The pig industry, in 2023, has almost lost a whole year, if the most tragic industry of the year is selected, in addition to the real estate industry, the pig industry is brave to fight for the second, and it is a good choice.
At the end of the year, there are three major hurdles to explain in the pig industry: non-plague troubles, deterioration of industrial balance sheets, and prominent contradictions between continuous operation and production order.
First, the characteristics of the pig industry.
The characteristics of the pig industry are very unique: capital-intensive, biological assets + working capital = industrial cash, pigsty and other fixed assets are difficult to realize, and the realization discount is large;It is difficult to obtain bank credit through collateral for biological assets and fixed assets, and the production equipment is multiply, and the living inventory will continue to consume cash flow, so it is difficult to form an effective inventory. At the same time, the pig cycle is not disturbed by the economic cycle and is an atypical cyclical industry;The epidemic environment is complicated and normalized, and once the epidemic occurs, the cost of breeding will be greatly increasedCapacity expansion will inevitably sacrifice costs, the stability of production order has a huge impact on costs, and sustainable operation has extremely high requirements for debt boundaries.
2. Changes in industrial characteristics in the past five years.
The elimination rate of the main body of the pig industry unit is extremely high, the average life cycle of small-scale groups is four or five years, and the average number of existing units in the past five years is three times, and the scale of enterprises through high debt, bear the cost of the expansion period out of control, and complete the extremely unstable concentration rate increase, the high and low variance of the cycle pig price increases, the dispersion of the industry cost expands, the cycle content is richer, and the industrial ecology is reshaped, the industry enters the period of confusion and thinking, and different types of subjects are looking for the way to survive. After the non-plague in 2018, due to the policy support for the recovery of production capacity and the expectation of continued high pig prices, the industrial credit in 2019 was suddenly enlarged, forming a huge gap with the sudden suspension or even run on the industrial credit at the current point in time.
Third, the current pig price qualitative.
Since November, pig prices have fluctuated between 13 and 15, with an average price of 14Around 4, November to December as the traditional peak season, this year's average price is in the lowest range in the same period in the past thirteen years (2011-2023), only slightly higher than the extremely low price in 2018 due to non-plague selling, but considering that the feed ** is 30% higher than 2018 With the cost rise brought about by the upgrading of the prevention and control system, the current actual loss of a single head is close to the same period in 2018, and considering that the current industrial debt ratio is much higher than that in 2018, the net asset loss of highly leveraged pigs is much greater than that in 2018, and the deterioration of the industrial balance sheet is far greater than that of the same period in 2018.
Fourth, the most serious industrial crisis in history.
Compared with the history of the past 13 years, this year's industry has experienced the longest loss period, the highest debt ratio, in the largest sales, the highest traditional peak season but in the lowest price range in history, the largest loss in the peak season, which has triggered the most tragic deterioration of the industrial balance sheet, a number of listed pig enterprises debt pressure is on the verge of the limit, queuing Zhengbang, since the listing from the loss of Muyuan ushered in the first annual loss, the degree of tragedy of the industry qualitative: the most serious industrial crisis in history.
Fifth, the industrial crisis deduction.
Industry, capital market, and even ** funds are Xi to use various research agency data to analyze the direction of production capacity changes, but no one can obtain the most accurate overall industry data, blind box state, according to the multiplication, inventory, slaughter volume, feed animal protection and other data, it is difficult to accurately profile the industry, compared with industrial products, the difficulty and inaccuracy of pig industry data statistics are extremely large, so it is impossible to quantitatively deduce like industrial products.
For the pig industry, qualitative deduction is closer to the truth, and it is easy to enter the misunderstanding of empirical inductive thinking to summarize the law, and it is necessary to start from the objective status quo on this basis, and use logical deduction thinking to deduce and analyze.
1) How is the pig price spiral stampede formed:
1. The economic downturn, insufficient purchasing power, and the downward movement of pig prices to seek more consumer groups, which led to a serious shrinkage of the total value of industrial inventory, which in turn led to the depreciation of industrial cash assets.
2. The outbreak of non-plague and other epidemic diseases triggers selling, and sick pigs and small weight pigs are sold at low prices through special channels, which is the destruction of inventory value and the destruction of cash-like assets. Pig prices are sluggish, even if the tooth is extracted to protect the herd, it is difficult to expect more cash, so the group sells, increases supply, further depresses pig prices, and the depreciation of inventory is another reason.
