Zhitong Financial APP learned that Shengang Securities released a research report saying that the current valuation of the pig farming sector is close to the historical bottom.The ratio of performance to price is prominent.It is suggested to actively distribute the enterprises with reasonable capital structure, safe cash flow and excellent growth, and pay attention to Wen's shares (300498.SZ), Muyuan shares (002714.SZ) and so on.

The main points of ▍ Hong Kong Securities are as follows:

The price of live pigs has stopped falling and stabilized.

As of September 15, the average price of commercial pigs was 16.52 yuan / kg, weekly-0.2%, monthly-3.4%, higher than the year's high (17.6 yuan / kg)-6.1%.

Early pig prices rise periodically, first, due to the shortage of large fat pigs above 140kg, driving up the price of standard pigs; second, in some areas, non-plague is more serious from June to July, and commercial pigs are listed ahead of schedule, resulting in a small cut-off period in pig supply in late July. in addition, the loss of body weight brings about a reduction in pork supply.

The weight has picked up steadily, and the price difference of standard fertilizer has narrowed.

In August, the average weight and post-slaughter weight of commercial pigs showed a continuous upward trend. As of September 15, the average weight of commercial pigs (121.5kg) and post-slaughter weight (88.6kg) were higher than the low at the end of July, which meant an increase in pork supply.

From the point of view of the price difference of standard fertilizer, the price difference of standard fertilizer reached the peak value of-0.45 yuan / kg at the end of July, and narrowed but limited in August. As of September 15, the price difference of standard fertilizer is still-0.35 yuan / kg, which is still higher than that of the same period in previous years. It shows that although the shortage of fat pig supply has been alleviated to some extent, there is still a gap.

As the demand enters the peak season, it is difficult for prices to fall sharply, but the overrise in prices from July to August flattened the fluctuation of pig prices in the second half of the year. Looking forward to the second half of the year, the downward supply overlaps the repair of seasonal demand, and prices should have risen, but the unexpected sharp rise in pig prices from July to August may have squeezed the upside in the future.

The trend of capacity elimination may continue. Although the price in July and August is better than that in the first half of the year, it is still considered that the industry is in the channel of capacity removal, and its decisive factors include financial pressure and passive elimination caused by the epidemic.

1. Financial pressure: before August, the industry lost money for seven months in a row, the financial pressure of the industry is already very great, and the price increase from July to August has not significantly improved the cash flow.

The price increase of commodity pigs is limited: the average price of commodity pigs in July is 14.3 yuan / kg, which is lower than the industry cost line; in August, the average price of commodity pigs is 17.1 yuan / kg, which is not significantly higher than the cost line (take Wen's shares, a leading company with comprehensive strength in the industry, as an example, the comprehensive cost of Q2 is 17 yuan / kg, of which the comprehensive cost is the cost excluding headquarters expenses).

Piglet price downward: after the price increase of commodity pigs, piglets only rose briefly, and the increase was very limited, but since the middle of August, the price of piglets decreased again, and the rate of price reduction accelerated. As of September 15, the price of 7kg piglets was 274 yuan per piglet, which is lower than the cost of the industry (take Muyuan shares, which has a significant cost advantage in the industry, as an example, the cost of weaned piglets in Muyuan in August is about 300 yuan).

two。 The impact of the epidemic: Rain Water is sufficient this year, making the pig disease easier to spread; on the other hand, pig prices are low this year, pig enterprises are short of funds and lax in epidemic prevention, further leading to frequent outbreaks of the disease, resulting in passive elimination.

From the perspective of plate investment, the decline in stock prices in August is due to the fact that the market believes that the logic of pig production capacity has broken, but it is judged that the elimination of pig capacity will continue, but the extent of elimination may be weakened, the logic is still not broken, and the plate is too pessimistic. There is room for overfall and rebound.

Risk Tips:

The downside risk of pig price, the risk of animal disease, and the lower-than-expected risk of consumption recovery.