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中泰证券:种植业供给过剩较普遍 景气程度依赖需求回暖

Zhongtai: The oversupply in the Planting Industry is quite common, and the degree of prosperity depends on the recovery of demand.

Zhitong Finance ·  Jan 13 23:27

Zhongtai released a Research Report stating that the prosperity of the Planting Industry in 2025 will still depend on the downstream market, especially whether terminal demand can recover under the stimulation of Low Stock Price.

According to information from Zhitong Finance APP, Zhongtai has released a Research Report stating that, due to sufficient supply and poor downstream demand, the performance of various sectors in the Planting Industry is lackluster in the first three quarters of 2024. In the fourth quarter, as the overall environment improves, each sector achieves excess returns driven by factors such as restructuring and long-term capacity reduction in certain symbols. However, the prosperity of the Planting Industry in 2025 will still depend on the downstream market, particularly whether terminal demand can recover under low stock price stimulation. The firm believes that some high-inventory industries cannot bring about a real upward trend merely by relying on supply-side contraction, and attention can be paid to industries with low inventory or continuous capacity reduction in the short term.

Zhongtai Securities' main points are as follows:

Due to sufficient supply and poor downstream demand, the performance of various sectors in the Planting Industry is poor in the first three quarters of 2024. In the fourth quarter, as the macro atmosphere eases and the Index rises, each sector exhibits varying degrees of rebound following the trend, with some symbols achieving excess returns driven by restructuring and long-term capacity reduction. Whether the prosperity of the Planting Industry can rebound in 2025 needs to be observed based on whether the downstream market can recover: whether insufficient terminal demand can be effectively activated by low stock prices, and emphasizing industries with low inventory or continuous capacity reduction. Some high-inventory and high-capacity industries cannot bring about a sustained upward trend by relying solely on temporary supply-side contraction.

Seed Industry: 2024 marks the first year of market-oriented sales for Transgenic seeds, with retail prices generally 30-50% higher than traditional seeds. Although production and sales can only occur in limited areas, the reputation for high yields has begun to accumulate. Thus far, there are 81 varieties of Transgenic Corn and Soybean that have passed national approval in China, and it is expected that more provinces will promote Transgenic field planting in 2025. In 2024, both the area for seed production and production costs will decrease, formally entering a capacity reduction cycle in the industry. In the past two years, grain prices have reached new lows, resulting in decreased corporate gross margins, increased return rates, and reduced pre-sale scales, which are the main reasons for the industry's downturn.

The seed industry is one of the sectors in agriculture in recent years.mergers and acquisitions.The most concentrated sector involves many industry leaders controlled by state-owned and central enterprises. It has formed a consensus that external mergers and acquisitions are the core engine for the development of industry leaders—declining prosperity and policy empowerment are driving the industry to accelerate integration, and merger events may occur frequently; the seed industry is a technological pioneer in the Agriculture sector, exhibiting high research and development investment, significant policy barriers, and strong brand recognition, as opposed to the low research and development, shallow barriers, and homogeneity found in other agricultural sub-sectors with commodity characteristics. In the long run, competition in the seed industry stems from technological competition, and overseas experience suggests that future leaders in the seed industry will also be outstanding technology companies. Performance is under pressure, but there is room for continued valuation recovery; high-quality leading companies may identify the bottom before the industry.

Rubber: Rubber is the star variety of the planting industry chain in 2024. The market is beginning to pay attention to the cumulative impact of the continuous reduction in global natural rubber production capacity. From the tight correlation between stock and futures throughout the year, the market has not yet formed a comprehensive consensus on the new price cycle. The rigid rise in labor and land costs in Southeast Asia is irreversible, and the relative returns from alternative planting remain maintained. China Hainan Rubber Industry Group, as a leading enterprise in global natural rubber, benefits from the initiation of a new rubber cycle. After merging with Hongsheng Agriculture, the short-term cons outweigh the pros, but it will enhance profitability in the long run post-cycle upward trend. After being cleansed by Typhoon Mawar and laying out in African production areas, the company's dry glue output is expected to increase by 2025.

Sugar: The global sugar inventory-to-consumption ratio is the lowest among mainstream agricultural products, both in horizontal and vertical comparisons. In the past five sugar seasons, there has been a cumulative shortage of 7.914 million tons globally. Starting from the negative oil prices in April 2020, the international sugar price has had the highest relative return among mainstream agricultural products in the last two years, with its center of gravity lower mainly due to weak macro demand and a broad downturn among agricultural products. If the commodity market maintains a weak pattern, domestic and international sugar prices will respond with wide fluctuations. The linkage between China's sugar prices and the international market is becoming tighter, and the increased volatility in the industry will test the overall quality of domestic sugar enterprises. Companies with diverse business models and excellent risk management capabilities will see their valuations uplifted.

Processing of Agricultural Products: Prices for agricultural products such as Soybeans, Corn, and oils are expected to remain low for an extended period, and leading downstream enterprises with improved competitive landscapes will enjoy a period of low-cost dividends.

Risk Warning: The effects of policy promotion may not meet expectations; downstream demand may see unexpected declines; there may be unexpected changes in weather; data used in Research Reports may not be updated in a timely manner.

The translation is provided by third-party software.


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