3. In the past five years, the debt has promoted the dramatic change in the production capacity structure, the debt ratio has deteriorated to no room for improvement, the low pig price has caused the depreciation of inventory, the debt is rigid, the depreciation of inventory assets, and the forced increase in the debt ratio and operating leverage ratio, the end of the year is the traditional debt repayment time, especially large enterprises need more cash to prevent credit runs, so as not to cause credit rating downgrades, sell inventory under the debt situation, and the pig price is too low, so it is necessary to sell more inventory than in previous years for cash, and further reduce the spot **.
4. The continuous operation characteristics of the pig industry lead to a great dependence on cash, and after the capital chain is broken, it is impossible to stop work at a low cost in all links like industrial product production and wait for financial rescue, and live pigs will starve to death. Long-term losses will drain working capital, debt ratio is extremely deteriorating, to continue to operate must sell inventory to replenish liquidity, low pig prices and low inventory value, selling can only be more than before.
5. The complete production chain of commercial pigs requires higher capital and stronger uncertainty, especially the most expensive cash consumption. In the deteriorating industrial environment, shortening the production chain is a kind of self-protection, and more subjects choose professional fattening and secondary fattening, and it is inevitable to reduce the number of multiplication and reserves, and it is also the result of the pursuit of safety under financial conditions.
According to the above points, the trend of spiral trampling to capacity is determined, which belongs to the situation of the joint effect of various factors in the past few years, and is a realistic reflection of market laws and industrial characteristics.
2) Several misunderstandings of the market.
1. Large-scale enterprises, especially listed large-scale enterprises, have strong financing ability and can withstand the crisis, but it is difficult to reduce production capacity.
In fact, everything has its brittle break point, infinite pressure will have a limit, and the process does not represent the result.
At the current point in time, the collective deterioration of the balance sheet of the breeding entity, especially the debt run of some listed scale enterprises, their dependence on credit is higher, and the requirements for funds for continuous batch production are also higher, some enterprises continue to sell, the number of stocks has dropped sharply, and there are more and more announcements of various asset sales, and the signal is obvious, the situation is out of control, and it has the typical characteristics of a crisis.
However, the production order of these large-scale enterprises is out of control, especially the companies with the model of substitution of farmers, resulting in forced production reductions, rent withdrawals, increased amortization, disputes and compensation with substitute households, declining credit ratings, debt runs, and a series of uncontrollable situations that have worsened the balance sheet chain. Brittle fracture is happening, and large-scale withdrawal is inevitable, please refer to the collapse path of the young eagle and Zhengbang.
Pig breeding is probably the highest elimination rate of the industry, regardless of the size of the main body, in the special period of special industries, the performance is more prominent, the more threshold of simple business, the more competitive industry, elimination is normal.
2. Large-scale enterprises will be bailed out, so they are stumped.
The pig industry is highly dependent on cash, and if a company runs out of cash and its biological assets disappear, it can already be declared dead.
The residual value of fixed assets is very low, or even has no asset value, and it does not represent production capacity. Fixed assets that do not create cash flow, or still consume cash flow, no matter how much capital is injected to revitalize it, the cash flow will eventually be exhausted again. That's a poisonous asset, who dares to save it?
The bailout requires a lot of cash to restore production, and rummaging through possible bailout forces, it is precisely that there is no money, and there is no credit for a long time.
All bailout plans are aimed at getting rid of debts, giving creditors an explanation in order not to have a vicious incident.
Therefore, there is no production capacity that cannot be removed, and activating zombie production capacity can not be completed by issuing a few announcements.
3. When the pig price recovers, the small ** production capacity will recover quickly.
Several voices: the pigsty is idle, more small households just stop production, pig prices rebound, and more production capacity will be restored.
The economy is not good, more unemployed people return to their hometowns to raise pigs, and the production capacity will be used to quickly fill the industrial gap.
To answer these misconceptions, let's first look at a few misconceptions that have been falsified:
The funds are no longer speculating, and the funds will pour in, and they will rise. The result is a double kill of real estate stocks.
People are unemployed, and there are more people at home, and it will rise. This didn't happen, but there were more people.
