Zhitong Finance and Economics learned that Essence International released a research report saying that the production capacity of pigs continued to decline, and the tightening of the supply side is expected to bring the industry out of the trough in the future. Pig prices are still hovering at the bottom and will pick up in the coming quarter. Recommended target: COFCO Jiakang (01610). It is expected that the company's adjusted net profit excluding changes in the fair value of biological assets in 23 24 25 will be 54/11.7/14.200 million yuan, the net profit of the statement caliber is -043/12.9/14.200 million RMB, corresponding to EPS of 0 031/0.HK$34. Maintain ** rating with a price target of 2HK$43.
The main views of Essence International are as follows:
Pig prices are in the stage of grinding the bottom.
Since the beginning of this year, pig prices have continued to fall in the first half of the year, and there has been a wave of small ** in August, and it has fallen again in the last month. **The main reason is that the demand increases in summer, and the short-term supply and demand imbalance occurs due to the overselling of farmers in the early stage. However, in the past three years, stimulated by the super pig cycle, the industry has expanded production on a large scale, bringing more hogs**, and the support for pig prices is limited. At present, pig prices are still in the stage of grinding the bottom.
The decentralization of production capacity has accelerated.
From the perspective of market sentiment, the market pays more attention to the data of the sow herd. Judging from the figures disclosed by the Ministry of Agriculture, the number of fertile sows continued to decline in October. According to third-party data, there is a trend of accelerating the reduction of production capacity. Based on the data of Mysteel, Hexun and Yongyi, the number of fertile sows in November decreased by 15-2.8%, a significant increase from the decline in October, and the continued low pig price has led to the acceleration of production capacity.
The cost of feed has fallen, and the price of pig grain is at a historical low.
Judging from the most recent quarter, both soybean meal and corn ** have been obvious**. At present, soybean meal** is 4,035 yuan ton, and corn** is 2,572 yuan, down 18% and 10% respectively from the peak at the end of August. However, in the long run, the cost of feed (corn, soybean meal, etc.) has been large since 20 years, and it is still high in 23 years, and soybean meal has fluctuated sharply in the past two years.
The aquaculture sector has performed poorly, with valuations at historically low levels.
Affected by pig prices, the performance of pig breeding stocks has been poor since the beginning of the year, with a decline of more than 15%, and a slight increase in the near future. At present, the valuation of the pig breeding sector is at a historical low, and the head companies Muyuan and Wen's PB are 34-3.9x, COFCO Jiakang PB is only 09x。The sector has moved into attractive valuation ranges.
At present, pig prices are in the stage of grinding the bottom, considering the demand for pork during the Spring Festival at the end of the year, pig prices may rise in the first quarter of next year. At the same time, the recent acceleration of production capacity will support the stock price. At present, the valuation of the aquaculture sector is sluggish, and the production capacity has ushered in an inflection point.
Risk Warning:
The production capacity is slower than expected, the pig price is lower than expected, and large-scale epidemics occur.