The Zhitong Finance App learned that Haitong International released a research report saying that the price of chicken seedlings has risen since the beginning of January, but the stock price has not clearly responded, or mainly because the market is concerned about the continued rise in chicken seedlings prices. The bank believes that the rise in the price of chicken seedlings since January is not simply a seasonal factor; the supply and demand pattern is the core. Furthermore, the price of chicken seedlings is expected to continue to strengthen in the future, and the stock price will perform better. At the individual stock level, based on elasticity, it is recommended to focus on Yisheng Co., Ltd. (002458.SZ), Shengnong Development (002299.SZ), Hefeng shares (603609.SH), Minhe shares (002234.SZ), Xiantan shares (002746.SZ), Chunxue Foods (605567.SH), etc.

Haitong International's views are as follows:

Why is the price of chicken seedlings rising recently?

On the one hand, historically, the price of chicken seedlings often rises after the incubation period. What is behind this is the concentrated recovery in breeding demand, driving the rise in chicken seedlings prices; on the other hand, the year-to-date price of chicken seedlings has only been lower than the same period in 2019 for most of the time, and even after a recent correction, they are at a historically high level. The supply and demand pattern is affected by the similar increase.

The amount of ancestral renewal has rebounded, and the number of generations produced has increased month-on-month.

In January, the ancestral chicken updated 118,000 sets, an increase of 31,000 sets over the previous month. The number of chicken produced in ancestral generation was 1.134,000, an increase of 12,000 sets over the previous month, or 1.1%. In the next few months, it is expected that the upward trend in the generation generation will continue.

The number of births picked up in January, but there was a sharp drop in backup volume.

January was affected by the resumption of production after the incubation period, and some backup parents were or concentrated in childbirth, leading to a month-on-month increase in births. However, the number of spare parents dropped sharply from month to month, down more than 11 million units from the beginning of '23, and the drop reached 28%. The absolute amount fell to its lowest point since the beginning of '22. This also means that the number of parents entering childbearing in the future will be low.

The number of births is expected to continue to decline in the future.

In the first half of '24, the average number of new theoretical monthly births was 5.368 million, while the theoretical monthly average number of units eliminated was 6.488 million. Higher than the number of new births determined that the generation of births would continue to decline in the future, and it is expected to maintain a month-on-month decline of more than 2% per month in February-April.

The price of chicken seedlings is expected to remain strong.

As the number of birthing parents declines, the supply of commercial chicken seedlings will also gradually shrink, and it is expected to drop by more than 2% month-on-month over the next few months. Due to the special nature of white-feather broiler breeding, the current supply of chicken seedlings depends on the number of early parent and ancestral chickens, and is not affected by the introduction of current ancestral chicken. After seasonal factors subside, the pattern of tight supply and demand is expected to continue to support the strengthening of chicken seedlings prices.

It is recommended to focus on the white feather broiler breeding sector.

Historically, the price of chicken seedlings is a core indicator of the sector's stock price trend. The price of chicken seedlings has risen since the beginning of January, but there has been no obvious reaction in stock prices, or mainly because the market is concerned about the continuation of the rise in chicken seedlings prices. The bank believes that the rise in the price of chicken seedlings since January is not simply a seasonal factor; the supply and demand pattern is the core. Furthermore, the price of chicken seedlings is expected to continue to strengthen in the future, and the stock price will perform better. At the individual stock level, based on elasticity, it is recommended to focus on Yisheng Co., Ltd. (002458.SZ), Shengnong Development (002299.SZ), Hefeng shares (603609.SH), Minhe shares (002234.SZ), Xiantan shares (002746.SZ), Chunxue Foods (605567.SH), etc.

Risk warning: The relevant forecast is based on certain assumptions, and there is uncertainty; supply significantly exceeds expectations due to feather exchanges, etc.; consumption is significantly lower than expected.