When an economy has an economic downturn and the financial situation of residents deteriorates, it is an indiscriminate deterioration, and the essence of returning to the hometown is also financial deterioration, and they cannot afford the cost of urban survival, and the city must have more opportunities than the countryside, but as long as they can still survive in the city, no one is willing to admit defeat and return to their hometown. If there are individual cases, there is no problem, but the group, the general unemployed people return to their hometowns to raise pigs, and there is no factual basis to support, on the contrary, behind the increase in unemployment is the intensification of the debt crisis in the economy, and it is difficult to deduce that there are more new funds to enter the pig industry.
Therefore, when the boom of the pig price cycle rebounds, as historically, there will be funds into the pig industry, but in the context of the current debt crisis, the strength of new funds will be far less than the previous period of economic liquidity, after the irrational expansion of capital in 2019-2020, the capital of high debt into the industry is mired in the quagmire, and even huge losses out, too many cases of overturning have been placed in front of us, even if the high pig price is expected to reappear in the future, the new capital will be more cautious.
Sixth, the investment opportunities of Muyuan under various crises.
1) Macro environment and industrial environment:
1. The economy is in a downward trend and short-term irreversible due to various factors accumulated over a long period of time, and the debt crisis is occurring, triggering a sharp depreciation of various assets after that, which has been verified and is in progress in real estate and **.
As the current economy is facing great difficulties, the liquidity of the real economy caused by the obstruction of credit derivation will affect the profit center and growth expectations of various industries and companies, and the capital market itself is also facing the crisis of lack of confidence. This is a double kill situation of entity and capital valuation, and if you want to resist or avoid systemic risks in the market, you can only fight against systemic double kill by finding special structural opportunities.
2. The pig industry has a crisis ahead of the economy, and this round of crisis in the pig industry has come faster and more violently, and it is also a unique crisis in history. According to the uniqueness of the industry, the pig industry has the fastest destocking and the most thorough de-capacity, so the pig industry will be the first to get out of the crisis, and it will be the first, fastest and largest to recover cash flow.
This round of the longest loss period in history makes many people doubt whether the pig cycle still exists, but a common sense judgment is that the pig industry will not disappear, how long the low boom interval loss, it will take a longer high boom interval to compensate for the industry, the cycle will not disappear, but when the high boom returns, which subjects are still on the table, and are eligible to harvest greater cash flow, is a question that every investor needs to think about.
Based on the above analysis, the industries of the economy may be in the sinking pit for a long time, and it is difficult to determine the bottom position, but the reversal of the pig cycle is a definite event.
2) The logic of the current investment opportunities in Muyuan:
Based on the above environment, the layout of the deterministic pig cycle and the performance improvement at the phenomenon level is the safest and safest choice to survive or resist the overall downturn of the economy and cope with the risk of asset depreciation.
1. To determine the reversal of the pig cycle, the continuous determination of the reversal indicator signal is the process of continuous stock price until the pig price is cashed in the first range, and the stock price will come to an end temporarily.
2. After the pig price runs at a high level, the market can dig out and confirm the causes of pig prices, and have a further understanding of the duration of the high boom, so as to tap the cash flow improvement scale and elasticity of each pig enterprise.
For example, Muyuan ushered in the first annual loss this year, next year or the year after next year in the determined high boom cycle, after the substantial expansion of production capacity in recent years, will usher in the largest level of cash flow harvest period, the huge magnitude and elasticity of its performance improvement are deterministic events, from annual losses to tens of billions of profits reversal, which will be the most enthusiastic phenomenon event in the capital market, will have a strong role in promoting the stock price.
At a certain point in time, you can go to other industrial assets that have a large depreciation range, have bottomed out and show signs of recovery, and complete the asset preservation and appreciation of the second curve.
3) Comparison between Muyuan and other "Mao assets".
Under the dual effect of the current pig industry crisis and the extremely sluggish capital market, the market has given a very low valuation in the historical range of Muyuan**, but the industrial crisis will pass, and the systemic crisis in the capital market will also pass.
In fact, in the past two or three months, Muyuan and various high-quality assets of the chart of the chart change, it will be found that the original fell sharply, quickly pulled back to the early platform, and all kinds of so-called high-quality assets represented by Mao are still substantial.
In addition, from several statistical calibers, it can also be demonstrated that the investment logic of this article, all kinds of Mao assets, from the point of view of the decline since the peak, as of Friday**, Muyuan fell to one of the smallest groups, second only to Moutai and a few others, and if the start of non-plague ** at the end of 2018, Muyuan rose higher than Moutai in the same period.
