fall of historical level
In China, pork consumption accounts for more than 60% of meat consumption for a long time. As the production of live pigs takes time, it takes about 18 months from binary piglets to fat pigs. The intertemporal mismatch between supply and demand leads to the formation of pig cycle, and the resulting changes in pig prices are also deeply felt by many Chinese people.
Sealand Securities Co.Ltd(000750) research report shows that since 2002, China has experienced five pig cycles, each lasting for 3-4 years. The pig cycle from 2018 to now is the most impressive. In this historical cycle, pig prices rose by a record 262%, peaking and then fluctuating at a high level for 13 months.
The surge in pig prices has led to the release of reserves and policy blowing by the senior management several times. Since 2021, pork prices have continued to decline, and the average selling price of pigs once fell to 10 yuan / kg.
For pig breeding enterprises, the profit or loss can not be determined by pork price alone. This requires the introduction of the concept of pig food ratio. Simply understood, the ratio of pig to grain is the ratio between the price of pigs and the price of corn, the main feed for pig breeding.
According to the "plan for improving the regulation mechanism of government pork reserves and ensuring supply and price stability in the pork market" released last year, the breakeven point of pig breeding enterprises is about 7:1 When the pig grain price ratio is lower than 5:1, the national development and Reform Commission will issue a level-1 early warning.
In June last year, "pork prices fell for 19 weeks" was on the hot search, and the pig grain ratio also entered the level-1 early warning range of excessive decline in that month. At present, the pig grain ratio has been in this range for five consecutive weeks, which is a great test for pig breeding enterprises. It is no wonder that the performance of pork stocks has repeatedly reported lossesP align = "center" 02 p align = "center" current inflection point of leading indicators p align = "center" truth in history
But why is it clear that pig enterprises are very sad, but the stock price is rising all the way?
This has not never happened. 2018 was at the low point of pig price, and the performance of most pig enterprises, including Muyuan Foods Co.Ltd(002714) , New Hope Liuhe Co.Ltd(000876) and New Hope Liuhe Co.Ltd(000876) fell year-on-year in each quarter. Some enterprises continued to 2019, with 2019h1 Muyuan Foods Co.Ltd(002714) or even a loss of 156 million yuan.
However, around October 2018, pork stocks began to set off a magnificent rise. At this stage, most pork stocks rose more than five timesP align = "center" share price performance of some companies
One of the codes is the leading indicator of pig supply in the whole life of breeding sows. The pig breeding cycle is long. Due to the change of the number of fertile sows, the number of pigs released from August to December determines the inflection point of pig price.
The data show that the number of fertile sows in China peaked in June 2021 and began to decline. At present, it is still in the process of decline. As the deep loss of pig breeding continues, the de production capacity of the industry will also continue, and the stock of fertile sows is likely to continue to decline.
To some extent, this explains why pork stocks bottomed around August last year and ignored that the pig grain ratio fell below 5:1 this year.
In addition to the number of breeding sows, there are two major factors affecting China's pig breeding industry.
One is the improvement of concentration. Hua'an futures quoted the data of brick consulting to show that the pig sales of the top 10 listed pig enterprises accounted for 9.4% of the total number of pigs sold in China in 2019 and 17.3% in 2021. Nearly doubled in two years.
The increase in concentration superimposes the cruelty of the deep loss of the industry and the deregulation of production capacity. The biggest impact is on individual farmers, but it is an opportunity for large-scale breeding enterprises. Therefore, enterprises willing and able to increase production may benefit more in the next business cycle.
Take Muyuan Foods Co.Ltd(002714) as an example. In the last round of "pig cycle", the year-on-year growth rate of live pig sales in Muyuan Foods Co.Ltd(002714) 20162018 reached 62.27%, 132.42% and 52.14% respectively. The sales volume increased rapidly from 1.92 million in 2015 to 11.01 million in 2018. Although it declined slightly in 2019, it increased by 76.67% to 18.12 million in 2020.
Fujian Aonong Biological Technology Group Incorporation Limited(603363) , which has been sought after by capital in recent months, seems to be repeating the road of muyuan. In 2021, 3.25 million pigs were slaughtered, and the number of pigs slaughtered for the second consecutive year doubled year-on-year, with a year-on-year increase of 141% in 2021. The speed of expansion is at the forefront of comparable companies.
In the survey at the beginning of March, Fujian Aonong Biological Technology Group Incorporation Limited(603363) said that its target is 6 million in 2022, 8 million in 2023 and 10 million in 2024.
The impact of the rising cost of raw materials, namely feed, on pig breeding can not be ignored. With the rising prices of corn and other raw materials, the pig grain ratio continues to be in the first-class early warning range. On the one hand, it is expected to accelerate the deregulation of industrial capacity, on the other hand, it will also form a certain support for pork pricesP align = "center" 03 p align = "center" enlightenment from futures prices p align = "center" optimistic expectations?
If the inflection point of the leading index is uncertain enough, the futures price can be verified accordingly.
Futures contract is the trading object or subject matter of futures trading. It is uniformly formulated by the futures exchange. It stipulates the standardized contract for the delivery of certain quantity and quality commodities at a specific time and place. Futures prices are reached through open bidding.
For example, 2210 contract is a contract that will be delivered in October 2022. At that time, the seller needs to deliver the goods specified in the contract to the buyer, and its quotation represents the price that both parties believe will be reached at that time.
Pig futures was listed in Dalian Commodity Exchange in January 2020. Its quotation is almost the peak, and the main contract 2205 is still in the downward trend. In contrast, the prices of 2207, 2209 and 2211 contracts have become stronger and stronger in recent months. 2211 contracts have even increased by about 7% this year (as of April 1, 2022).
Not only that, the more forward contracts, the higher their prices. In other words, compared with 2205, the contract is in a premium state. It can be seen at a glance from the figure below.
This shows that the current market funds are more optimistic about pig prices in the coming months.
Of course, in terms of the price of specific contracts, 2205 and 2207 contracts are still in a downward trend, and it is still unknown when the pig price bottoms out. However, when spring comes, can summer be far behind?
