Zhongtong Finance & Economics APP has learned that Huachuang Securities has released a research report that believes the chicken cycle is coming. From a long-term perspective, the cost-effectiveness and economic advantages of white chickens as the animal protein with the lowest meat-feed ratio will further be reflected, and the industry's long-term growth is already evident. On the other hand, the scale of leading enterprises has expanded significantly compared to the last cycle, and the profit realization ability of this cycle is expected to achieve substantial growth compared to the last cycle. The industry chain profit is concentrated in the upstream breeding link, and advantaged breeding enterprises may obtain excess returns.
According to the Association's monthly report, from January to April, only 179,900 imported grandparents seeds (accounting for 41%) were updated, and the import ratio continued to be below 50%. In the downstream industry with weak profitability, the upstream parental link can still maintain a continuous rise in prices. This further highlights the supply and demand contradiction in the upstream link, and short-term regulation behaviors such as changing feathers and extended elimination are difficult to make up for the shortfall in imported varieties. In May, the overall price trend of the industry chain is improving, and along with the transmission of upstream contradictions to the downstream, the industry chain prices are expected to continue to rise.
White chicken prices may continue to improve, and corporate profits are expected to rebound.
With terminal inventory at a low level and stocking up, the white chicken product industry rebounded month-on-month in April. As for chicken seedlings, according to the data of listed companies, the price of commodity representative chicken seedlings maintain profitability, but weak compared to the same period. In terms of slaughter, the price of broilers continued to decline year-on-year, but there was a slight improvement month-on-month.
The industry space continues to expand. As for chicken seedlings, the industry's commodity representative chicken seedlings sales volume for the 14th-17th weeks of 2024 was 359 million birds, a YoY increase of 6%, and cumulative sales of 1.405 billion birds from the 1st to the 17th week, a YoY increase of 6%. Among listed companies, Yisheng's sales volume in April showed a YoY decline but a slight increase MoM, and it is expected to maintain a sales scale of around 600 million birds of commodity representative chicken seedlings in 2024. As for meat sales, head enterprises are actively extending downstream and expanding deep-processed products with high-speed growth, and the product structure has been optimized, further weakening the cyclical impact. After the Zoucheng project of Xiantan shares was completed and put into operation in 2024, the volume of chicken slaughter would reach 250-270 million and the capacity of meat processing would reach 700,000. The company's production capacity will be doubled.
Capacity: Overseas import volume is still restricted, and there is hope that in-production parental stocks will continue to decline. In April, the average stock of grandparents' commercial chicken was 1.18 million sets, an increase of 6.6% YoY and 1.8% MoM. Third-party data (Steelhome) showed that the industry's updated quantity was 151,000 sets in April. The stock of parents was 21.95 million, a decrease of 2.5% YoY and 0.6% MoM. In April, the price of parent chicken seedlings was 35.29 yuan/set. The latest quotation data for the 18th week of 2024 was 38.68 yuan/set, which rose for three consecutive weeks.
Overseas avian influenza: The US avian influenza continues, and importation is still restricted. The commercial chicken farm avian influenza in the United States has accumulated at 2 cases in May, and has reported avian influenza outbreaks in 51 dairy farms in 9 states, increasing the risk of interspecies transmission, making the prevention and control more difficult. Brazil, the largest chicken exporter, has reported 3 cases of avian influenza in poultry and 161 cases in wild birds as of May 17. If a poultry epidemic occurs in the world's largest chicken exporter, it will have a significant impact on global poultry trade.The latest 30 days as of May 20, there have been 4 commercial chicken farm and 7 family breeding HPAI, and more than 1 million poultry have been culled. In the short term, the follow-up may continue to maintain the state of one seed supply zone, and importation may continue to be restricted.
Investment advice: We expect the chicken cycle to come. From a long-term perspective, the cost-effectiveness and economic advantages of white chickens as the animal protein with the lowest meat-feed ratio will further be reflected, and the industry's long-term growth is already evident. On the other hand, the scale of leading enterprises has expanded significantly compared to the last cycle, and the profit realization ability of this cycle is expected to achieve substantial growth compared to the last cycle. The industry chain profit is concentrated in the upstream breeding link, and advantaged breeding enterprises may obtain excess returns. The valuation of the sector has already been at a low level after adjustment. It is expected that the long logic of restricted overseas import will continuously be verified, and the sales price of excellent breeding enterprises will continue to maintain their advantages over market prices under the background of restricted importation. Yisheng Livestock & Poultry Breeding, which has continued to expand its scale and is expected to gain cyclical and barrier profits, is heavily recommended, and the undervalued white chicken leader, Wellhope Foods, should also be noted. It is recommended to pay attention to Sunner Development, Xiantan Shares, Minhe Shares, etc.
Risk reminder: The overseas grandparent chicken importation exceeds expectations, domestic avian influenza and other breeding diseases outbreak, the price of chicken drops, major food safety incidents, and systemic risks of the macro economy.
