Huachuang Securities: The number of listed pig companies listed in August increased month-on-month, and the average weight changed from decline to increase

The Zhitong Finance App learned that Huachuang Securities released research reports. Production capacity is being eliminated at an accelerated pace, the bottom is forward-looking layout, efficiency is superior to growth, and quality is superior to scale. According to data from the National Bureau of Statistics, by the end of June, there were 37.8 million breeding sows nationwide, a year-on-year decrease of 2.63 million heads, a decrease of 6.5%, an increase of 3.2 percentage points over the first quarter. Furthermore, according to data from third party agencies such as Steel Union and Yongyi Consulting, basic production capacity has also been rapidly declining since the 3rd quarter. Although judging from the fundamentals of current supply and demand in the industry, pig prices may continue to fluctuate offline for a period of time, this is also to prepare for a reversal in the subsequent cycle, and the longer the fluctuation and bottoming out, the more thorough production capacity is cleared, and the certainty of subsequent reversals is higher. Referring to multi-dimensional data such as breeding sows and piglets, judging from a rhythmic perspective, the bank anticipates that the significant effects of supply contraction or the probability of a profitable inflection point in pig prices will appear in 2027Q2, but the current sector valuation is low, so it is recommended to pay attention to allocation opportunities in the pig sector.

The main views of Huachuang Securities are as follows:

Release volume: The total number of pig companies released in August 18 increased 7.43% year-on-year and 4.98% month-on-month

In August, 18 sample pig companies, including Muyuan, etc., released a total of 17.0884 million pigs (including Muyuan Co., Ltd., Wenshi Shares, Superstar Farming and Animal Husbandry, Shennong Group, Jingji Zhinong, Dabeinong, Lihua Co., Ltd., and Dekang Agriculture and Animal Husbandry sold commercial pigs, the same as the following), an increase of 7.43% over July. Among them, the top 5 releases were Muyuan Co., Ltd., Wen's shares, New Hope, Dekang Agriculture and Animal Husbandry, and Zhengbang Technology, with 7.03 million heads, 2.973,500 heads, 935,000 heads, and 867,900 heads respectively. The top 5 year-on-year growth rates were Shennong Group, Xinwufeng, Aonong Biology, Jinxinnong, and Zhengbang Technology. The growth rates were 116.20%, 52.99%, 38.71%, 31.57%, and 29.60% respectively.

Average sales price: The average sales price of commercial pigs from the 16 sample pig companies in August was 10.84 yuan/kg, down 21.87% year on year and up 0.13% month on month

In August, the average sales price of commercial pigs from 16 sample pig companies, including Makihara, was 10.84 yuan/kg, down 21.87% year on year and up 0.13% month on month. Among them, the top 5 pig companies were Dongrui Co., Ltd., Jinxinong, Jingji Zhinong, Zhengbang Technology, and Lihua Co., Ltd., which sold at 12.16 yuan/kg, 11.64 yuan/kg, 11.50 yuan/kg, 11.14 yuan/kg, and 11.12 yuan/kg, respectively, while Tiankang Biotech sold the lowest price at 9.61 yuan/kg. Of the 16 sample pig companies, a total of 9 had higher than average prices (Wen's shares, superstar agriculture and animal husbandry, zhengbang technology, Dongrui shares, Jingji Zhinong, Jinxinong, Dabeinong, Lihua shares, Dekang agriculture and animal husbandry), and a total of 7 (Muyuan Co., Ltd., Shennong Group, Xinwufeng, New Hope, Tianbang Foods, Huatong Biotech) sold at lower than average prices.

Average weight: The average weight of commercial pigs sold by the 8 sample pig companies in August was 126.13 kilograms

In August, the average weight of commercial pigs from the 8 sample pig companies, including Muyuan and others, was 126.13 kg (if data comparability is taken into account, the average weight of commercial pigs from these 5 pig companies, including Makiyuan Co., Ltd., Shennong Group, New Hope, Dabeinong, and Lihua Co., Ltd. was 124.78 kg, down 0.05% year on year and 1.08% month on month). Among them, Superstar Farming and Animal Husbandry had the highest average sales weight, 131.23 kg, up 1.40% month over month, followed by Shennong Group, with an average weight of 131.00 kg, an increase of 1.18% month over month. In addition, pig companies with a body weight above average weight also included Dekang Agriculture and Animal Husbandry (129.58 kg, up 0.41% month over month), Muyuan shares (127.80 kg, up 1.81% month over month). Among them, Wen's shares weighed 124.36 kg, up 0.57% month-on-month, and New Hope weighed 119.29 kg. The year-on-month increase was 1.23%. Dabeinong's weight was 122.64 kg, an increase of 1.40% over the previous month. The weight of Lihua Co., Ltd. was 123.14 kg, a decrease of 0.20% over the previous month. Most companies listed in August showed a trend of rising to varying degrees after losing weight for 4 consecutive months.

Pig industry: The entire industry chain continues to be in a state of overall loss, and the extent of losses has increased again

According to the National Bureau of Statistics, as of September 20, the average sales price of commercial pigs nationwide was 10.70 yuan/kg, down 2.7% month-on-month and 17.7% year-on-year. According to Yongyi Consulting, as of September 22, the sales price of weaned piglets was 130 yuan/head, down 9.7% month-on-month and 44.9% year-on-year. Also, as of the 3rd week of September, according to Yongyi Consulting and Monitoring, the profit of commercial pigs sold by self-breeding enterprises was -193.23 yuan/head, which has been losing money for 32 consecutive weeks. The average profit from selling piglets was -150 yuan/head, which has been losing money for 27 consecutive weeks. In terms of weight, as of September 24, according to Yongyi Consulting, the average weight listed in the industry was 128.82 kg/head, a slight drop from a high level, and is at the highest level since the same period in 2018. Also, according to the China Agricultural Information Network, as of September 18, the country's 16 provinces weighed 88.69 kilograms after death, showing a volatile upward trend since late August. Furthermore, as of mid-September, the utilization rate of secondary fattening fencing houses nationwide was 36.27%, a month-on-month decrease of 9.1 pcts and a year-on-year decrease of 3.9 pcts. As of September 24, the frozen goods inventory rate was 25.49%. Since mid-June, it has been slow to be removed from storage, but the frozen goods storage rate is still relatively high during the same period in history.

Risk warning: Fluctuations in pig prices, sudden large-scale uncontrollable epidemics, major food safety incidents, macroeconomic systemic risks, and trade frictions have caused large fluctuations in food prices.