This week’s view:
Planting industry chain: on April 20, the 2022 China Agricultural Outlook conference was held in Beijing. The conference issued the China Agricultural Outlook report (20222032) (hereinafter referred to as the “report”). The report pointed out that after analysis and prospect, in terms of supply and demand situation, in the next decade, benefiting from the continuous development of agricultural policies, China’s grain sowing area is expected to stabilize at more than 1.75 billion mu, including about 1.45 billion mu of grain and more than 800 million mu of rations. With the in-depth implementation of the action to revitalize the seed industry, a round of upgrading of grain varieties is expected, and the guarantee of facilities and conditions is continuously strengthened. About 1.2 billion mu of high-standard farmland will be built, and the existing 280 million mu of high-standard farmland will be transformed and upgraded. The scientific and technological output will be more powerful. During the outlook period, the unit yield of grain and food is expected to increase by 6.4%, of which the unit yield of corn and soybean will increase by 18.3% and 34.1% respectively, reaching 498 kg / mu and 175 kg / mu respectively. The agricultural production structure and regional layout have been significantly optimized, the green and high-quality Shenzhen Agricultural Products Group Co.Ltd(000061) supply capacity has been significantly enhanced, the output of high-quality japonica rice and high-quality special wheat with strong and weak gluten has increased steadily, and the output of corn and soybean will reach 324 million tons and 35.07 million tons respectively. The report points out that in the next decade, the comprehensive grain production capacity will continue to improve, and the sown area will increase slightly, with an average annual growth of 0.3%; The yield per unit area increased rapidly, with an average annual growth of 0.9%; Benefiting from the growth of both area and unit yield, grain output is increasing, with an average annual growth of 1.3%. It is expected that grain output will reach 762 million tons in 2031. Affected by the obvious slowdown in the growth rate of feed consumption, grain consumption continues to grow, but the growth rate slows down. It is estimated that the average annual growth is 0.7%, and the grain consumption will be 864 million tons in 2031. The imbalance between supply and demand of grain will be improved with the rapid growth of output. However, it should also be noted that the cost of grain production will increase in the future, and the “hard constraints” faced by resources and environment will become tighter. While ensuring green development and sustainable utilization of resources, there will be great pressure on the stable development of grain production, and grain production and demand will remain in a tight balance. As a country with a large population, food security is very important. National macro policies have always placed food security and seed industry revitalization at a strategic high point. The prosperity of seed industry has increased, and listed companies related to seed industry have ushered in an important policy window. In terms of target selection, we mainly recommend Beijing Dabeinong Technology Group Co.Ltd(002385) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) and Shandong Denghai Seeds Co.Ltd(002041) with obvious first mover advantage and Shandong Denghai Seeds Co.Ltd(002041) .
The perennial root of sugarcane is three years in China, but five to seven years in Brazil and Australia. This is the reason why the overall supply of sugar was relatively 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. Due to the superposition of the extreme price of oil and sugar in 2022, a new round of global currency rise has begun, which has exceeded the expectation of 2022. The focus of China’s sugar industry is expected to benefit from the sound selection of the target.
In addition, we continue to recommend chemical stocks with a valuation of only 11 times Meihua Holdings Group Co.Ltd(600873) . We expect that the performance elasticity in 2022 will come from the production of new lysine capacity by the end of 2021. 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 pig Yitong data, the average price of pigs nationwide this week was 13.77 yuan / kg, an increase of 10.05% on a weekly basis. We believe that the reasons for the sharp rise in pig prices are: (1) driven by market bullish sentiment; (2) When the price of piglets was low from November to December last year, the amount flowing into the roast suckling pig market was relatively large, which had a certain impact on the launch in April; (3) Recently, the epidemic situation in the North has eased, approaching may day, and the demand for pork and slaughter has increased; (4) Huashang Reserve announced that the fifth batch of 40000 tons of central reserve meat collection and storage in 2022 will be auctioned on the 22nd, which has a certain boost to market confidence. In addition, the National Bureau of Statistics announced this week that at the end of the first quarter, the number of fertile sows was 41.85 million, a year-on-year decrease of 1.33 million, a decrease of 3.1%. Combined with the data of the Ministry of agriculture and rural areas, the number of fertile sows in a single month in March decreased by 1.94% month on month, further expanding the decline compared with February. The number of fertile sows has been negative since July 2021. So far, it has been reduced for 9 months, and 3.79 million fertile sows have been reduced, with a cumulative decrease of 8.30%. At present, the pork consumption in the market is still in the off-season, and the contradiction between supply and demand still exists. We expect that the strength and space for the rebound of pig prices will not be too strong. It will be dominated by a mild trend or adjustment shock, and the deregulation of production capacity will continue. From the current time node, the average market value of some high-quality pig breeding stocks has fallen to a historically low level, and the configuration window has been gradually opened. The choice of specific targets to choose from among among the specific targets is to be recommended in turn for the selection of specific targets, with the following to be recommended in turn: the0 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 8 , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Shenzhen Kingsino Technology Co.Ltd(002548) , etc. 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.
