The current round of pig cycle entered the downward period in early 2021. The rapid downward trend of pig price plunged the whole industry into a state of loss. After two bottoms of pig prices, industrial risks have been greatly released, and the discussion on the reversal of investment cycle is becoming hot in the market.
Recently, most of the listed pig enterprises disclosed the annual report of 2021 and the first quarter report. Overall, due to the continuous downturn of pig prices, the performance of pig enterprises in 2021 changed from profit to loss year-on-year, and continued to lose in the first quarter of this year. On the 29th, the leading stock Muyuan Foods Co.Ltd(002714) ( Muyuan Foods Co.Ltd(002714) . SZ) disclosed regular reports, with a loss of 5.18 billion yuan in the first quarter and a profit of 6.963 billion yuan in the same period of last year; In 2021, the net profit was 6.904 billion yuan, a year-on-year decrease of 74.85%; The operating revenue was 78.89 billion yuan, a year-on-year increase of 40.18%.
At the beginning of this cycle, the collective expansion of listed pig enterprises has formulated the long-term marketing target scale with significant year-on-year growth. However, during the downward period of the cycle, in the face of the huge challenge of cash flow caused by continuous losses, strictly controlling expenses, reducing costs and increasing efficiency have become the primary work of major pig enterprises.
The first financial reporter noted that CAITONG, gf and other public funds had bought a large number of small market value pig enterprises in the first quarter to carry out the layout on the left. Among them, CAITONG fund “gambled” Shenzhen Kingsino Technology Co.Ltd(002548) ( Shenzhen Kingsino Technology Co.Ltd(002548) . SZ), and its five products ranked among the top ten circulating shareholders of Shenzhen Kingsino Technology Co.Ltd(002548) .
after four consecutive quarters of losses, many pig enterprises suspended the construction of new production capacity
Since January 2021, pig prices have entered a unilateral downward stage, falling rapidly from about 36 yuan / kg to less than 10 yuan / kg. Among them, it fell to the first low point in June and hit a new low in October. In 2021, pig prices fell by nearly 70% year-on-year at their lowest point.
According to the disclosed annual report, Wens Foodstuff Group Co.Ltd(300498) ( Wens Foodstuff Group Co.Ltd(300498) . SZ) lost 13.4 billion yuan of net profit attributable to the parent company in 2021, and New Hope Liuhe Co.Ltd(000876) ( New Hope Liuhe Co.Ltd(000876) . SZ) and Tech-Bank Food Co.Ltd(002124) ( Tech-Bank Food Co.Ltd(002124) . SZ) lost 9.6 billion yuan and 4.461 billion yuan respectively. According to the previous performance forecast, Jiangxi Zhengbang Technology Co.Ltd(002157) ( Jiangxi Zhengbang Technology Co.Ltd(002157) . SZ) is expected to have a loss of 18.2 billion yuan to 19.7 billion yuan in net profit attributable to the parent company. If there is no accident, the company will become the listed pig enterprise with the largest loss so far in this round of pig cycle.
After the Spring Festival this year, the price of pigs fell again, and the ratio of pig to grain fell below the warning line for many times. Recently, the price of pigs rebounded after the country carried out several rounds of frozen meat collection and storage. As of April, the profit and loss of pigs was about 29.82% lower than that of the whole industry, but the profit and loss of pigs was still lower than that of the whole industry.
In the first quarter, depressed pig prices and rising feed dragged down the performance of listed pig enterprises Wens Foodstuff Group Co.Ltd(300498) disclosed that in the first quarterly report of pig enterprises, the company achieved an operating revenue of 14.59 billion yuan, a year-on-year decrease of 13.3%, a loss of 3.763 billion yuan before deduction and 3.598 billion yuan after deduction. The net profit suffered losses for four consecutive quarters, and the operating cash flow outflow was about 400 million yuan.
Tangrenshen Group Co.Ltd(002567) also disclosed the first quarter report. The company’s net profit attributable to the parent company was 149 million yuan, and the net profit in the same period of last year was 279 million yuan, from profit to loss Tech-Bank Food Co.Ltd(002124) also suffered a loss of net profit for four consecutive quarters, with a loss of 674 million yuan in the first quarter Muyuan Foods Co.Ltd(002714) recorded the first quarterly performance loss since the second quarter of 2019.
Pig low prices and upward pressure on costs will bring greater losses. It should be pointed out that since 2019, the whole industry has expanded production against the trend, and the expansion of production capacity will inevitably lead to the improvement of debt ratio. The consumption of cash flow will continue. Ensuring that the financial situation is controllable is the core task of breeding enterprises in the downward process of pig cycle.
How to ensure that the financial situation is controllable? The first financial reporter combed the annual report and found that, on the one hand, listed pig enterprises are broadening financing channels and alleviating cash pressure by issuing convertible bonds and fixed growth; On the other hand, suspend the construction of new production capacity and seek more refined cash flow and cost management.
Wens Foodstuff Group Co.Ltd(300498) in the latest research activity, the company said that it strictly controlled the cost and continued to carry out a series of special activities for cost reduction and efficiency increase. The indicators were implemented to each post and person. The overall cost control in the first quarter was good, lower than the previous budget, and the effect of cost reduction and efficiency increase was initially achieved.
