Key investment points:
In the first quarter of 2022, China’s pig breeding industry is still in a period of loss, and the performance of listed pig breeding companies in the first quarter of 2022 showed losses to varying degrees. Under the condition that there is no serious pig epidemic in the follow-up, taking into account the increase in the proportion of efficient sows in the early stage, we expect that there will be a possibility of seasonal recovery in China’s pig prices in 2022, but the whole year will still be under pressure.
The overall performance of China’s poultry breeding sector declined year-on-year in the first quarter of 2022. Although there are signs of de capacity in some parts of the industry, the current capacity is still in a high position. It is expected that the broiler breeding industry will still be in the stage of shock bottoming, and the prosperity of yellow feather broiler is relatively better than that of white feather broiler.
Under the influence of the decline of downstream aquaculture profits and the year-on-year high base, the prosperity of the feed animal protection industry showed a marginal weakening trend in 2022, and the performance of Listed Companies in the first quarter of 2022 declined to varying degrees year-on-year. The cost pressure of feed raw materials such as soybean meal has increased sharply. Small and medium-sized feed enterprises without scale advantage and formula R & D reserve advantage will accelerate their exit, and the market share is expected to further concentrate on the head feed enterprises.
Affected by the rise of corn and other grain prices and the improvement of seed supply and demand structure, the performance of the seed industry sector in the first quarter of 2022 improved year-on-year. It is expected that the supply and demand of hybrid corn seeds will continue to improve in 2022, and the supply pressure of hybrid rice seeds will remain.
In 2021, affected by the rising price of bulk raw materials in the upstream, the production cost pressure of edible fungus enterprises increased significantly. At the same time, under the influence of industrial capacity expansion and low consumption at the catering end, product prices are under pressure. Under the background of the squeeze between the production end and the sales end, the performance of listed edible fungus companies decreased significantly year-on-year in 2021. In 2022, the above factors still put pressure on the first quarter and subsequent performance of edible fungus enterprises.
Investment suggestion: at present, we continue to focus on recommending Guangdong Haid Group Co.Limited(002311) , and the main logic of being optimistic about Guangdong Haid Group Co.Limited(002311) is: (1) from the year-on-year trend of quarterly performance, the first quarter may be the low point of the whole year, and the follow-up is expected to show a trend of quarterly improvement, and the annual performance is expected to enter the recovery cycle; (2) The corresponding valuation of other businesses excluding pig breeding business is at a historically low level; (3) Since the beginning of this year, the price rise of upstream raw materials and the downturn of downstream breeding market have brought pressure on the whole feed in the short term, but due to the relatively poor pressure resistance of small and medium-sized enterprises, this will accelerate the withdrawal of small and medium-sized enterprises and further optimize the competitive environment of the company; (4) The company’s stock option incentive plan has wide employee coverage and clear objectives. At present, the stock price is close to the exercise price of equity incentive; (5) The actual controller of the company plans to subscribe for the additional issuance in full, demonstrating his confidence in the future development of the company. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be RMB 2.520/4.522/5.509 billion, corresponding to EPS of RMB 1.52/2.72/3.32, maintaining the “Buy-A” rating.
Risk tips: covid-19 epidemic leads to poor transportation risk, breeding epidemic risk, raw material price rise risk and natural disaster risk.
