Investment advice
Market review: this week, the CSI 300 index rose 2.23%, and the Shenwan agriculture, forestry, animal husbandry and fishery index rose 1.65%. Among the secondary sub industries, seed production, forestry and fruit and vegetable processing ranked among the top, rising by 10.30%, 8.68% and 5.53% respectively. Top three gainers of some key stocks: Xinjiang Tianshan Animal Husbandry Bio-Engineering Co.Ltd(300313) (+ 57.87%), Zhongnongfa Seed Industry Group Co.Ltd(600313) (+ 20.31%), Hefei Fengle Seed Co.Ltd(000713) (+ 19.10%). Top three declines: Fujian Aonong Biological Technology Group Incorporation Limited(603363) (- 12.65%), Shenzhen Kingkey Smart Agriculture Times Co.Ltd(000048) (- 5.87%), Fujian Tianma Science And Technology Group Co.Ltd(603668) (- 4.14%).
Pig breeding: according to the data of China pig breeding network, as of May 22, the average price of three yuan pigs abroad was 15.94 yuan / kg, up 2.25% on a weekly basis, and the pig price continued to fluctuate upward. At present, retail investors are reluctant to sell, and the pig production capacity began to decline in May, so the upward trend of pig price is expected to be maintained. At the end of April, the number of fertile sows in China was 41.773 million, down 0.18% month on month; According to the consulting data of Yongyi, the number of fertile sows in the sample points decreased by 0.34% month on month. Due to the continuous rise of pig prices, the removal rate of fertile sows has slowed down recently. We believe that the peak of pig production capacity has passed, but at present, the pig production capacity is still at a high level, and the pig price is still below the cost line of the industry. It is expected that the marginal speed of capacity de industrialization may slow down but will continue. At present, the asset liability ratio of breeding enterprises is at an all-time high and faces great capital pressure. We need to focus on the capital situation of enterprises. In the case of strong upward certainty of the pig cycle, we need to pay attention to enterprises with strong growth certainty and low operating risk. Enterprises with cost advantages and rich cash reserves are more likely to cross the bottom cycle. Key recommendations: Muyuan Foods Co.Ltd(002714) : cost leadership, strong growth certainty, Wens Foodstuff Group Co.Ltd(300498) : sufficient capital reserves and effective cost control in the near future.
Planting industry chain: on May 18, Ukrainian Minister of agricultural policy and food soliski said in a video international conference that Ukraine’s output may fall by 50% this year, and the sowing of winter crops will also be affected. The international wheat price may rise from US $430 to US $700. In addition, India banned wheat export, and the international wheat supply will be further tightened. China’s wheat imports are mainly from Australia, France and Canada, and the imports are mainly high-quality wheat used for baking. The reduction of international wheat supply has little impact on China’s grain supply side, but the rise of global wheat prices will have a certain import impact on China’s grain prices. In 2022, the No. 1 document of the Central Committee proposed to vigorously promote the research on key agricultural core technologies such as seed sources, fully implement the action plan for seed industry revitalization, and launch major agricultural biological breeding projects to ensure national food security. At the same time, in March, 2022, the Central Committee pointed out that it was necessary to strengthen the financial guarantee for the research on key agricultural core technologies such as seed sources, Once again, it demonstrates the government’s determination to vigorously support the development of seed industry. In the current environment of rising global food prices and restrictions on food exports in many countries, transgenic technology is expected to accelerate the implementation. Key recommendations: Yuan Longping High-Tech Agriculture Co.Ltd(000998) : abundant reserves of transgenic technology, Shandong Denghai Seeds Co.Ltd(002041) : corn seeds are expected to increase both quantity and price.
Poultry breeding: Recently, the price of white feather chicken and the price of chicken seedlings have fallen from the high point. The decline in the price of chicken products has reduced the enthusiasm of farmers to supplement chicken seedlings. As of May 20, the average price of broiler seedlings in the main production area was 2.57 yuan / feather, down from – 0.77% last week. The decline in the price of broiler seedlings makes the breeding end of parental breeding chickens continue to suffer losses, and the production end is expected to continue to be de standardized. We believe that at present, the supply of white feather chicken is still abundant. At present, the industry is in the de capacity stage. In the second half of the year, with the expected rise of pig prices and the improvement of the epidemic on the demand side, there is a possibility of the bottom of the industrial chain warming up. Key recommendation: Fujian Sunner Development Co.Ltd(002299) : the leader in the development of the whole industrial chain of white feather chicken industry.
Risk warning: capacity reduction is less than expected / the promotion process of GM corn is delayed / animal disease outbreak / Shenzhen Agricultural Products Group Co.Ltd(000061) price fluctuation.
