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Tianfeng Securities: The valuation is currently at a relatively low position, highlighting the value of the pig breeding sector.
In the situation where the previous production capacity has been fully utilized to drive the reversal of pig prices and the progress of supplementing the herd is limited, the industry has considerable profit space. Enterprises with strong cost control ability and high growth elasticity will obviously emerge as the bearish market leader with extended industry cycle length.
gtja Securities: strong reality, weak expectations, misalignment of pig cycle position and valuation level.
Under weak expectations but strong reality, the current spot price has already led the rise and exceeded expectations. Even if following the spot price, related companies still have room for valuation repair.
GTJA: The position of the pig cycle and the valuation level are mismatched, and the sector has room for valuation repair.
At this stage, the breeding sector is recommended based on the β angle, and the recommended symbols are Muyuan Foods (002714.SZ) and Wens Foodstuff Group (300498.SZ).
Wens Foodstuff Group (300498.SZ): In the first half of 2024, the company's average selling price of hogs increased by 5.09% year-on-year.
Wens Foodstuff Group (300498.SZ) stated on the investor platform that the company's main business is the breeding and sales of hogs and chickens. In the first half of 2024, the average selling price of the company's hogs rose by 5.09% year-on-year. Coupled with stable production, continuous improvement in production performance, and a decrease in the price of feed raw materials, the company's breeding costs decreased year-on-year. The profit of the company's hog farming business increased significantly year-on-year, reversing losses to profits. In the first half of 2024, the average selling price of the company's chickens rose by 1.51% year-on-year. In addition, the company's chicken raising business remained stable and core production performance indicators remained high.
Research Reports from Guosen Securities: Wens Foodstuff Group's performance is excellent, maintaining a rating of "outperform" compared to the market.
Guosen's research report pointed out that Wens Foodstuff Group (300498.SZ) is expected to have a net profit attributable to the parent company of 1.25-1.5 billion yuan in 2024 H1, turning losses into profits year-on-year. The company's performance is excellent. Based on calculations, it is expected that the profit per head of fattening pigs in the second quarter of 2024 will be close to 220-240 yuan, corresponding to a fully cost of hog farming of nearly 14.5 yuan/kg, and the cost is stable and declining. The company has sufficient reserves of hog farming capacity, with a completed capacity of about 46 million pigs for breeding pigs and a combined effective breeding capacity of about 35 million pigs in the fattening stage. It is expected that future slaughter growth will remain stable and benefit from the rebound in pig prices.
China Post Securities: it is expected that the pig price will be more likely to rise than fall in the second half of the year, and the profitability of the industry may exceed the market expectations.
Although the current weak demand limits the rise of pork prices, the reduced supply will support the prices, and the relatively tight supply pattern may last for a long time. If demand improves slightly in the second half of the year, the stimulating effect on prices will be greater than before.
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