Market review this week
The agriculture, forestry, animal husbandry and fishery sector outperformed the market. Last week (2022 / 4 / 112022 / 4 / 15), the CSI 300 index fell by 0.99%, and the Shenwan agriculture, forestry, animal husbandry and fishery index rose by 1.14% in the same period, outperforming the CSI 300 index by 2.13 percentage points, ranking fifth among 28 Shenwan level industries.
From the sub sectors of agriculture, forestry, animal husbandry and fishery, the rise and fall of feed / planting / fishery / Shenzhen Agricultural Products Group Co.Ltd(000061) processing / livestock and poultry breeding / animal health care last week were 5.03%, 3.54%, 3.27%, 2.94%, - 0.33% and - 5.92% respectively.
Core ideas of this week
[live pigs] in the short term, the epidemic will suppress the supply first and then increase, which will lead to the second bottom of pig prices and accelerate the de industrialization of production capacity
According to the monitoring of Boya Hexun, the average price of pigs nationwide this week was 12.46 yuan / kg, up 1.86% month on month and down 45.98% year-on-year; The self breeding loss was 511.57 yuan / head, with a month on month decrease of 3.67% and a year-on-year decrease of 171.57%; The loss of purchased breeding was 282.58 yuan / head, with a month on month decrease of 3.36% and a year-on-year decrease of 48.35%.
We believe that due to the prevention and control of covid-19 epidemic in China, the circulation and transportation of pigs are blocked, farmers are passively pressed on the fence, the market supply is reduced in the short term, and the pig price has increased. We believe that the overall market supply in April and may is sufficient, and the reduction of short-term market supply only delays the supply, but does not substantially reduce it. After the relaxation of pig transportation, there will be a centralized marketing situation, and the marketing weight will increase. The release of supply will once again exert downward pressure on pig prices, and pig prices may stop rising and fall. Under the pressure of breeding losses and cash flow, the production capacity may be accelerated again, which is expected to accelerate the arrival of the cycle and improve the reversal range of the new cycle.
[white feather broiler] the winner and loser of the chicken cycle is now in hand, and the upstream supply is accelerating and depolymerization
According to the monitoring of Boya Hexun, the average price of wool chicken in the main production area this week was 8.89 yuan / kg, up 3.86% month on month and 0.79% year-on-year; The comprehensive selling price of chicken products was 10.15 yuan / kg, up 2.22% month on month; The price of chicken seedlings was 2.09 yuan / feather, up 22.22% month on month.
We believe that the epidemic has damaged the main consumption channels and weak chicken consumption. Affected by covid-19, the main consumption channels of chicken such as group meal and wholesale market have been seriously damaged. The overall consumption of chicken is weak, and the comprehensive price of chicken remains low. The loss of profit at the slaughtering end will further affect the performance of upstream breeding end and chicken breeding enterprises. The performance of white feather chicken sector in the second quarter is expected to continue to suffer losses. However, the continuous loss of the industrial chain is conducive to the further clearing of upstream production capacity. In addition, since the beginning of 2022, the outbreak of avian influenza in the United States has spread to 24 states and 92 counties in the United States, resulting in the slaughter of more than 27 million birds, and there is no obvious mitigation trend. At present, China's dependence on the import of white feather broiler breeds is still high. In 2021, 70% of white feather broilers were imported from overseas, of which 57% were imported from the United States. The outbreak of avian influenza in the United States may exacerbate the supply risk of Chinese breeding chickens. With the slowdown of introduction, the impact of the dual factors of forced moulting in 2021, and the weakening impact of the epidemic combined with the increased demand of consumption stimulus policies, China's poultry prices are expected to gradually rise from the current bear market, and the reversal of industry prosperity is expected to exceed expectations.
[planting chain] the grain price remains high, so we should pay attention to the investment opportunities of planting chain
As of April 15, the average spot price of corn was 2836 yuan / ton, down 0.07% month on month; The average spot price of wheat was 3141 yuan / ton, up 1.82% month on month; The average spot price of soybean was 5689 yuan / ton, up 3.35% month on month; The average spot price of soybean meal was 4540 yuan / ton, up 0.75% month on month.
China's soybean, corn, wheat and other Shenzhen Agricultural Products Group Co.Ltd(000061) still rely on some imports and are greatly affected by the international market. Russia, Ukraine, Brazil and Argentina are the main suppliers of China's Shenzhen Agricultural Products Group Co.Ltd(000061) imports. The conflict between Russia and Ukraine and the dry weather in South America may have an impact on global grain production and supply, and global grain price fluctuations may have a linkage impact on China's planting chain.
In addition, we are concerned that the current military struggle between the two countries has gradually cooled down, but the supply and demand pattern of global energy, food and agricultural materials has not changed greatly. Geopolitical conflicts and energy sanctions are still likely to continue. Global energy pricing such as oil and natural gas may remain high and fluctuate, which will push up the prices of agricultural materials such as pesticides and fertilizers downstream, or have a potential negative impact on medium and long-term food production outside China. In the context of food security, biological breeding technology can solve the problem of oil shortage in China from the perspective of productivity factors. It is expected that the commercialization process of genetically modified organisms breeding in China is expected to make a breakthrough. We may see the introduction of seed production pilot scheme in 2022, the charging method of genetically modified traits may be further implemented within the year, and seed enterprises with obvious technical and quality advantages may take the lead in benefiting.
Investment advice
[pig breeding] in the cold winter of breeding, we select the target based on the two main lines of "not going bankrupt" and "expected marketing", and recommend Hunan New Wellful Co.Ltd(600975) , Muyuan Foods Co.Ltd(002714) and other enterprises with abundant cash flow and cashable marketing.
[white feather broiler] the industrial chain has experienced losses for more than one year. The deep losses in the downstream inhibit the enthusiasm of column filling. The decline in the price of chicken seedlings affects the profits of the incubator, or forces the chicken farms to take the initiative to reduce production capacity. We may see the month on month contraction of the supply of chicken seedlings in the third quarter of 2022; The outbreak of avian influenza in the United States may affect the import of white feather chicken provenance and aggravate the risk of breeding chicken supply. The white feather chicken cycle may start in preparation. It is recommended that enterprises focusing on the layout of the whole industrial chain business and the elastic target of the upstream main chicken seedling sales business.
[dynamic insurance] the downturn of pig price affects the immune mood. The cold winter of dynamic insurance enterprises has come, and the sector has fallen to a reasonable range dragged down by pig price. It is expected that the reversal of pig price in the second half of 2022 will lead to the upward prosperity of the industry, the enterprise is expected to usher in the performance inflection point, the sector is expected to be valued and repaired, and the low-level layout is recommended. It is recommended to focus on Pulike Biological Engineering Inc(603566) , which has obvious advantages in subunit vaccine research and development, and industry leaders with rich product reserves.
[planting chain] focus on the subject that directly benefits from the rise of grain prices; The rise of grain prices drives the prosperity of seed industry. It is recommended to pay attention to Beijing Dabeinong Technology Group Co.Ltd(002385) (rich reserves of genetically modified traits) and Yuan Longping High-Tech Agriculture Co.Ltd(000998) (the leader of corn and rice seeds).
Risk tips
Covid-19 epidemic spread risk, international situation change risk, policy implementation less than expected risk, etc.
