Super Pig Cycle Ends? Pig ETF Encountered Pig Prices On A Series Of Listed Prices, Pig Enterprises "Price Increases" Decisive Battle In The Second Half

At the bottom of domestic storage capacity and gradual recovery of capacity, the peak of the cycle of the pig industry has passed. The listed pig companies all focused their sales in 2020 in the second half of the year.

With the gradual recovery of production capacity, pig prices returned to the high point of October 2019 seems to be unrealistic.

In June 16th, the NDRC news conference pointed out that the price of pork is expected to maintain a steady downward trend in the second half of this year, and may fluctuate with seasonal and holiday demand changes.

However, this did not reduce buyer's enthusiasm. Cathay Pacific Fund Company reported that Cathay Pacific card livestock breeding ETF, was received on June 8th the same day, its weight stock is 002714.SZ, 300498.SZ, and the breeding industry in the field of San Nong development (002299.SZ) and other aquaculture leading companies.

However, perhaps when the ETF was approved and started to build a warehouse, the prosperity of the whole industry and the profitability of listed companies have begun to go downhill. Public data show that in the two quarter of this year, the sales prices of all the top pig enterprises all showed a marked decline.

In the second half of the year, it is the stage of concentrating the volume of the head aquaculture enterprises. For example, the sales plan of the new hope (00876.SZ) is "the 2 million quarter in the three quarter and the 4 million quarter in the fourth quarter". Then how will the pig price be deduced?

Head pig enterprises "decisive battle" in the second half of the year

"From the survey, the current situation of pig production is still relatively good. The number of sow herds and live pig farms increased considerably compared with 9 and October last year. The number of newborn piglets is increasing over the past several months, and the supply of fattening pigs is expected to improve in the 3 quarter of this year. National Development and Reform Commission 16 news conference pointed out.

Against this background, the domestic pig prices this year fell continuously after hitting a high level in early February.

According to the data provided by various sources, in the middle of February, domestic pig prices were near 37 yuan / kg, and fell to 27 yuan in late May.

"The supply side has a serious backlog of pig stocks. The volume of imports increased steadily in April and May, and the demand side was dragged down by the epidemic, which resulted in a continuous decline in hog prices in the first half of the year." Wang Shan, an agricultural product analyst at Sichuan agricultural products, said on 16, but since late May, the market has been reluctant to sell, and the price of live pigs has picked up slightly, to about 32 yuan / kg.

This may be related to the seasonal fluctuation of live pigs.

The new hope has summed up the fluctuation of pig prices over the past years in a recent institutional research record. "There are only two exceptions in the past 10 years in 2009-2018 years, one is from 2016 to May, but then it starts to fall, and it starts to rise in October; 2011 started at the beginning of the year, and then rose to June, then the high level to the September, but there was a rise to the second place."

In the remaining 8 years, the pork price curve is close to the shape of a concave shape. The lows of concave characters are basically in the middle and late March to early June, and most of them are concentrated in 4-6 months. "The two quarter is actually easy to reach the lowest point in a normal year." The new hope points out.

However, this year's market is a continuation of the super rise cycle in 2019, and the industry will not necessarily operate in strict accordance with the above rules.

In fact, for the second half of the year, the supply side will show more obvious improvement, and all leading enterprises will focus their sales in the second half of 2020.

The sales target of the 2019 annual report of Mu yuan shares is, "in 2020, the company planned to slaughter 17 million 500 thousand to 20 million pigs." The total sales volume of the company in the first 5 months of this year is 5 million 258 thousand.

002157.SZ plans to sell 900-1100 pigs this year. Among them, about 30% in the first half of the year, about 70% in the second half.

The new hope gives a clearer goal in the record of investor relations activities. 8 million targets are slaughtered throughout the year, about 1 million 200 thousand in the two quarter, 2 million in the three quarter and 4 million in the fourth quarter. In May of this year, the company had seen a clear volume, and sales increased by 59% in the same month.

It needs to be pointed out that in the past two years, the share of domestic pig enterprises has been increasing continuously. In the second half of the year, there is no small pressure to raise the price of hog.

"There will be a slight increase in the supply side in the three quarter, but it will not suddenly explode." Li Wenxu, an analyst of business and pig industry, said 16 days ago.

The effect of "quantity plus price"

According to the prediction of the third party research institutes in 2019, the domestic pig slaughter will increase significantly in 6 and July this year. Only due to the interference of epidemic factors, the productivity progress of many breeding enterprises will be affected at the same time, and the release of production capacity may be delayed, thus indirectly extending the gas cycle of the industry.

On the current situation, pig breeding industry is still in a high profit range.

Taking the new hope as an example, the cost of fattening piglets is 13.7 yuan per kilogram, and the estimated annual cost is 13-14 yuan / kg.

In May this year, the company was the largest among the 4 head pig enterprises, with a decrease of the average sales price, the decrease of 4.35 yuan compared with 32.88 yuan / kg in April this year, but it can be maintained at 28.53 yuan / kg.

Combined with the operation rhythm of pig breeding in 2019, the profitability of listed pig enterprises in the two quarter of this year will continue to grow year-on-year. Some of the listed companies that have gone ahead have proved this.

As of June 16th, 558 listed companies that had already announced the notice of the new report, the new 600975.SH and 002385.SZ, increased by 2562% and 2279%, and were first, second.

This is only related to the profit and loss balance of the whole industry in May, and the lower profit base in the first half of 2019. However, after entering the three quarter, the situation will gradually change.

In the three quarter of 2019, domestic pig prices continued to rise, and the profitability of pig breeding enterprises continued to rise, until the fourth quarter, the single quarter profit reached a historical peak.

Taking only the highest share of the pig business as an example, the net profit of the company in the three and fourth quarter of 2019 was 1 billion 543 million yuan and 4 billion 727 million yuan respectively, and dropped slightly to 4 billion 131 million yuan in the first quarter of this year.

Faced with the higher profit base in the second half of 2019, the pressure on the growth of the leading livestock industry, including the stock of livestock, has increased.

In this regard, all enterprises also have a pre judgment, this only in the second half of the year is far higher than the first half of the scale of the plan, hoping to improve the sales volume to smooth down the impact of pork prices.

Another potential driving factor is the weight gain of pigs in 2020. Data showed that the pig production in January was 112.44 kg, and increased to 136.84 kg by May this year.

On the one hand is the increase in the number of slaughter in the second half of the year; on the other hand, it is the lifting of pig weight in the same period of last year. However, on the drive of the financial statements of listed companies, the effect of sales promotion is not as obvious as that of products.

In addition, in the trend of domestic storage capacity and gradual recovery of capacity, the peak of the current cycle of pig industry has passed.

Pig ETF products should be quicker. Until next year, hog may not be the price. As for whether the market will raise the market share for raising enterprises, the reason why leading enterprises get premium and raise their valuations is another story.

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