Key investment points:
Cycle review: the pig cycle depends on the “cobweb model”, and the loss range and duration are the key to the reversal. Since 2006, it has experienced four rounds of pig cycles. Each round of pig cycle usually starts with the large-scale decline in the number of live pigs caused by animal epidemic, and goes through a period of 15-20 months of rising pig prices. The price rise stimulates farmers to make up the column, and then the price goes down and ends with a W-shaped bottom. The range and duration of loss are the key to reversal. Since the beginning of 2021, the average loss of pigs in the self breeding and autotrophy loss range is 319 yuan / head, with a loss duration of 25 weeks; The head of the loss range of purchased piglets lost 845 yuan / head for 36 weeks. Compared with the 2010-2015 pig cycle, the current round of losses is much higher than the previous round, but the loss duration is short.
In the short term, it is expected that the production capacity of pigs will be accelerated in 22 years, and the reversal of pig price can be expected. June 2021 is the high point of breeding sows. According to the estimation of breeding cycle, theoretically, April May of 22 years is the lowest point of pig price. From the perspective of capital, the current pig loss period is shorter than the previous round, and the enterprise cash flow is still better than the bottom of the previous round cycle, and there is no large-scale capital chain fracture in the industry; In terms of sow efficiency, MSY of fertile sows is expected to recover to 18 in 2022 with ternary elimination and binary replenishment; From the emotional point of view, the profit-making effect of the 2020 pig cycle is still vivid, and the rebound of pig prices at the end of the year may affect the speed of capacity removal.
Therefore, it is expected that without the interference of animal epidemic, 22h1 pig price will still be in the downward channel, and the inflection point of pig price is expected to appear in 22q2-q3. The rebound range of pig price still needs to observe the mood of making up columns after the Spring Festival. From the relationship between stock price and pig price, the stock price in the previous cycle often starts an upward trend between the two “pig price bottoms”. Therefore, it is expected that the short-term rebound range of pig price before the Spring Festival this year is the best layout time point.
The pattern of “large industries and small companies” in China’s pig breeding is an inevitable trend in the future. China’s pork consumption accounts for 47% of the world’s total consumption and the market scale is about 1.43 trillion, but at present, retail sales still account for nearly 50%. According to international communication experience, African classical swine fever often raises the epidemic prevention threshold of the industry, and the market share of scale increases after the outbreak. Moreover, large-scale marketing is highly planned, and it is more difficult to remove production capacity, that is, large-scale increases the fluctuation of pig price. In the long run, the midfield without management and cost advantages is expected to be cleared, and the proportion of retail investors may continue to decline. It is an inevitable trend for large aquaculture enterprises to “the stronger”.
It is recommended to pay attention to:
1) Muyuan Foods Co.Ltd(002714) : with the advantages of integration, reduce costs, improve management efficiency and maintain long-term high-speed growth.
2) Wens Foodstuff Group Co.Ltd(300498) : Pig and yellow feather broiler are double leaders, with abundant cash flow in the downward period of the industry.
3) Jiangxi Zhengbang Technology Co.Ltd(002157) : the compound annual growth rate of slaughter volume is as high as 33.5%. After the introduction, the efficiency of breeding pigs is expected to be greatly improved.
4) Tech-Bank Food Co.Ltd(002124) : increase cash reserves in various ways to ensure sufficient breeding sows and reserve sows and open up the integrated industrial chain of breeding and slaughtering.
5) Zhejiang Huatong Meat Products Co.Ltd(002840) : a rising star from slaughter to breeding, integrated operation, stable cash flow and rapid layout of breeding projects at the bottom of the cycle.
Risk tips: animal epidemic broke out, pork demand was lower than expected, and feed cost remained high
