Breeding scale: the scale of the industry continues to improve. In 2020 / 2021 / 2022q1, the number of listed companies listed on the top 8 reached 5386.1/9365.628245000, accounting for 10.7% / 14.0% / 14.4% of the total number of pigs in China. The trend of large-scale breeding in the industry continued and the concentration continued to increase. Among them, the market share of Muyuan Foods Co.Ltd(002714) 2021 increased to 6.0% (YoY + 2.6pcts), which is still growing rapidly as the largest enterprise of pig breeding in China.
Profitability: the deep loss of the industry has continued to 2022q1. ① Revenue side: in addition to Muyuan Foods Co.Ltd(002714) , Beijing Dabeinong Technology Group Co.Ltd(002385) marketing volume more than doubled, the revenue of most listed pig enterprises decreased significantly due to the decline of pig price. ② Cost side: there are great differences in breeding costs among different enterprises. The cost pressure of most enterprises will increase in 2021 or the full cost will be higher than 17 yuan / kg, which is expected to be generally higher than the industry cost line. ③ Profit side: in 2021, except for muyuan shares, the pig breeding of other enterprises were in a deep loss state, while in 2022q1, the whole industry entered a deep loss state, and the average loss per head is expected to be 300 ~ 800 yuan / head.
Capital situation: at present, the capital situation of the industry is generally tight. ① Capital expenditure: in 2020, the industry’s capital expenditure hit a record high. The total capital expenditure of 18 pig enterprises in the whole year reached 144.8 billion yuan, with a year-on-year increase of 191.7%. From 2021 to 2022q1, the capital expenditure decreased month on month with the decline of pig price. ② Asset liability ratio: in 2021, the debt ratio was generally at a high level of more than 60%, the capital chain was tight, and it was further exacerbated in 2022q1. ③ Solvency: the net assets / interest bearing liabilities of some enterprises are less than 0.5, facing great solvency pressure. ④ Cash flow: from 2020 to April 2022, 18 pig enterprises completed a total refinancing of 56.119 billion yuan, which formed a certain supplement to the cash flow. However, under the condition of deep loss, the net cash flow generated by most enterprises’ operating activities has turned negative in 2022q1, and the cash flow pressure is still large.
Since 2020, the industry has actively contributed to capacity expansion. ① Productive biological assets: capital expenditure promotes the expansion of production capacity. Superimposed on the high price of energy production in 2020, the productive biological assets increase significantly. In 2021, with the decline of pig price, capacity replacement and partial impairment provision, the book value has decreased, the overall number of energy production has been adjusted steadily and slightly, and the deregulation of industrial capacity is mainly contributed by small and medium-sized retail investors. ② Fixed assets and construction in progress: with the continuous expansion of production capacity, the fixed assets of the industry increased significantly. With the quarterly narrowing of capital expenditure, the investment scale of construction in progress also slowed down.
Investment suggestion: pay attention to the capital situation and look for certainty in the uncertainty. The influencing factors of this cycle have increased. In the medium term, there is a certain uncertainty about the cycle reversal time. The price is expected to be dominated by shocks, and the price center in the second half of the year may be higher than that in the first half of the year. We believe that the capacity deregulation will continue, and the cycle reversal time may be delayed. Among them, the breeding enterprises with significant cost advantages and relatively abundant cash have successfully passed the cycle, which is more deterministic than the bottom. With the superposition of column scale growth and cost optimization, they are more expected to enjoy the cycle reversal dividend. Key recommendations: Wens Foodstuff Group Co.Ltd(300498) , suggestions: Muyuan Foods Co.Ltd(002714) , Tangrenshen Group Co.Ltd(002567) , Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Hunan New Wellful Co.Ltd(600975) , Tech-Bank Food Co.Ltd(002124) , Tecon Biology Co.Ltd(002100) .
Risk tips: sudden epidemics or natural disasters, repeated covid-19 epidemics, lower than expected reversal of pig prices, etc
