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天风证券:10月生猪销售月报透露哪些信号?

Tianfeng Securities: What signals did the October pig sales monthly report reveal?

Zhitong Finance ·  11/13/2023 11:32

Pay attention to the rise in investors brought about by the subsequent acceleration of capacity removal.

The Zhitong Finance app learned that Tianfeng Securities released a research report saying that pig breeding companies' monthly sales reports for October continued to be divided. Fattening is losing money again, and it may be difficult for the average price of pigs to improve. Currently, the average loss of piglets is close to 200 yuan/head, and the loss may increase further. Capital pressure on the farming side is increasing, and the removal of production capacity is expected to accelerate. The bank believes that the gold buying period in the pig sector is that pig prices are short and long, the trend of removal of production capacity has become +, and the valuation of the sector is relatively low. At the same time, forward-looking odds > precise timing of winning ratio, and attention is paid to the rise in investors brought about by the acceleration of subsequent capacity removal. At this stage, sector beta configuration and flexibility are preferred.

Tianfeng Securities's views are as follows:

Pig breeding companies' monthly sales reports for October continued to diverge

① Wen's, Tang Renshen, and New Hope continued to maintain a steady upward trend in the number of listings, and there were no major changes in the listing structure; the share of Tianbang piglets increased markedly, reaching 32% (piglets accounted for between 10% and 25% during Q3); Aonong piglet sales accounted for a relatively high share, which has remained around 40% since this year. ② Judging from the average price and estimated cost situation in October, companies with excellent cost control, represented by Muyuan Co., Ltd., are expected to achieve net operating cash flow inflows, higher costs, or net operating cash flow outflows, and a marginal increase in financial pressure. ③ In addition to the monthly sales report, on the evening of November 9, Tianbang announced that the actual controller, Mr. Zhang Banghui, would transfer 39.91 million shares of the company to repay the stock pledge financing loan (accounting for 2.17% of the total share capital). The transfer price was 2.76 yuan/share, at a 30% discount.

What do you think of pig prices? Strong supply and weak demand, average pig prices & piglet prices may continue to be under pressure

1) Fattening has lost money again, and it may be difficult for the average price of pigs to improve. On the supply side, the removal rate of sows that can be raised in '23 was slow & production efficiency continued to improve, and the supply pressure is difficult to ease recently (the number of companies scheduled to be listed in the November steel connection/Yongyi sample increased 3.86%/7.06% month-on-month); on the demand side, frozen goods stocks are facing outbound pressure & the recent cooling weather has not led to a rapid rise in slaughter volume, and later demand may be difficult to increase.

2) Currently, the average loss of piglets is nearly 200 yuan/head, and the loss may increase further. Supply: Currently, the capital situation in the industry is tight. Some farmers may passively increase the sales ratio of piglets in exchange for cash flow and reduce financial pressure (piglets need to consume a lot of cash until the fattening stage), so it is difficult to relieve the pressure on piglet supply; demand: Due to the cooler weather, piglet transfer losses have increased & corresponding pig release is a low season for consumption, and demand for piglets may continue to decline in the fourth quarter.

Capital pressure on the aquaculture side is increasing, and the removal of production capacity is expected to accelerate

1) Due to the high degree of scale, the early process of decontamination did not accelerate. The magnitude and speed of historical capacity removal in the recovery period. During the period when retail investors accounted for a relatively high share, due to the weak resilience of retail investors and their willingness to actively eliminate risks, production capacity removal will accelerate in the early stages of losses. However, with the rapid increase in the scale of the non-plague industry, the scale market is more willing to maintain the scale of production capacity, so the early elimination process of losses in this round has not accelerated. Currently, Yongyi Consulting has removed a total of 7.8% (January-October), Steel Union has removed a total of 2.0% (January-October), and the Ministry of Agriculture and Rural Affairs has removed a total of 4.8% (January-September).

2) Financial constraints may have led to a marked acceleration of decontamination. We expect that in the future, when pig and piglet prices continue to be under pressure, if the capital chain of farms/households in the industry breaks down, production capacity is removed or changes from quantity to quality, the short-term elimination rate is expected to increase nonlinearly. The removal of some sample capacity in October has shown an accelerated trend. Yongyi Consulting/Steel Union's October sample site productivity ratio was -0.85%/-0.44% (-0.27%/-0.41% in September).

Sector valuations are relatively low, forward-looking odds > accurate timing of winning rates

1) The valuation of the sector is relatively low, and the average market value is in the relative bottom range of history. Judging from the initial average market value in 2023, of which superstar farming and animal husbandry is 4000 yuan/head; Muyuan, Jin Xinnong, and Xinwufeng 3000 yuan/head; Wen's and Huatong 2000 yuan/head; multi-stock valuations are in the relative bottom range in history, and the average market value may still have significant room for growth.

2) The gold buying period for the pig sector is short and long, pig prices are long, and the trend of removal of production capacity has become +, and the valuation of the sector is relatively low. At the same time, forward-looking odds > the winning ratio of precise timing, focusing on the rise in investors brought about by the acceleration of subsequent capacity removal. At the current stage, sector beta allocation and flexibility are preferred. Big Pig first recommended Wen's shares (300498.SZ), Muyuan shares (002714.SZ), followed by New Hope (000876.SZ); Little Pig recommended key recommendations: Huatong Co., Ltd. (002840.SZ), Xinwufeng (600975.SH), Superstar Farming and Animal Husbandry (603477.SH), etc., followed by Aonong Biotech (), COFCO Jiakang (01610), Tianbang Food (002124.SZ), etc. 603363.SH

Risk warning:Risk of the epidemic; pig prices falling short of expectations; risk of policy changes.

The translation is provided by third-party software.


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