Recently, the agricultural sector has fluctuated higher, and seed companies have attracted attention against the background of the current rise in global food prices.
A few days ago, Shandong Denghai Seeds Co.Ltd(002041) , Zhongnongfa Seed Industry Group Co.Ltd(600313) and other seed companies released their 2021 annual reports. While disclosing their performance, they also gave feedback on the current situation of the industry. With the growth of production and sales, the market competition is still fierce.
China Securities Daily e reporter noted that the seed industry has been highly valued in the past year. Since 2021, the No. 1 central document has proposed a good turn around for seed industry. After that, a series of papers such as seed industry revitalization action plan and the newly revised People's Republic of China seed law have been released. The seed industry has welcomed the policy. The industry will call it the first year of the Chinese seed industry revitalization in 2021. Some institutions pointed out that the seed industry, as a post grain price cycle, is expected to rise in the next 2-3 years under the stimulation of high grain prices, and the leading enterprises are more likely to rise both in volume and price.
Shandong Denghai Seeds Co.Ltd(002041) doubled profits last year
On April 19, Shandong Denghai Seeds Co.Ltd(002041) ( Shandong Denghai Seeds Co.Ltd(002041) ) released its annual report. In 2021, the revenue was about 1.101 billion yuan, an increase of 22% year-on-year; The net profit is about 233 million yuan, with a year-on-year increase of 128%. It is proposed to distribute 0.36 yuan (including tax) for every 10 shares.
Shandong Denghai Seeds Co.Ltd(002041) pointed out that the situation of oversupply of corn seed market improved last year, but the number of approved varieties is large, the degree of homogenization is high, and the market competition is still fierce. Facing the severe market situation, Shandong Denghai Seeds Co.Ltd(002041) seize the opportunity of the recovery of commodity corn purchase price and corn seed demand, and increase the sales of corn seeds.
Shandong Denghai Seeds Co.Ltd(002041) said that due to the rising commodity grain prices, farmers' enthusiasm for growing grain has further improved, the company's seed business has improved, and the sales of corn seeds, wheat seeds and rice seeds have increased compared with the same period of last year. Among them, the profitability of subsidiaries increased significantly.
In addition, Shandong Denghai Seeds Co.Ltd(002041) said that last year, corn feed consumption and processing consumption increased, the gap between production and demand expanded, and the relationship between supply and demand changed from basic balance to tightening. The rise in the price of corn commodity grain has played a positive role in promoting the recovery of corn production and the rise of seed demand.
According to the reporter, at present, China has a high degree of breeding homogeneity and a relatively high proportion of derived varieties. Affected by the accelerated speed of variety approval in recent years, the "blowout" in the number of new maize varieties approved, the homogenization of varieties and the high inventory, there is vicious competition at low prices in the market, which affects the growth of industry profits. However, the newly revised seed law has been implemented since march1,2022, and the relevant rules and regulations of the seed industry have been further improved, which will greatly promote the protection of intellectual property rights and the development of the seed industry in the future.
corn seed industry may reshuffle
Recently, a number of seed industry companies have disclosed their performance, among which the gross profit of seed business has increased. At the same time, the current rise in the price of corn commodity grain and the increase in the access threshold for corn seed production also have a certain impact on the corn seed industry, which may face a reshuffle.
the Gansu Dunhuang Seed Group Co.Ltd(600354) annual report shows that the company had a revenue of 920 million yuan and a net profit of 90.51 million yuan last year. Among them, the revenue of seed business was 606 million yuan, with a gross profit margin of 25.86%, an increase of 3.97 percentage points year-on-year.
according to the Zhongnongfa Seed Industry Group Co.Ltd(600313) annual report, last year's revenue was 3.764 billion yuan and the net profit was 36.31 million yuan. Among them, the seed business realized an operating revenue of 878 million yuan, a year-on-year increase of 42%; Gross profit was 180 million yuan, up 39% year-on-year.
Zhongnongfa Seed Industry Group Co.Ltd(600313) pointed out that in the past year, the demand for forage corn and deep-processing corn has expanded, and the price of corn commodity grain has increased. Due to the comprehensive factors such as the increase of field planting income, the reduction of high-quality seed production base area, the continuous improvement of human capital, the increase of land circulation and control costs, the price of corn seed production base has increased significantly, which has greatly increased the production cost of seed enterprises, The entry threshold for maize seed production will be raised, and the maize seed enterprises may face an industry reshuffle, and the small and medium-sized enterprises with weak variety competitiveness will be eliminated by the market.
Central China Securities Co.Ltd(601375) said that the price of corn, as China's main food crop, has risen rapidly since 2020 due to the expansion of downstream feed demand and the reduction of China's inventory. After the shock consolidation in the second half of 2021, corn prices have rebounded again recently catalyzed by the situation in Russia and Ukraine. In the short term, the production capacity of pigs has not yet reached the peak, and the demand for feed corn is relatively rigid, which forms a certain support for the trend of corn price.
The broker predicts that from 2022 to 2023, China's pig production capacity will be gradually eliminated, and the demand for feed corn will be gradually reduced. In the long run, the upward space of corn price is limited.
On the other hand, some Chinese enterprises have obtained the biosafety certificate of genetically modified corn. In order to realize the scientific and technological self-reliance of China's seed industry, the application of biological breeding technology is the general trend. After the commercialization of biological breeding technology in China, the overall profitability of the industry is expected to be further improved.
In addition, Guosen Securities Co.Ltd(002736) analysis, in terms of cycle, it is expected that the high boom of China's corn, wheat and other grain prices in 2022 is expected to continue. In the winter of 2021, the main wheat producing areas will have problems of late sowing and low germination rate, and the wheat output may decrease in 2022. Due to the substitution relationship between wheat and corn, the price of corn is also expected to strengthen. As a post grain price cycle, the prosperity of seed industry will rise in the next 2-3 years. Stimulated by high grain prices, farmers' demand for brand seeds is much better than that of the industry, and the volume and price of leading enterprises rise together.
In addition, the agency also believes that after the implementation of GM, the entry threshold of the industry will be further improved, the market share of leading enterprises will usher in a golden promotion period of about three years, and the growth attribute will be more prominent.