The chicken cycle is expected. From a long-term perspective, the cost-effectiveness and economic advantages of white chickens as the animal protein with the lowest meat-feed ratio will further be reflected, and the industry's long-term growth is already evident. On the other hand, the scale of leading enterprises has expanded significantly compared to the last cycle, and the profit realization ability of this cycle is expected to achieve substantial growth compared to the last cycle. The industry chain profit is concentrated in the upstream breeding link, and advantaged breeding enterprises may obtain excess returns. Currently, the sector's valuation is at a low level after adjustment. It is expected that the long logic of restricted overseas import will continuously be verified, and the sales price of excellent breeding enterprises will continue to maintain their advantages over market prices under the background of restricted importation. Yisheng Livestock & Poultry Breeding, which has continued to expand its scale and is expected to gain cyclical and barrier profits, is heavily recommended, and the undervalued white chicken leader, Wellhope Foods, should also be noted. It is recommended to pay attention to Sunner Development, Xiantan Shares, Minhe Shares, etc.
Zhongtong Finance & Economics APP has learned that Huachuang Securities has released a research report that believes the chicken cycle is coming. From a long-term perspective, the cost-effectiveness and economic advantages of white chickens as the animal protein with the lowest meat-feed ratio will further be reflected, and the industry's long-term growth is already evident. On the other hand, the scale of leading enterprises has expanded significantly compared to the last cycle, and the profit realization ability of this cycle is expected to achieve substantial growth compared to the last cycle. The industry chain profit is concentrated in the upstream breeding link, and advantaged breeding enterprises may obtain excess returns. According to the Association's monthly report, from January to April, only 179,900 imported grandparents seeds (accounting for 41%) were updated, and the import ratio continued to be below 50%. In the downstream industry with weak profitability, the upstream parental link can still maintain a continuous rise in prices. This further highlights the supply and demand contradiction in the upstream link, and short-term regulation behaviors such as changing feathers and extended elimination are difficult to make up for the shortfall in imported varieties. In May, the overall price trend of the industry chain is improving, and along with the transmission of upstream contradictions to the downstream, the industry chain prices are expected to continue to rise. White chicken prices may continue to improve, and corporate profits are expected to rebound. With terminal inventory at a low level and stocking up, the white chicken product industry rebounded month-on-month in April. As for chicken seedlings, according to the data of listed companies, the price of commodity representative chicken seedlings maintain profitability, but weak compared to the same period. In terms of slaughter, the price of broilers continued to decline year-on-year, but there was a slight improvement month-on-month. The industry space continues to expand. As for chicken seedlings, the industry's commodity representative chicken seedlings sales volume for the 14th-17th weeks of 2024 was 359 million birds, a YoY increase of 6%, and cumulative sales of 1.405 billion birds from the 1st to the 17th week, a YoY increase of 6%. Among listed companies, Yisheng's sales volume in April showed a YoY decline but a slight increase MoM, and it is expected to maintain a sales scale of around 600 million birds of commodity representative chicken seedlings in 2024. As for meat sales, head enterprises are actively extending downstream and expanding deep-processed products with high-speed growth, and the product structure has been optimized, further weakening the cyclical impact. After the Zoucheng project of Xiantan shares was completed and put into operation in 2024, the volume of chicken slaughter would reach 250-270 million and the capacity of meat processing would reach 700,000. The company's production capacity will be doubled. Capacity: Overseas import volume is still restricted, and there is hope that in-production parental stocks will continue to decline. In April, the average stock of grandparents' commercial chicken was 1.18 million sets, an increase of 6.6% YoY and 1.8% MoM. Third-party data (Steelhome) showed that the industry's updated quantity was 151,000 sets in April. The stock of parents was 21.95 million, a decrease of 2.5% YoY and 0.6% MoM. In April, the price of parent chicken seedlings was 35.29 yuan/set. The latest quotation data for the 18th week of 2024 was 38.68 yuan/set, which rose for three consecutive weeks. Overseas avian influenza: The US avian influenza continues, and importation is still restricted. The commercial chicken farm avian influenza in the United States has accumulated at 2 cases in May, and has reported avian influenza outbreaks in 51 dairy farms in 9 states, increasing the risk of interspecies transmission, making the prevention and control more difficult. Brazil, the largest chicken exporter, has reported 3 cases of avian influenza in poultry and 161 cases in wild birds as of May 17. If a poultry epidemic occurs in the world's largest chicken exporter, it will have a significant impact on global poultry trade.The latest 30 days as of May 20, there have been 4 commercial chicken farm and 7 family breeding HPAI, and more than 1 million poultry have been culled. In the short term, the follow-up may continue to maintain the state of one seed supply zone, and importation may continue to be restricted. We expect the chicken cycle to come. From a long-term perspective, the cost-effectiveness and economic advantages of white chickens as the animal protein with the lowest meat-feed ratio will further be reflected, and the industry's long-term growth is already evident. On the other hand, the scale of leading enterprises has expanded significantly compared to the last cycle, and the profit realization ability of this cycle is expected to achieve substantial growth compared to the last cycle. The industry chain profit is concentrated in the upstream breeding link, and advantaged breeding enterprises may obtain excess returns. Currently, the sector's valuation is at a low level after adjustment. It is expected that the long logic of restricted overseas import will continuously be verified, and the sales price of excellent breeding enterprises will continue to maintain their advantages over market prices under the background of restricted importation. Yisheng Livestock & Poultry Breeding, which has continued to expand its scale and is expected to gain cyclical and barrier profits, is heavily recommended, and the undervalued white chicken leader, Wellhope Foods, should also be noted. It is recommended to pay attention to Sunner Development, Xiantan Shares, Minhe Shares, etc.