The Zhitong Finance App learned that Western Securities released a research report saying that in February, due to the Spring Festival holiday, the pace of pig release was slow and the overall operating rate of the industrial chain was low, leading to a sharp drop in the number of pigs released year on year and month on month. The total number of listed pig companies listed in January-February was 246.34 million heads, +9.90% over the same period last year. The consolidated listing volume of listed pig companies continued to increase year-on-year in January-February, indicating that production capacity is still high and supply is relatively sufficient. It is recommended to seize opportunities in the pig breeding sector and focus on listed pig companies with strong certainty in listing growth and steady management: recommend Wen's shares (300498.SZ), superstar agriculture and animal husbandry (603477.SH), Tang Renshen (002567.SZ), Huatong shares (002840.SZ), and it is recommended to focus on Muyuan shares (002714.SZ), Xinwufeng (600975.SH), etc.

The main views of Western Securities are as follows:

The number of listed pig companies listed in February '24 was 5.426,200 heads, or -22.04% year-on-year, and -31.45% month-on-month (excluding Muyuan Co., Ltd. and Aonong Biotech). Among the leading companies, Wen's Shares and New Hope listed 19.221/1.3088 million heads respectively, -0.69%/-24.48% year-on-year, and -27.12%/-24.12% month-on-month respectively. Affected by the Spring Festival holiday in February, the pace of pig release was slow, and the overall operating rate of the industrial chain was low. As a result, the number of pigs released plummeted year-on-year and month-on-month. The total number of listed pig companies listed in January-February was 246.34 million heads, +9.90% over the same period last year. The consolidated listing volume of listed pig companies continued to increase year-on-year in January-February, indicating that production capacity is still high and supply is relatively sufficient.

The revenue of listed pig companies in February was 7.887 billion yuan, -18.46% year-on-year and -24.08% month-on-month (excluding Muyuan shares). Among the leading companies, Wen's Share/New Hope achieved revenue of 33.38/1,836 billion yuan, -1.01%/-27.74% year-on-year, and -21.33%/-14.96% month-on-month respectively. Due to the influence of the Spring Festival in February, the number of releases dropped sharply year on month, causing revenue to plummet year on month. The cumulative revenue of listed pig companies in January-February was 34.911 billion yuan, +7.11% year-on-year. The average price of pigs released in January-February '24 was slightly lower than the same period last year, so the year-on-year revenue growth rate was slightly lower than the year-on-year growth rate of the number released.

The average pig sales price of listed pig companies in February was +2.72% month-on-month and -2.91% year-on-year. The average price of pigs released in February was slightly higher than in January, but lower than the same period last year. Hog prices are still relatively low. The average weight of listed pig companies in February was 103.6 kilograms, +4.27% over the previous month. The average number of pigs released in February increased slightly from month to month, indicating that the market's consumer preference for fat pigs during the peak season of the Spring Festival consumption season was high.

By the end of January 2024, the number of sows kept was 40.67 million, down 7.4% from the high storage point in December 2022 (43.9 million heads). Currently, the storage volume is equivalent to 104.3% of normal holdings. The supply of production capacity is at the upper end of a reasonable range and is in a green area. Currently, pig prices are low, farmers continue to lose money, some small and medium-sized farmers will gradually withdraw from the market, and the loss of sow production capacity will continue. However, at present, pig prices can stabilize at around 14 yuan, farmers do not lose much, and the rate of loss of production capacity will be moderate.

As of January 2024, domestic designated pig slaughter enterprises slaughtered 37.25 million heads in a single month, -6.36% month-on-month and +28.58% year-on-year. According to Yongyi data, as of March 7, 2024, the price difference between 175 kg pigs and standard pigs was +0.52 yuan/kg. Currently, the standard fertilizer price difference is relatively stable. It is expected that after March, as pig consumption enters the low season, the standard fertilizer price difference will gradually narrow.

Risk warning: Degradation of pig production capacity falls short of expectations, increase in feed prices exceeds expectations, risk of epidemic diseases, etc.