Key investment points
Market review this week
The agriculture, forestry, animal husbandry and fishery sector outperformed the market. Last week (2022 / 4 / 182022 / 4 / 22), the CSI 300 index fell by 4.19%, and the Shenwan agriculture, forestry, animal husbandry and fishery index fell by 2.85% in the same period, outperforming the CSI 300 index by 1.34 percentage points, ranking eighth among 28 Shenwan level industries. From the sub sectors of agriculture, forestry, animal husbandry and fishery, the livestock and poultry breeding / feed / planting / Shenzhen Agricultural Products Group Co.Ltd(000061) processing / animal health care / fishery sector rose or fell by - 0.21%, - 4.88%, - 5.26%, - 5.75%, - 5.94% and - 7.62% respectively last week.
Core ideas of this week
[pig] let the bullet fly for a while
According to Boya Hexun monitoring, pig prices continued to rise this week. This week, the national average price of pigs was 13.71 yuan / kg, up 11.27% month on month and down 41.88% year-on-year; The self breeding loss was 376.61 yuan / head, with a month on month decrease of 29.17% and a year-on-year decrease of 149.24%; The loss of purchased breeding was 157.61 yuan / head, with a month on month decrease of 49.81% and a year-on-year decrease of 52.69%.
Pig price: we believe that the pig price has exceeded the expected pulse in the short term, leaving the fundamental support. On the supply side, the stock of fertile sows peaked from June to July last year with a small range of change. Corresponding to the current pig supply, there will be no significant fluctuation, and the demand side has not been significantly improved in the short term. Therefore, the sharp fluctuation of pig prices lacks fundamental support. It is more due to the obstruction of transportation caused by epidemic prevention and control, strong market bullish sentiment and hoarding of some traders. At present, there is a phenomenon of poor transmission of hairy pigs to IOUs, There may be a phased correction next week. From a longer perspective, the current cycle has passed the lowest point of pig price. With the reduction of pig supply in May and June, pig price will show a shock upward trend, and may meet the high point of the year in the third quarter. However, at present, the price difference of standard fertilizer is widening, and the price of fat pigs is much higher than that of standard pigs. Under the background of generally optimistic about the market in the second half of the year, the secondary fattening and column pressing behavior reappear. Corresponding to the market pork supply in the fourth quarter of this year, it may exceed expectations again. It is expected that the pig price in the fourth quarter of this year will be corrected compared with that in the third quarter, repeating the trend of pig price in 2014. 2023 will officially usher in the upward stage of the next cycle.
De production capacity: we believe that the pulse of pig price exceeding expectations in April and the optimistic expectation of the future market will affect the emotional probability of farmers' elimination of sows. However, the current pig price of 14 yuan / kg is still lower than the cost of 16-17 yuan / kg, and the breeding loss is still continuing. In addition, due to the tight cash flow of the scale farm, the de production range may decrease in April, but the de production trend remains unchanged.
Future expectations: the sharp rise in pig prices has led to differences in the market over the actual removal of sows. Under the caliber of the Ministry of agriculture and rural areas, the cumulative removal of sows is 8.3%, while the reduction of sow feed data by 35% reflects the more optimistic actual removal. We expect that with the continuous removal in April and may, the cumulative removal range is expected to exceed 10%. According to the experience of previous cycles, the removal of more than 10% is enough to support the doubling of the high point of pig prices, We are still optimistic about the performance 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 22, the average spot price of corn was 2843 yuan / ton, up 0.16% month on month; The average spot price of wheat was 3306 yuan / ton, up 5.25% month on month; The average spot price of soybean was 5689 yuan / ton, unchanged month on month; The average spot price of soybean meal was 453543 yuan / ton, down 0.10% 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 the fluctuation of global grain prices 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 prices such as oil and natural gas may remain high and volatile, 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 depressed pig price affects the immune mood. The performance of dynamic insurance enterprises in the first quarter may decline significantly, and the sector has fallen to a reasonable range dragged by the pig price. It is expected that the reversal of pig price in the second quarter will drive the prosperity of the industry up, the enterprise performance is expected to improve quarter on quarter, the valuation of the sector is expected to be 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.
