This week's view:
Planting industry chain: on December 24, 2021, the 32nd meeting of the Standing Committee of the 13th National People's Congress unanimously adopted the decision on Amending the seed law of the people's Republic of China (Draft), which will come into force on March 1, 2022. This is another important amendment since the seed law was revised at the 17th meeting of the Standing Committee of the 12th National People's Congress on November 4, 2015. The key points include: 1) establishing a substantial derived variety system (EDV), and obtaining the consent of the owner of the new plant variety right of the original variety when making commercial use of the substantial derived varieties; 2) Increase the protection of plant variety rights, expand the protection links of variety rights from the original three to eight, and add five links of "processing for reproduction, offering for sale, import, export and storage"; 3) We strengthened the intensity of tort compensation and raised the upper limit of compensation from three times to five times. If it is difficult to determine the amount, we will raise the limit of compensation from three million yuan to five million yuan. We believe that the seed industry, as the chip of agriculture, is an important basis for ensuring China's food security. Under the background of covid-19 pneumonia, the state pays more attention to the seed industry, and the seed industry business environment is expected to be further optimized. In addition, the seed industry policy will be released in the Spring Festival, including the No. 1 central document and the action plan for seed industry revitalization. In terms of target selection, we mainly recommend Beijing Dabeinong Technology Group Co.Ltd(002385) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) with obvious first mover advantage and Shandong Denghai Seeds Co.Ltd(002041) with excellent performance of hybrid maize varieties.
The perennial root of sugarcane in China is three years, but in Brazil and Australia it is five to seven years. This is the reason why the overall supply of sugar was sufficient in the past and the price of sugar did not rise for many years, but the cycle will only be late and will not be absent. It has been five years since the high point of the previous cycle in 2021. Superimposed on the higher than expected rise of oil prices and the large release of global currencies, as well as the frequent occurrence of global extreme climate caused by sunspot movement this year, a new upward cycle of sugar has begun and is expected to last until the second half of next year. In terms of target selection, the steady target focuses on recommending China's sugar industry leader Cofco Sugar Holding Co.Ltd(600737) , and the elastic target Nanning Sugar Industry Co.Ltd(000911) is expected to benefit fully.
In addition, we continue to recommend chemical stocks Meihua Holdings Group Co.Ltd(600873) with a valuation of only 10 times. We expect that the performance elasticity of next year will come from the cost improvement brought by the new lysine production capacity and the decline of corn price at the end of the year. In the long run, the monosodium glutamate and amino acid industries are limited by the new capacity under the background of carbon neutralization, and the valuation center is expected to rise.
Pig breeding: according to the data of zhuyitong, the average price of pigs nationwide this week was 15.36 yuan / kg, down 6.17% on a weekly basis. The supply side of live pigs is still relatively loose. In early October, pork consumption rose sharply, overdraft consumption before the festival, and pig prices were likely to maintain a volatile trend years ago. Referring to historical experience, pork consumption will decline significantly after the Spring Festival, while the supply side is still relatively loose, with great downward pressure on pig prices. We believe that the higher than expected rebound in pig prices since early October has not reversed the general trend of de production of fertile sows. In November, the de production rate of fertile sows is still 1.2% month on month. The decline in pig prices after the festival may further accelerate the de production rate and accelerate the arrival of the inflection point of the pig cycle. From the current time node, the market value of some high-quality pig breeding stocks has dropped to a historically low level, and the configuration window has been gradually opened. For the selection of specific targets, it is recommended in turn: Wens Foodstuff Group Co.Ltd(300498) , Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) . In addition, Jiangxi Zhengbang Technology Co.Ltd(002157) , Tech-Bank Food Co.Ltd(002124) , New Hope Liuhe Co.Ltd(000876) , Tecon Biology Co.Ltd(002100) , Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Tangrenshen Group Co.Ltd(002567) , Hunan New Wellful Co.Ltd(600975) , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Shenzhen Kingsino Technology Co.Ltd(002548) are expected to benefit fully.
Risk tips
The recovery process of pig production capacity is less than expected, the product sales is less than expected, and the commercialization process of GM is less than expected.
