Key investment points
Market review this week
The agriculture, forestry, animal husbandry and fishery sector underperformed the market. Last week (2022 / 4 / 252022 / 4 / 29), the CSI 300 index rose 0.07%, and the Shenwan agriculture, forestry, animal husbandry and fishery index fell 7.08% in the same period, underperforming the CSI 300 index by 7.15 percentage points, ranking 27th among the 28 Shenwan level industries.
From the sub sectors of agriculture, forestry, animal husbandry and fishery, the Shenzhen Agricultural Products Group Co.Ltd(000061) processing / feed / planting / livestock and poultry breeding / animal health care / fishery sector rose or fell by - 4.12%, - 4.67%, - 6.97%, - 8.20%, - 9.15% and - 13.02% respectively last week.
Core ideas of this week
[pig] industry β Emerge, dawn is near
According to Yongyi consulting data, on May 4, 2022, the average price of pigs nationwide was 15.00 yuan / kg, down 0.13 yuan / kg month on month. The price of pigs in Northeast China, Henan, Shandong, Hunan, Sichuan, Guangdong and other places fluctuated weakly and adjusted.
Pig price: We observed that during the May Day holiday, the price of pigs rose weakly and fell steadily in many places. The transmission from hairy pigs to white bars was not smooth, the price difference of standard fertilizer narrowed, and the price of some large pigs was cheaper than that of standard pigs, while consumption was difficult to boost significantly after the holiday. It is expected that the price of pigs will be mainly adjusted by shock in May. After May, with the decreasing supply of pigs, the upward trend of pig prices is unstoppable.
Capacity Deregulation: since April, the pig price has risen all the way, approaching the cost line of most listed companies, and the operating cash flow of enterprises has become positive one after another. It is expected that the capacity deregulation of scale field will slow down significantly. The market is worried that the decline in the rate of capacity removal will affect the arrival of a new cycle, but we believe that the actual capacity removal of the industry exceeded expectations. From January to March this year, the sow feed decreased by 40% year-on-year and the piglet feed decreased by more than 30% year-on-year. At the same time, the number of fertile sows of leading enterprises representing the highest breeding level of the industry also showed a downward trend in 2022q1, indicating that the actual capacity removal of the industry may exceed the level of official statistics. We expect that with the continuous de conversion in April, the cumulative de conversion rate will exceed 10%, which is enough to support the doubling of pig prices, the high point of the new cycle.
To sum up, we believe that the listed pig enterprises impaired their productive biological assets and accrued inventory depreciation reserves in 2022q1, laying a foundation for subsequent business improvement. At the same time, the recent correction of the sector has fully released the risk, and the sector has reached a position worthy of investment.
[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 29, the average spot price of corn was 2862 yuan / ton, up 0.66% month on month; The average spot price of wheat was 3264 yuan / ton, down 1.24% month on month; The average spot price of soybean was 5785 yuan / ton, up 1.68% month on month; The average spot price of soybean meal was 435714 yuan / ton, down 3.93% 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, the leaders Muyuan Foods Co.Ltd(002714) , Wens Foodstuff Group Co.Ltd(300498) , Wens Foodstuff Group Co.Ltd(300498) , Hunan New Wellful Co.Ltd(600975) , which are "safe in the capital chain" and "predictable in the market", and the second tier dark horse Hunan New Wellful Co.Ltd(600975) .
[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.
