Recently, pig prices have risen again after a short period of stabilization. The listed companies in the pig farming industry, which are still losing net profit in the first half of the year, have shown a sharp reversal in their results in the three quarters. As one of the leading listed companies in the industry, Muyuan shares is expected to make a maximum profit of 1.65 billion yuan in the third quarter alone, according to the third-quarter results forecast announced on the evening of October 8.

Pig farming enterprises enter the profit range

The third-quarter performance forecast of Muyuan shares shows thatIn the first three quarters of 2019, the company is expected to make a profit of 1.3 billion yuan to 1.5 billion yuan, compared with 350 million yuan in the same period last year, an increase of 271.23% to 328.34%.

In the first half of 2019, Muyuan shares lost a net profit of 156 million yuan, down 97.95% from a year earlier. The substantial increase in results in the first three quarters is undoubtedly due to a significant rise in net profit in the third quarter.

The performance forecast showsMuyuan shares is expected to make a net profit of 1.45 billion yuan to 1.65 billion yuan in the third quarter of 2019, up 238.12% to 284.75% from 429 million yuan in the same period last year.

The company said that due to the continued impact of African classical swine fever, the price of live pigs was lower in the first quarter of 2019. From the second quarter of 2019, pig prices began to rise, and the company began to enter a profit period. As the epidemic situation of African classical swine fever in China is still severe, the company continues to upgrade the biosafety hardware infrastructure during the reporting period, strengthen the management of goods and personnel, and increase the investment in biosafety prevention and control costs.

Tianbang, which also owns pig farming business, also reversed its performance in the third quarter.

According to the company's forecast for third-quarter results released on Oct. 8, the company is expected to make a profit of 2.66 million yuan to 12.66 million yuan in the first three quarters of 2019, down 98% from 121 million yuan in the same period last year. However, in the third quarter, the company is expected to achieve a profit of 370 million yuan to 380 million yuan, an increase of 819% to 844% over the same period last year, successfully covering a loss of 367 million yuan in the first half of the year.

Tianbang shares said that the company's main business is pig farming. Due to the influence of the epidemic of classical swine fever in Africa, the pig breeding industry gradually decreased from January to September in 2019, and pig prices gradually increased. The company lost 296 million yuan in pig farming business in the first quarter and 66 million yuan in the second quarter. With the increase in pig prices and biosafety prevention and control measures in the third quarter, the profitability of the company's pig business has increased significantly. The third quarter is expected to generate a net profit of about 200 million yuan. At the same time, the company concentrated resources and focused on its main business, selling 27.295% of the shares in Guangdong Haimao Investment Co., Ltd., with an estimated after-tax net profit of about 164 million yuan.

In September 2019, domestic commodity pig prices as a whole showed a sharp upward trend. The September pig sales report released by Muyuan shares showed that the company's average sales price of commercial pigs in that month was 26.17 yuan / kg, up 29.11 percent from August 2019. The company sells 725200 live pigs with a sales income of 1.922 billion yuan.

Tianbang's September pig sales report also showed that the company sold 180100 commercial pigs in September 2019, with a sales income of 468 million yuan and an average sales price of 48.64 yuan / kg (24.8 yuan / kg excluding the price of piglets and breeding pigs). 2.027 million commercial pigs were sold from January to September in 2019, with sales income of 3.327 billion yuan and average sales price of 15.39 yuan / kg, with year-on-year changes of 40.91%, 69.59% and 28.34%, respectively.

The average price of pigs in many provinces has exceeded 30 yuan / kg.

In order to ensure the stability of domestic pig prices and residents' pork consumption, since August, many ministries and commissions have issued a number of policies to support the development of the pig industry.

On September 29, the Ministry of Commerce, together with the National Development and Reform Commission, the Ministry of Finance and other departments, launched the third central reserve of frozen pork, releasing a total of 10,000 tons of central reserve pork to the market, realizing the stability of domestic pig market prices on the eve of the National Day holiday.

Affected by the intensive release of frozen meat from central and local reserves at all levels, the national average price of lean pigs continued to fluctuate steadily at 27 yuan / kg for 20 days during the National Day holidays. however, pig prices began to rise again on the third day of the holiday. in just a few days, the national average price has risen sharply from 27 yuan / kg on October 3 to break through the 30 yuan / kg integer mark.

Feng Yonghui, an analyst at Souzhu, said that so far, the average price of more than half of the provinces across the country has exceeded 30 yuan / kg, and the average price of 9 provinces has exceeded 32 yuan / kg. From high to low are Guangxi, Guangdong, Fujian, Jiangxi, Hunan, Zhejiang, Hubei, Anhui and Jiangsu, of which Guangxi, Guangdong, Fujian and Jiangxi provinces average prices exceed 35 yuan / kg, local high prices reach 36-37 yuan / kg level. The highest pig prices in the country are still mainly concentrated in the provinces of South and Central China.