Since the end of 2018, since the pig logic theme investment, ** from below 3000 points, to now back to below 3000 points, Muyuan's share price still has risen more than four times, and the outperformance is still amazing.
Seventh, the second half of the Golden Pig decade.
At the end of October and early November 2018, the investment theme of the Golden Pig Ten Years was launched, which has gone through five years and completed the first half. Pig logic refers to: after the non-plague, the industry is rebuilt, and the production capacity concentration rate is increased, which brings huge capacity growth space to listed pig enterprises, and finally harvests the valuation under the huge cash flow that can be discounted. Five years have passed, many arguments have already been answered, but the capital market is forgetful, so let's review the business report card of listed pig enterprises in the past five years:
1. Five-year total profit:
Muyuan's profit is more than 50 billion vs Wen Zhengtian Xinao's pig business has a total loss of 70 billion.
Among them, Wen's removed other businesses such as chicken raising and made a profit, and the pig business was almost unprofitable. New Hope removed the profit of 10 billion yuan from other businesses, and the loss of 20 billion yuan in the pig breeding business. Zhengbang lost more than 30 billion. Tianbang Aonong removed the first animal protection and feed business, and the profit was about billions.
The profit gap itself represents the cost gap, but also the gap in operating ability.
2. Five-year new liabilities and new slaughter ratio:
Muyuan: The new liabilities are more than 80 billion, the new slaughter is 55 million to 60 million, and the corresponding liabilities of the new single head are 1450 yuan - 1330 yuan.
Wen Zhengtian Xinao total: new liabilities of 150 billion, new slaughter of 23 million to 25 million, new single head of corresponding liabilities: 6520 yuan - 6000 yuan. The contribution efficiency of the new liabilities to the growth of slaughter is 5 times different from that of Muyuan.
3. Change in five-year debt ratio (from the end of 2018 to 2023Q3):
Makihara: 54% to 59%, almost unchanged.
Wens: 34 to 60 percent, twice as fast.
Zhengbang: 68% to 163%, insolvent, bankruptcy and reorganization.
New Hope: 48% to 73%, a significant increase, no increase.
Tianbang: 61% to 87%, a significant increase, no increase.
Aonong: 69% to 90%, a significant increase, no increase.
Summary: 1. Muyuan: The only way to use the cash flow earned to complete the expansion of production capacity without increasing the debt ratio, and to achieve the cost exclusion of feed factors back to the level before the plague.
2. Wen's: Under the condition that there is basically no expansion of production capacity (22 million slaughtered in 2018 and about 25 million this year), more than 35 billion new liabilities have been paid (the debt ratio of pig business has doubled), and the cost has returned to more than 15% higher than before the non-plague.
3. Zhengbang: Debt and capital expenditure have the largest growth rate, and the growth of slaughter has also been the fastest.
4. New Hope: Pig investment of 80 billion, half of the production capacity is basically sunk, creating a miracle of 6,000 yuan of principal investment + 5,000 yuan of new liabilities to get a head out of the slaughter, and capital expenditure is a disaster for New Hope.
5. Tianbang Aonong has been lining up behind Zhengbang anyway, expanding rapidly, queuing up quickly, and destroying quickly.
According to the five-year business cycle, Muyuan has a market share of 100% of the profit of the pig business among the listed pig enterprises.
Final verification: it is true that only Muyuan can raise pigs well.
But why is there such a big gap?
There must be a demon when things go wrong, believe it enchanting and question its demons, which demon should it be mixed?
Looking back on the past five years, the expansion of production capacity has brought about a huge increase in production costs, excessive capital expenditure, which will bring about a rapid increase in the debt ratio, and too rapid development has made management difficulty non-linear growth, and overtaking in corners has become overturning in corners.
In the first half of the decade, the increase in the concentration rate of the Golden Pig was basically completed, but the cost of the concentration rate is that the essence of each subject is very different, especially the increase in the concentration rate driven by debt is difficult to survive sustainable production.
The theme of the second half of the Golden Pig decade is to test the cash flow quality, and the main line of investment in the industry will be: advanced production capacity through technological progress to break the diseconomies of scale, eliminate large-scale sunken production capacity, large-scale zombie production capacity, I believe that the second phase of the Golden Pig ten-year logic is more valuable, and will also bring more certain investment opportunities and obtain higher investment returns.