Key investment points
Pig breeding: when the cycle is dark, pig enterprises will die and live
The breeding loss continued to increase in 2022q1. On the one hand, the supply of pigs in the market exceeds the demand, and the price of pigs continues to fall. According to the monitoring of Boya Hexun, the price of pigs fell to 11.5 yuan / kg in the first quarter from 16 yuan / kg in the previous year. On the other hand, the price of corn, soybean meal and other feed raw materials continued to rise in the first quarter, pushing up the feed cost. As of March 31, 2022, the spot price of corn in China was 2837 yuan / ton, up nearly 5% compared with the beginning of January, and the spot price of soybean meal was 4589 yuan / ton, up nearly 40% compared with the beginning of January. In addition, the frequent occurrence of winter diseases increased the loss of dead Amoy, and the loss of pig breeding continued to intensify in the first quarter. The loss of self breeding increased from 115 yuan / head at the beginning of January to 540 yuan / head at the end of March, and the profit of fattening purchased piglets increased from 103 yuan / head at the beginning of January to 292 yuan / head at the end of March. Under the pressure of capital, the listed pig enterprises significantly slowed down the pace of slaughter. In the first quarter, except New Hope Liuhe Co.Ltd(000876) and , the slaughter volume of pigs by the main listed pig enterprises decreased month on month compared with the fourth quarter of last year. Due to the high feed cost in the first quarter, the high incidence of epidemic diseases, low capacity utilization, the impact of the Spring Festival holiday on the marketing progress and other factors, the cost improvement of listed pig enterprises is limited, and the loss of commercial fat pigs is between 400800 yuan. Moreover, since the pig price in the second quarter is still below the breeding cost line, pig enterprises may withdraw the provision for inventory falling price at the end of the first quarter, which will further aggravate the loss range of enterprises.
Animal vaccine: the immune mood is frustrated, and the cold winter of enterprises has come
Pig prices remained depressed, pig raising enterprises strengthened cost control, and animal insurance enterprises were under pressure. Since the breeding sows reached the highest point in June 2021, the supply of live pigs has been sufficient, and the pig price has been in the loss stage for most of the time. In order to control the cost, farmers have simplified the immunization procedure and pressed the price to the upstream animal protection enterprises, and even stopped the immunization of most non compulsory immunization vaccines. According to the data of the national veterinary drug basic database, there was differentiation in the batch issuance of vaccines in the first quarter of 2022. The number of batches of foot-and-mouth disease and avian influenza vaccines issued for compulsory immunization increased by 2.3% and 12.2% year-on-year; The number of batches of non compulsory immunization vaccines decreased significantly, including 28.8% year-on-year decline in pig ring, 40.7% and 44.7% year-on-year decline in pig pseudomania and epidemic diarrhea respectively. The product sales of dynamic insurance enterprises are facing the dual pressure of price reduction and reduced demand. It is expected that the performance of dynamic insurance enterprises will decline significantly in the first quarter.
Stick to the main line of investment in pig breeding and pay attention to the valuation opportunities at the bottom of the animal protection sector
(1) pig breeding: we believe that the pig breeding sector is still the main line of agricultural investment in 2022. At present, the price difference between eliminated sows and fattening pigs is small, which reflects that under the background that the market is generally optimistic about the market in the second half of the year or next year, the sentiment of farmers to reduce production capacity is not strong enough. However, under the continuous breeding losses and cash flow losses, and it is difficult to have a significant recovery in short-term end consumption. In the second quarter of this year, there is a strong certainty that the industry’s sow production capacity will be accelerated. The pig breeding group represented by Cr40 may have a significant elimination of sows one after another, and a new round of pig cycle has been brewing and started. From the perspective of the historical pig cycle, from July last year to the end of March this year, the cumulative decline in the number of fertile sows decreased by only about 8%, while the inflection point of the de stocking of fertile sows in history is around 15% – 20%. Therefore, the current breeding sector is still on the left side of the fundamentals, and the sector callback is a good time to buy. It is recommended to pay attention to the leader [ Muyuan Foods Co.Ltd(002714) ] (leading in cost control industry); [ Wens Foodstuff Group Co.Ltd(300498) ] [ New Hope Liuhe Co.Ltd(000876) ] (the listing is expected to increase rapidly and the cost improvement is expected to continue to be realized); [ Hunan New Wellful Co.Ltd(600975) ] [ Tecon Biology Co.Ltd(002100) ] (the background of state-owned enterprises ensures the safety of funds and the market value of each head is undervalued).
(2) dynamic insurance: the short-term pig price dragged down the prosperity of the industry, and the current investment value of the sector. By fitting the trend of pig price and animal protection industry index, it is found that the stock price of animal protection enterprises is almost synchronized with the pig price. We believe that the current animal protection sector has fallen to a reasonable range dragged by the pig price, and the average valuation level of the sector is 20-30 times, which has been in a 10-year historical position. Although the pig price is low in the second quarter or continues to affect the immune enthusiasm, and the number of major pig vaccine batches is growing sluggishly, the deregulation of pig production capacity is advancing with the trend, It is expected that the anti transfer of pig cycle in the second half of 2022 will drive the prosperity of vaccine upward, and the animal insurance sector is expected to usher in valuation repair. It is recommended to pay attention to [ China Animal Husbandry Industry Co.Ltd(600195) ] (the market of foot-and-mouth disease vaccine is growing rapidly, and the performance of chemical drug prohibition is bright); [ Pulike Biological Engineering Inc(603566) ] (R & D investment continues to increase, reserves of advantageous products are abundant, and non plague vaccines or contribute to performance); [ Jinyu Bio-Technology Co.Ltd(600201) ] (the market leader of foot-and-mouth disease, and new products support long-term growth).
Risk tips
(1) covid-19 epidemic spreading risk;
(2) risk of large-scale outbreak of animal diseases;
(3) price fluctuation risk of raw materials.
