Home » [Research Report Nuggets]Institution: Catalyzed by multiple factors, the allocation of pig breeding stocks is at the right time

[Research Report Nuggets]Institution: Catalyzed by multiple factors, the allocation of pig breeding stocks is at the right time

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[Research Report Nuggets]Institution: Catalyzed by multiple factors, the allocation of pig breeding stocks is at the right time

The agency pointed out that the trend of tight supply is superimposed and the demand under it is supported. It is expected that the short-term price of pigs will have limited downward space, and the overall situation will remain volatile. It is recommended to pay attention to breeding enterprises with a high degree of fulfillment, significant advantages in cost control, and relatively abundant cash flow.

core logic

1、The research of the breeding sector focuses on “volume” and “price”, and the volume and price determine the cycle and growth of the agricultural sector.. From the perspective of quantity, the scale and concentration of the industry continue to increase, which determines the long-term sustainable growth logic of leading enterprises. From the ad valorem dimension, the cyclical supply and demand mismatch of industry products determines the cyclical price fluctuations in the mid-term dimension. Agricultural medium-term investment focuses on the price cycle. The essence is to judge the cycle position and plan the boom cycle in advance.

2、Pig farming: based on long-term growth β logic, focus on enterprise α performance. At the current point of time, the β of long-term and rapid growth of the industry still exists, and the sector has long-term allocation value. In the short and medium term, due to the downward cycle trend, we should pay attention to the α performance of individual stocks, which is reflected in the short-term profit realization of individual stocks (average price for slaughter and breeding costs) and long-term α attributes (the amount of slaughter and breeding costs).

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3、Bottom valuation superimposed 2023 pig price exceeded expectations, and the allocation of pig breeding stocks was at the right time. According to the calculation of the changes in the number of fertile sows by the Ministry of Agriculture, before April 2023, the number of live pigs for slaughter will show a month-on-month downward trend, and the price of pigs is expected to remain relatively high, but it will be disturbed by secondary fattening and slaughter during the period. After May 2023, the price of pigs will decline or be slower than expected. The main reason is that sow replenishment is more rational. According to the data from the Ministry of Agriculture, the number of fertile sows in the country will only rise by about 4% from the bottom. Pig prices will remain high in 2023 time or beyond expectations.

4. On the supply side, the recent drop in pig prices will help force retail investors to sell in advance, release the supply pressure accumulated in the previous period, and reduce the pressure on the rise in pig prices in the future market; at the same time, in the context of de-capacity in the second half of 2021, the supply of live pigs is tight The trend does not change. On the demand side, as the nationwide temperature drop begins, the demand for salted meat has gradually opened up, adding to the demand for stocking up during the Spring Festival, the boost to terminal consumption will eventually appear. Overall,The trend of tight supply is superimposed and the demand under it is supported. It is expected that the short-term price of pigs will have limited downward space, and the overall situation will remain volatile. It is recommended to pay attention to breeding enterprises with a high degree of fulfillment, significant advantages in cost control, and relatively abundant cash flow.

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Good for individual stocks

Zheshang Securities believes that the right side of the cycle pays more attention to performance realization, and gives priority to certain leaders who can achieve the goals of slaughter volume and cost reduction. We recommend Muyuan, the leading company with an absolute leading cost advantage, Wen’s, which has a booming pig and chicken business, and Tiankang Biology, which has both flexibility in marketing and cost advantages, and pay attention to Superstar Agriculture and Animal Husbandry, Tang Renshen, Aonong Biology, and Huatong.

Founder Securities pointed out that in terms of pig farming, it is recommended to pay attention to Muyuan and Wen’s shares that have historically performed better, and superstar agriculture and animal husbandry and Huatong shares with strong growth α attributes, as well as Jingji Zhinong and Huatong shares that have continued to improve costs. An excellent and stable Shennong Group. In terms of white-feathered chickens, it is recommended to pay attention to the development of Shengnong, the leader in the integration of its own breeder + industrial chain, and Yisheng shares, a leading enterprise in white-feathered chicken seedlings.

The content of this article is selected from the following research reports:

Founder Securities “Agriculture Industry Strategy Report 2023: Grasp the Cycle and Embrace Growth”

Hua Securities “In-depth report on the agriculture, forestry, animal husbandry and fishery industry: the allocation of pig farming stocks is at the right time, and the prosperity of multiple sub-sectors is picking up”

East Asia Qianhai Securities “Agriculture, Forestry, Animal Husbandry and Fishery Industry Weekly: How do you view the sales of live pigs by pig companies in November?” “

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Zheshang Securities “Comment on the sales data of listed pig companies in November: the sales volume increased month-on-month, and the weight is still at a high level”

Disclaimer: The Securities Times strives for truthful and accurate information, and the content mentioned in the article is for reference only and does not constitute substantive investment advice, so operate at your own risk

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