Prospect of the first quarterly report in 2022: the performance of the breeding sector is under pressure, and the profit growth of the seed industry is obvious. We make forward-looking predictions on the performance of key companies: 1) for the live pig sector, it is expected that the overall performance of the sector will be under pressure due to the significant year-on-year decline in pig prices in 2022q1. Among them, we expect Zhejiang Huatong Meat Products Co.Ltd(002840) to benefit from the steady increase in production capacity, and the cost of 2022q1 may achieve marginal improvement. It is expected that the net profit attributable to the parent company in Zhejiang Huatong Meat Products Co.Ltd(002840) 2022q1 will be a loss of 90-100 million yuan, a year-on-year decrease of 216% – 229%. The loss range may be at a lower level among peers. In addition, we expect that the net profit attributable to the parent company of Muyuan Foods Co.Ltd(002714) 2022q1 will be a loss of 5.5-6.5 billion yuan, a year-on-year decrease of 179% – 193%. The company has excellent cost management, and the advantage of excess profit per unit compared with its peers is expected to be further highlighted. 2) In the feed sector, according to the announcement of the company, Guangdong Haid Group Co.Limited(002311) 2022q1’s net profit attributable to the mother was 201 million yuan, a year-on-year decrease of 71.62%, mainly due to the pressure on the breeding business due to the downturn of pig price. We believe that the fluctuation of pig cycle does not affect the core of Haida’s growth stocks and continue to be optimistic about Guangdong Haid Group Co.Limited(002311) . 3) For the poultry sector, due to the rise of feed costs and the downturn of poultry prices, the overall performance of the sector is expected to be poor in 2022q1, and the profit of the white chicken sector may reach the lowest level in this cycle. In addition, the performance of Hunan Xiangjia Animal Husbandry Company Limited(002982) with a high proportion of food business is expected to be better than that of its peers. 4) In the dynamic insurance sector, the sluggish pig price in 2022q1 inhibits the demand for dynamic insurance, and the overall performance growth of the sector is expected to slow down. 5) The planting chain maintained a high boom and benefited from the reversal of corn inventory cycle. It is expected that the overall performance of 2022q1 planting chain may be strongly supported.
Investment suggestion: continue to focus on the pig sector and be optimistic about China’s high grain price boom in 2022. 1) Pig: we believe that 2022 is the best stage to lay out the pig sector in advance, and the pig cycle will probably reverse in 2023. The recent significant rise in the cost of feed raw materials may accelerate the reversal of the pig price cycle and further strengthen the expectation of sector reversal. It is expected that the stock of fertile sows may continue to be removed with the decline of pig price in the first half of 2022, which is expected to further catalyze the sector. At the same time, meat products benefit from the decline in pig prices, and the profit is expected to be further improved in 2022. Recommendations: Zhejiang Huatong Meat Products Co.Ltd(002840) , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , Tecon Biology Co.Ltd(002100) , Dongrui Food Group Co.Ltd(001201) , COFCO Jiakang, Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , etc; Attention: Henan Shuanghui Investment & Development Co.Ltd(000895) , Longda food, etc. 2) Yellow feather chicken: it is expected that the profit of yellow chicken breeding will improve in 2022. It is recommended that high-quality breeding targets: Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Hunan Xiangjia Animal Husbandry Company Limited(002982) , Wens Foodstuff Group Co.Ltd(300498) . 3) White feather chicken: the time point of the reversal of the bottom of the cycle may be approaching, and the breeding links such as chicken seedlings and commercial chickens are in deep losses. It is expected that the trend of capacity elimination is expected to accelerate. It is suggested to pay attention to the bottom: Springsnow Food Group Co.Ltd(605567) , Fujian Sunner Development Co.Ltd(002299) , Shandong Yisheng Livestock & Poultry Breeding Co.Ltd(002458) , Shandong Xiantan Co.Ltd(002746) . 4) Animal protection: the value of sector allocation is weaker than that of aquaculture. It is recommended to pay attention to Wuhan Keqian Biology Co.Ltd(688526) , China Animal Husbandry Industry Co.Ltd(600195) , Pulike Biological Engineering Inc(603566) . 5) Planting chain: pay attention to the rise in food prices caused by the conflict between Russia and Ukraine and the excessive development of global currencies. In 2022, there is strong support for the fundamentals of China’s wheat and corn. The rise in food prices may directly benefit the improvement of planting area and planting capital investment, and the head high-quality seed enterprises or both demand and profit. In addition, the implementation of GM is expected to accelerate. It is expected that the implementation of GM will reshape the pattern of seed industry, and the seed industry will usher in the resonance between cycle and growth. Recommendations: Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Beijing Dabeinong Technology Group Co.Ltd(002385) , Shandong Denghai Seeds Co.Ltd(002041) .
Risk tips: risks caused by bad weather; Potential risks caused by uncontrollable animal outbreaks.