In this round of rise, the northern producing areas of Northeast and North China took the lead in obvious increases, which in turn led to a rise in pig prices across the country. As a whole, the price gap between the north and the south narrowed significantly. Judging from the overall quotation in various localities, the overall pig price in Northeast China has risen rapidly from the long-lasting level of 25-26 yuan / kg to nearly 30 yuan / kg, while that in North China as a whole has risen from 26-27 yuan / kg to more than 30 yuan / kg. Among them, the price in Shandong and Henan is as high as 33 yuan / kg.

At present, there are few provinces where the average price is still less than 30 yuan / kg, mainly concentrated in the northwest provinces, southwest Guizhou, Yunnan and Beijing-Tianjin areas. Yunnan is still the lowest pig price in the country, and the average price in the province remains at 22-23 yuan / kg. The main flow prices of other provinces are between 28 and 29 yuan / kg.

He said that the root cause of the rapid rise in pig prices in October is still the continuous decline in the number of live pigs, and the further deepening of the contradiction between supply and demand in the market. at present, most pigs are born from March to April, when the non-plague epidemic spread in a large area. Since the outbreak of the epidemic, domestic sows and pig stocks have declined month by month since the outbreak, and since April this year, the number of pigs has continued to increase compared with the same period last year. As a result, the supply of live pigs in October is still significantly lower than that in September, and butcher companies have to raise purchase prices to ease the difficulty of pig procurement.

Zhuochuang statistics also show that on October 8, the average price of three yuan hurdles outside the country was 33.26 yuan / kg, up 3.80 yuan / kg from before the festival, which coincided with 33.26 yuan / kg in Shandong, with the lowest price of 30.02 yuan / kg in Heilongjiang and the highest price of 35.96 yuan / kg in Fujian. Among them, since the National Day holiday, pig prices in Northeast China have continued to rise sharply, with a cumulative increase of 5 yuan / kg.

Pig prices continue to rise in the future.

Used to be called"strongest pig cycle"In 2016, the average price of live pigs in China reached an all-time high of 21.5 yuan / kg. However, this historical record was broken in mid-August 2019, and pig prices have continued to rise in the past two months, breaking the 30 yuan / kg mark. So, whether the follow-up pig prices are still bullish? Does the pig farming sector still have investment value?

Feng Yonghui believes that at present, the price of 5 kilograms of piglets in the market is about 1300-1400 yuan per head, and the increase is not very strong, so under the stimulation of the corresponding policies of the relevant state departments, the mood of many farmers to fill the fence of piglets is running high. The enthusiasm of restoring production capacity and re-breeding is also gradually being mobilized, and it is expected that piglet prices will also have a small space to rise with the rise of pig prices.

Based on the current price trend of live pigs and pork, the supply and demand of live pigs and pork is still tight. In this situation, farmers who still have pigs in their hands can increase the fattening weight of normal fattening pigs, because pig prices still have some room to rise in the later stage. For pig breeders with little or no pigs in their hands, piglets and reserve sows can be properly fenced. Under the current stage of self-breeding mode, the actual profit level of each pig is 1600 yuan per pig, and the profit level of breeding is still considerable.

Guo Dandan, an analyst at Zhuochuang, believes that pig prices are rising rapidly during the National Day, the breeding end is bullish and hesitant to sell, the supply of live pigs continues to be tight, and the start of slaughtering enterprises will be low, but the acquisition pressure remains. At present, the transportation in the south has not been restored, there are not many foreign pig sources as a whole, and there are few local pig sources, and the supply side is strongly pulled. It is expected that short-term domestic pig prices may still have room to rise.

Dongxing Securities Research News believes that by the impact of the supply side, this round of pig cycle will be extended.The demand side of pork is relatively stable. As one of the main meats in China's traditional diet, the absolute values of demand income elasticity and demand price elasticity are all less than 1. The supply side is affected by African classical swine fever virus and environmental protection. The number of live pigs and breeding sows continues to decrease. Coupled with the current low enthusiasm around the fence, the market pork supply will be tight situation. Compared with the previous three cycles, this cycle began in mid-May 2018, and by mid-September 2019, it has risen for 16 months, with an increase of 131%. Compared with previous cycles, this cycle is faster and larger, so this cycle is expected to be longer than before.

Tianfeng Securities Research News believes that the next 2-3 years, will be the pig plate profit business cycle superimposed head listed enterprises out of the rapid expansion period, is a long-term volume and profit rising market.At present, the pig farming sector has entered a high profit cycle, and listed companies have entered the stage of rapid profit release. At present, the pig raising plate still has strong configuration value.