Taking into account the length of losses in the industry, the extent of elimination of breeding sows, and the current situation of the spread of the winter epidemic, the historical low valuation of the industry is taken into account, and the focus is on high-quality pig companies with leading cost control and good financial resources.
The Zhitong Finance App learned that China Galaxy Securities released a research report saying that according to Boya Hexun, pig prices have fluctuated slightly since April. On April 26, it was 14.94 yuan/kg, -2.5% compared to April 1; self-breeding lost 36 yuan/head in April, and the profit from outsourced piglet breeding was 107 yuan/head. The livestock and poultry farming chain is still the current focus. The focus is on the low layout opportunities of the pig cycle, comprehensively considering the length of losses in the industry, the extent of loss of sows, and the spread of the winter epidemic, taking into account the low valuation history of the industry. The focus is on high-quality pig companies with leading cost control and good capital, as well as Muyuan Co., Ltd. (002714.SZ), Wen's (300498.SZ), and Tiankang Biotech (002100.SZ).
Second, there is a certain correlation between the price of yellow feather chicken and pig prices. At the same time, considering its low supply-side level, there is a possibility that the price will rise in the future. You can pay attention to Lihua Co., Ltd. (300761.SZ). The upstream supply of white feather chicken is shrinking. Overall, it is in the early stages of the upward cycle, and sector attention can be paid. Also, focus on the post-cycle sector of the aquaculture chain, including feed leader Haida Group (002311.SZ) and Guangdong Feed (001313.SZ), which focuses on aquatic products; at the same time, attention is being paid to the process of launching new animal vaccines, as well as high-quality vaccine companies Placo (603566.SH) and Zhongmu Co., Ltd. (600195.SH).
The main views of China Galaxy Securities are as follows:
March CPI was +0.1% year-on-year, and pork prices declined slightly
In March '24, China's CPI was +0.1%, including -2.7% for food items and -2.4% for pork in food; CPI -1.0% month-on-month, of which -3.2% month-on-month for food items and -6.7% month-on-month for pork in food. In March '24, China's agricultural imports amounted to 16.77 billion US dollars, -17.23% year on year, export value was 8.259 billion US dollars, -7.76% year on year, trade deficit of 8.512 billion US dollars, -24.73% year on year
Self-growing and self-supporting losses narrowed in April, focusing on the potential impact of rainfall in the south
According to Boya Hexun, pig prices have fluctuated slightly since April. On April 26, it was 14.94 yuan/kg, -2.5% compared to April 1; self-breeding lost 36 yuan/head in April, and the profit from outsourced piglet breeding was 107 yuan/head. At the end of March '24, the number of breeding sows in China was 39.92 million, -3.6% quarter-on-quarter and -7.3% quarter-on-quarter. It has been recovering for 5 consecutive quarters. From a supply-side perspective, according to Yongyi data, it is estimated that there was an inflection point in fat pig supply in March '24. 24Q2 supply showed a contraction trend. Combined with secondary fattening sentiment and the potential impact of the epidemic caused by rainfall in the south, 24Q2 pig prices may show an upward trend. It is recommended to focus on pig companies that are leading/improving in the cost control industry, relatively healthy in terms of capital, and reasonable valuations.
In March, the ancestors of white chickens updated 138,800 sets, and in April, the price of seedlings showed a downward trend
From January to March '24, the ancestral generation renewed 289,700 units, with imports accounting for 38% and domestic production accounting for 62%. On April 14, 22.15 million chicken sets were stored for the birth parents. It is in a historically high range, and the current production capacity is sufficient. According to Boya Hexun, the price of chicken seedlings in Yantai, Shandong showed a downward trend in April, falling from 3.7 yuan/feather on April 1 to 3.3 yuan/feather on April 26. As the supply inflection point of upstream ancestral generations gradually spread, wait for the downstream chicken supply inflection point to arrive. On April 26, the PB (LYR) of SW broiler breeding was 1.91 times, which is at the bottom of history, and can be watched by sector.
The agricultural index performance in April was weaker than the Shanghai and Shenzhen 300. From the beginning of April to 26, the agriculture, forestry, animal husbandry and fishing index fell 1.57%. The Shanghai and Shenzhen 300 rose 1.32% during the same period. Among the sub-industries, feed, aquaculture, and agricultural product processing performed the highest, with +0.50%, -0.66%, and -1.74%, respectively, while fishing (-15.17%) lags behind.
Risk warning: risk of livestock and poultry prices falling short of expectations, risk of epidemic diseases, risk of fluctuating raw material prices, etc.