Key investment points:
China is the world’s largest producer of pigs, and pork is the largest consumer category for residents. According to the data of the U.S. Department of agriculture, China’s pig production in 2020 was 565 million, accounting for 48.43% in the world, ranking first in the world. In the meat consumption structure, pork is the largest consumer category of residents. In 2020, the per capita pork consumption of Chinese residents will be 18.20 kg / year, accounting for 73.42%.
The market scale of China’s pig breeding industry has exceeded trillion, and large-scale breeding has been steadily promoted. Take the number of pigs sold * average weight * average price of pigs as the standard to measure the market scale of the industry. In the first three quarters of 2021, the market scale of China’s pig breeding industry has reached 1.21 trillion yuan. At present, the concentration of China’s pig breeding industry is low, and the number of large-scale pig enterprises is relatively small. In 2021h1, the Cr5 of China’s pig breeding industry is 10.50%. Driven by policies, urbanization and other factors, the concentration of China’s pig breeding industry has great room for improvement in the future, and large-scale breeding is advancing steadily.
The pig breeding industry is expected to usher in an upward turning point in 2022. In 2021, with the sharp decline of pig prices, Chinese pig breeding enterprises suffered losses in varying degrees in the third quarter of 2021, and the trend of capacity de industrialization appeared. According to the data released by the Ministry of agriculture and rural areas, the number of fertile sows in China has continued to decline month on month since July. Recently, with the weakening of seasonal consumer demand, pig prices have entered the downward channel again. If the production capacity of sows and other sows can be continuously reduced in the future, it is expected that the pig breeding industry is expected to usher in an upward turning point around the third quarter of 2022.
Investment strategy: maintain the recommended rating of the pig breeding industry and actively grasp the upward inflection point of the pig cycle. Looking forward to 2022, if the production capacity of fertile sows continues to be reduced, combined with the fact that pigs lag behind the production capacity of fertile sows for 10 months, the industry is expected to usher in an inflection point around the third quarter. Considering that the peak consumption season in the fourth quarter of 2021 makes the pig price rebound to a certain extent, or affects the length of the pig cycle to a certain extent. If the follow-up pig price drops, the loss range of pig breeding companies will further increase, or accelerate the bottoming process of pig cycle. In the follow-up, we should continue to pay attention to the important data such as the stock of fertile sows and the performance of pig enterprises, and look for appropriate layout opportunities. In terms of subject matter, we can focus on Muyuan Foods Co.Ltd(002714) (002714), Wens Foodstuff Group Co.Ltd(300498) (300498), New Hope Liuhe Co.Ltd(000876) (000876), Jiangxi Zhengbang Technology Co.Ltd(002157) (002157) in the aquaculture sector.
Risk tips: national policies, large-scale outbreaks of African swine fever, avian influenza and other diseases, less than expected capacity removal, downward pig prices, intensified market competition, etc
