Pig: panic suppression has been significantly underestimated
Investment suggestion: the cycle is not over, and the adjustment of epigenetic pig stocks ushers in a good opportunity for allocation. Since the second half of last year, the main logic of the pig sector lies in the valuation repair under the background of capacity removal, which belongs to the first stage of capacity removal logic before the rise of pig price. From the reflection of stock price, the logic of short-term pig price rise has been weakened, but the rise and fall of short-term pig price is more difficult to predict than long-term price, so exceeding or lower than expected has a great impact on short-term stock price. If we lengthen the cycle, the main rising wave of pig sector is usually accompanied by the main rising wave of pig price. From the previous pig cycles, the market of pig sector before the arrival of the main rising wave of pig price has not been completed. Although some pig enterprises have increased significantly since last year, most of them are companies with strong growth, and the growth of leading pig enterprises (such as muyuan) is small. According to the upward stage of the pig cycle in 2023, the valuation of these growing pig enterprises has been greatly reduced, and after short-term sales, they have great attraction. After the pig sector stabilizes, judging from the average market value from the beginning, Wenshi and muyuan have an average market value of more than 3000 yuan in 2023, superstar, Tiankang and tianbang have an average market value of more than 3000 yuan in 20 Jinzai Food Group Co.Ltd(003000) , aonong, New Hope Liuhe Co.Ltd(000876) , Tangrenshen Group Co.Ltd(002567) , after the panic, the sector may usher in a wave of valuation repair opportunities. Continue to recommend the pig sector, focusing on Wens Foodstuff Group Co.Ltd(300498) , Muyuan Foods Co.Ltd(002714) , and it is suggested to pay attention to the second tier pig enterprises New Hope Liuhe Co.Ltd(000876) Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , Tangrenshen Group Co.Ltd(002567) , Tecon Biology Co.Ltd(002100) , Shenzhen Kingsino Technology Co.Ltd(002548) , etc.
Poultry: continue to recommend yellow chicken sector
Investment suggestion: for white chicken, the price of commercial chicken seedlings has fallen recently, and the price of chicken has also fallen. On the whole, the rebound of chicken price throughout April is more likely to be the rebound in the case of small short-term supply shortage. In the case of high stock and downstream overcapacity, the fundamentals do not have a large market, and the price rise is difficult to be sustainable. We still need to pay attention to whether the inventory can form a downward trend, but the recent changes in the industry have increased this uncertainty. We continue to hold a cautious view on this, but for some companies (such as Fujian Sunner Development Co.Ltd(002299) ), they have long-term investment value.
In terms of yellow chicken, the industry has experienced the capacity removal for two years (more than one year earlier than the pig capacity removal), and the cumulative range of the industry has reached more than 20%. Since the first quarter of this year, the main sales areas have been affected by the epidemic, which has accelerated the further capacity removal of the industry, and the industry fundamentals are in an upward trend. Throughout 2022q1, the yellow chicken sector is the only profitable sub sector. Just as we previously judged that the yellow chicken is the sector that first realizes the capacity de industrialization and first starts to reverse among the three breeding varieties. At present, the price is strong in the off-season, which means that the fundamentals are expected to be greatly improved in the second half of the year under the background of continuous de industrialization of production capacity. With regard to the sustainability of the boom, on the one hand, it has been nearly a year from the sale of parental chicken seedlings to the launch of commercial pigs, which is not far from that of sows to commercial pigs. On the other hand, the data of the ancestral chicken association is distorted due to subsidies and other problems, and the enterprise’s willingness to expand production for a long time is low. In fact, there is a shortage of upstream seed sources, and the boom is expected to remain high for more than 1-2 years.
Based on the above analysis, we are optimistic about the Huangji sector and recommend Jiangsu Lihua Animal Husbandry Co.Ltd(300761) , Wens Foodstuff Group Co.Ltd(300498) , Hunan Xiangjia Animal Husbandry Company Limited(002982) .