For the trend of pig price in the second quarter, Wens Foodstuff Group Co.Ltd(300498) it is expected that the probability of pig price maintaining a low position in the second quarter is high, and the industry capacity will continue to be reduced. It is optimistically estimated that the pig price in the third quarter of 2022 may enter the upward channel of the next cycle; Pessimistic estimation, it may take until the fourth quarter or 2023 to enter the uplink channel of the next cycle.
before the reversal, the public offering has “clung together” small market value pork stocks
Since the cycle entered the downward channel, the market has been arguing about the time point of the reversal inflection point. Some people believe that the de conversion range of fertile sows is not enough and the bottom range of pig price is lengthened, which leads to the backward delay of the reversal time point of pig price, and further believes that the investment in pig cycle sector still needs time.
According to Zhang Shengxian, the end of the agricultural cycle is bound to come. From the perspective of investment, the “W-type” bottoming period of pig price is an opportunity for the layout on the left.
“It is difficult to accurately predict the time node of the specific inflection point of the cycle, but what we can determine is that the current stage is the bottom stage of the cycle,” Zhang Shengxian told reporters, “However, we are relatively cautious in judging the high point of pig price in this cycle, which may be about 20 yuan to 25 yuan. In the last cycle, great efforts were made to eliminate the disease, which led to the price rebounding to 35 yuan / kg. This phenomenon is not common. When the capacity removal in this cycle ushers in an inflection point, the cycle rebound will not be too strong. If the removal takes too long, it may affect the upward elasticity of the whole sector.”.
In the secondary market, the overall trend of the pig sector outperformed the stock index during the year, reflecting the margin of safety, but there was obvious differentiation within the sector. Small market value pig enterprises of about 10 billion were more favored by institutional funds.
In the first quarter, gf’s strategy preferred to buy four small market value pig enterprises, and newly became the top ten circulating shareholders of Tech-Bank Food Co.Ltd(002124) , Tangrenshen Group Co.Ltd(002567) , Leshan Giantstar Farming&Husbandry Corporation Limited(603477) ( Leshan Giantstar Farming&Husbandry Corporation Limited(603477) . SH), Fujian Aonong Biological Technology Group Incorporation Limited(603363) (60336. SH), holding 25.08 million shares, 17.19 million shares, 3.86 million shares and 4.56 million shares respectively.
CAITONG fund has made greater efforts to layout the pig cycle. Among them, CAITONG’s value momentum increased by Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , Tangrenshen Group Co.Ltd(002567) , Tecon Biology Co.Ltd(002100) ( Tecon Biology Co.Ltd(002100) . SH), Tech-Bank Food Co.Ltd(002124) 739 million shares, 6.8 million shares, 1.48 million shares and 9.72 million shares respectively in the first quarter; The fund has also newly become the third largest shareholder of circulating shares of Shenzhen Kingsino Technology Co.Ltd(002548) and Fujian Aonong Biological Technology Group Incorporation Limited(603363) with 16.18 million shares and 12.11 million shares respectively; Xinjin has become the eighth largest shareholder of Zhejiang Huatong Meat Products Co.Ltd(002840) ( Zhejiang Huatong Meat Products Co.Ltd(002840) . SZ), holding 4.48 million shares.
CAITONG fund “gambled” Shenzhen Kingsino Technology Co.Ltd(002548) , and all of its five products were newly added as the top ten shareholders of Shenzhen Kingsino Technology Co.Ltd(002548) , holding more than 41540000 shares in total.
It is worth mentioning that the science and innovation theme fund of CAITONG fund also bought pork stocks. According to the financial report, as of the end of the first quarter, CAITONG science and innovation theme had been closed for three years and became the eighth and tenth largest circulating shareholders of Shenzhen Kingsino Technology Co.Ltd(002548) and Zhejiang Huatong Meat Products Co.Ltd(002840) respectively.
In contrast, the traditional large market value pig enterprises have few institutions. By the end of the first quarter, none of the public funds had newly become the top ten shareholders of Wens Foodstuff Group Co.Ltd(300498) , Muyuan Foods Co.Ltd(002714) .
Northbound capital was quite active in the operation of pork sector in the first quarter, and balanced the layout of large and small market value pig enterprises. Following the increase of Wens Foodstuff Group Co.Ltd(300498) 3906 shares in the fourth quarter of last year, the northbound capital increased its position by 12230000 shares in the first quarter. And increased the holdings of Tecon Biology Co.Ltd(002100) , Tangrenshen Group Co.Ltd(002567) and other small market value stocks.
In Zhang Shengxian’s view, the growth of small market value pig enterprises may be more worthy of expectation. Looking back at the last round of collective rise in the pig sector, some leading large market value tickets in the index component stocks have both growth and periodicity, that is, the growth of marketing scale after capacity expansion and the fluctuation of pork price drive the share price of leading stocks to rise. At present, the production expansion space of head pig enterprises is limited, the growth is relatively weak, and the performance of small market value pig enterprises with higher marketing growth is more sensitive to price elasticity.
