Huafu Securities: Pig prices are expected to rebound during the peak season at the end of the year, and high profits will continue in Q4

The Zhitong Finance App learned that Huafu Securities released a research report saying that it is expected that demand for pork will gradually improve as the national temperature drops. Against the backdrop of limited supply growth, pig prices are expected to rebound during the peak season at the end of the year, and high profits in Q4 will continue. Currently, the industry's production capacity is slowly recovering, and the boom range in this cycle is expected to lengthen, focusing on low-cost, high-growth pig companies. It is recommended to focus on Muyuan shares (002714.SZ), Wen's shares (300498.SZ), Huatong shares (002840.SZ), etc.

The main views of Huafu Securities are as follows:

Volume: The year-on-month increase was significant when released in October.

In October, 18 pig companies listed a total of 14.297,900 pigs, +14.56% month-on-month and +12.53% year-on-year. Judging from the month-on-month growth rate in October, Tang Renshen (+55.34%), Zhengbang Technology (+42.75%), Muyuan shares (+21.28%), and Dabeinong (+19.83%) showed significant month-on-month declines. *ST Aonong (-25.17%), Jingji Zhinong (-19.82%), and Luoniushan (-8.30%) showed significant month-on-month declines. Looking at the year-on-year growth rate in October, the listings of Dongrui shares (+128.44%), Shennong Group (+73.63%), Lihua shares (+55.98%), and Muyuan shares (+33.16%) increased year-on-year, *ST Aonong (-76.08%), Zhenghong Technology (-47.93%), and ST Tianbang (-38.75%) saw year-on-year declines in listings.

Structure: Pig companies' share of piglet sales declined in October.

After the price of piglets fell to a low level, a small number of retail investors and breeding companies in some regions stopped falling and rebounded in early October. However, considering winter swine disease, the overall volume of correction had little impact on the market. The increase in piglet prices was limited, and the average monthly price still fell month-on-month. The price of a 7 kg piglet market in October was 305.84 yuan/head, -18.70% month-on-month. In October, the eight listed pig companies sold a total of 832,200 piglets, +4.12% month-on-month, accounting for 9.55% of sales, or -1.50PCT month-on-month. Among them, Muyuan Co., Ltd. listed 234,400 piglets in October, -27.78% month-on-month, accounting for 3.60%, or -2.45 PCT month-on-month.

Degree of completion: The average completion rate of pig companies listed in January-October is 80%.

As of October, the average completion rate of the 10 listed pig companies' listing plans was 80.49%, which is 0.6 PCT compared to the same period last year. Among them, New Hope (91.16%), Lihua Co., Ltd. (85.24%), Shennong Group (82.96%), and Dabeinong (82.14%) had the highest completion plans for the whole year. Compared with the same period last year, the listing progress of Tang Renshen and Dongrui shares from January to October '24 was slower than the same period in '23. The listing progress of Muyuan Co., Ltd. and Tiankang Biotech did not change much over the same period last year. The listing progress of New Hope and Lihua Co., Ltd. was faster than in the same period last year.

Average price: The breeding side is active, and the average price of pig companies fell in October.

Due to concerns about future market conditions, the farming side actively launched in October to lock in profits. Yongyi/Steel Union/Zhuochuang data showed that the completion rate of large-scale farms in October was 104.18%/104.45%/103.81%, respectively, showing a certain degree of overselling, and overall pig prices showed a volatile downward trend. The average sales price of listed pig companies also revised. In October, the average sales price of pigs from 13 pig companies was 17.64 yuan/kg, -6.84% month-on-month, and +16.97% year-on-year. Among them, the average sales prices of Muyuan Co., Ltd. and Wen's Shares were 17.17/17.64/17.37 yuan/kg, respectively, -7.94%/-7.40%/-7.66% month-on-month, and +18.25%/+16.74%/+16.50% year-on-year.

Weight: The average weight of the industry declined sequentially in October.

In October, the Group reduced weight and increased enthusiasm for listing, driving the average weight of monthly transactions. The average weight of pigs in the industry was 125.95/91.04 kg after slaughter, which was -0.03/-0.14 kg month-on-month. From the perspective of listed companies, regardless of the impact of piglets and pig breeding sales, the average weight of the 6 listed pig companies increased month-on-month in October. It is estimated that the average weight of Muyuan Shares/Wen's Shares/Lihua Shares/Zhengbang Technology pigs released in October was 120.31/123.31/122.09/137.58 kg, +1.23/+0.69/+1.89/+3.86 kg. The average weight of the 2 pig companies decreased month-on-month. It is estimated that the average listing weight of Dabeinong/Shennong Group was 126.98/126.52 kg, respectively. 57/-1.69 kg .

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