Animal protection: the sector is located at the bottom of the valuation and pays attention to the catalytic effect of non plague vaccine. Investment suggestions: affected by the loss of downstream breeding, the boom of animal protection industry has declined, and the performance of some enterprises has declined. Affected by this, the overall valuation of animal protection sector has fallen to an all-time low. In the long run, the downstream large-scale process, the change in the demand for reduced and alternative antibodies, and the research and development of multi linked and multivalent new vaccines are expected to continue to promote the expansion of the animal protection industry. The research and development of non classical swine fever vaccine has made steady progress, and many enterprises have made positive progress. They pay attention to the catalytic effect brought by African classical swine fever vaccine. We mainly recommend Tianjin Ringpu Bio-Technology Co.Ltd(300119) , Wuhan Keqian Biology Co.Ltd(688526) , Pulike Biological Engineering Inc(603566) , Tecon Biology Co.Ltd(002100) , China Animal Husbandry Industry Co.Ltd(600195) , etc.
Planting: corn prices remain high
Investment advice: global grain prices remain high and seed demand remains high. In the medium and long term, the revision of the seed law is conducive to the improvement of industry concentration and the market share of leading companies. The commercialization process of GM corn seeds will continue to be promoted, which is beneficial to companies with early GM R & D layout and large reserves. Recommended Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Shandong Denghai Seeds Co.Ltd(002041) , Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) , Winall Hi-Tech Seed Co.Ltd(300087) .
Feed: the price of soybean meal rebounded, and the feed output decreased both year-on-year and month on month in April. Investment suggestions: the price rise of feed raw materials such as corn and soybean meal slightly squeezed the gross profit margin of feed processing, but the leading enterprises have a strong ability to transfer costs to downstream breeding plants, and the market share is expected to increase.
The sales volume of aquatic feed and ruminant feed is expected to maintain a high growth rate, and pay attention to the head enterprises with rapid adjustment of product structure to aquatic feed. Recommend Guangdong Haid Group Co.Limited(002311) , and pay attention to Hefeng animal husbandry.
Pet: optimistic about the investment main line of domestic pet substitution
Investment suggestion: we believe that the fundamentals of China’s pet industry are still in rapid development, and domestic substitution is still the main logical investment line of the current period. From the first quarter performance, the profitability of Yantai China Pet Foods Co.Ltd(002891) and Petpal Pet Nutrition Technology Co.Ltd(300673) has been significantly restored. With the release of the production capacity of the wet food project, the sales revenue of pet cans of the company increased by 52.97% year-on-year in 2021. In 2022, the company plans to raise funds to invest in the “project with an annual output of 60000 tons of high-quality pet dry food” and the “project with an annual output of 40000 tons of new pet wet food” to support the future development of the company Petpal Pet Nutrition Technology Co.Ltd(300673) overseas affected by the suspension of the epidemic has been basically eliminated. Factories in Cambodia are expected to release about 3000 tons of production capacity this year. Projects under construction in China and New Zealand have a total production capacity of about 120000 tons of dry and wet grain. There is a strong certainty of performance growth in 2022. We continue to recommend Yantai China Pet Foods Co.Ltd(002891) , Petpal Pet Nutrition Technology Co.Ltd(300673) , and Tianjin Ringpu Bio-Technology Co.Ltd(300119) , in the pet food sector and in the pet medical sector.
Industry rating and investment strategy: in terms of livestock breeding, pig breeding enterprises with strong cost control ability and high growth can better resist risks in the downward period. We believe that the next round of poultry boom cycle may precede pigs, while white feather chicken or yellow feather chicken; In terms of seed industry, high grain prices and the promotion of transgenic commercialization will continue to benefit the prosperity of seed industry; In terms of feed, the recovery of pig production capacity will support feed demand; In terms of dynamic insurance, it is in the period of industry reform. With the improvement of industry concentration, the advantages of leading enterprises will be gradually clear; Be optimistic about the consumption and growth attributes of pet track. Give the industry a rating of “recommended”.
Risk tip: the company’s performance is lower than expected, the risk of sharp fluctuations in the market caused by emergencies, the risk of epidemic diseases in the breeding industry, the risk of policy uncertainty, the risk of price fluctuation, the risk of extreme weather, etc.
