Pig prices have fallen. A-share pig farmers are crying, and some companies have a loss of 3 billion in half a year

　　Sino-Singapore Jingwei Client, July 20 (Yan Shuxin) Recently, A-share pig raising companies have successively disclosed their performance forecasts for the first half of this year. Affected by the drop in pig prices, net profits have generally declined, and some leading pig breeding companies have suffered huge losses.

The data shows that in the first half of the year, the New Hope’s pre-loss limit reached 3.45 billion yuan, and Wen's shares are also expected to lose more than 2.2 billion yuan.

　　In the second half of the year, will the major A-share pig farmers still face profit pressure?

How to deal with the downward pressure of the pig cycle?

　　Pre-loss 3 billion in half a year

　　On July 18, Aonong Biopharmaceuticals announced the pre-loss announcement for the 2021 semi-annual results. The net profit attributable to shareholders of the listed company (hereinafter referred to as net profit) is expected to lose 120 million to 180 million yuan; non-net profit loss is 140 million yuan -2 billion yuan.

Calculated, the company's net profit in the first half of the year fell 46.73%-64.49% year-on-year.

　　Affected by the continued decline in pig prices, A-share pig raising companies generally performed poorly in the first half of this year.

According to a review by the Sino-Singapore Jingwei client, as of July 19, 10 pig raising companies have disclosed their performance forecasts for the first half of 2021, and their net profits have declined compared with the same period last year. Among them, New Hope, Tianbang, Zhengbang Technology, Wen's shares have fallen by more than 100%, and the loss ceilings for the first half of the year are expected to reach 3.45 billion yuan, 650 million yuan, 1.45 billion yuan, and 2.56 billion yuan respectively.

　　As for the reasons for the decline in net profit and losses, these big pig farmers all believe that the continuous decline in pig prices and the rising cost of pig breeding are caused by factors.

At the same time, some companies have made provisions for falling inventory prices. Among them, New Hope has set aside inventory fall prices of about 1 billion yuan; Wen's shares have made provisions for inventory fall prices, equity incentive fees, and other performance, totaling about 700 million yuan; Aonong Biotechnology has conducted impairment tests on the inventory as of the end of June 2021, and has set aside an impairment provision of about 170 million yuan.

　　It is worth mentioning that among the above-mentioned pig raising companies, Muyuan's performance in the first half of the year was relatively good, with an estimated profit of 9.4 billion to 10.2 billion yuan, a decline of 5.42%-12.83% from the same period last year, and the decline was much lower than that of other breeders. Pig business.

　　Muyuan explained that during the reporting period, the company’s live pig production increased significantly compared with the same period last year. However, due to the gradual recovery of domestic live pig production capacity, the price of live pigs in the first half of 2021 decreased compared with the same period last year, resulting in the company’s operating performance in the first half of 2021 compared with the same period last year. Decline.

Data show that in the first half of 2021, Muyuan shares sold 17.437 million pigs, an increase of 157.14% from 678.1 million in the same period last year.

　　In fact, not only Muyuan shares, but most of the pig raising companies in the first half of this year have "decreased prices and increased volume."

According to data, from January to June 2021, Aonong Biosciences has sold a total of 1,257,200 pigs, an increase of 183.27%; New Hope has sold a total of 4,461,100 pigs, an increase of 110.14%; Zhengbang Technology has sold 6,996,800 pigs, an increase 156.72%; Luo Niushan sold a total of 177,500 live pigs, a year-on-year increase of 224.81%.

　　It should be noted that in the secondary market, as of the close on the 19th, the stock prices of New Hope and Dawnrays have fallen by 44.69% and 41.30% since the beginning of this year. The share prices of Tianbang, Shennong Group, Zhengbang Technology, and Jinxinnong have also fallen. Has exceeded 30%.

　　"Rescue"

　　How should companies deal with the downward pressure of the pig cycle?

　　Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, suggested that in the short term, breeding companies should slow down the pace of production expansion, and at the same time focus management on improving breeding efficiency, reducing costs, and doing a good job in disease prevention and control; medium and long-term, breeding companies can By increasing the technological research and development of pig breeding and breeding and the development of the downstream food value chain, the effective use of financial risk tools such as "futures + insurance" will reduce the market risk in the production process and increase the added value of pig breeding.

　　Cost reduction is indeed the focus of the recent work of many leading aquaculture companies.

The relevant person in charge of the New Hope Group told the Sino-Singapore Jingwei Client that the pig industry under its subsidiary has adjusted and arranged in response to the external environment, focusing on valuable and high-quality slaughter to cope with the downward price of pigs.

　　"In terms of capacity construction, since the total capacity scale currently in operation and under construction has reached a considerable volume, enough to support the development needs in the next two years, the overall pace of capacity development at this stage has slowed down. The projects in the provinces of the sales area and the supporting fattening projects of some established pig breeding farms will continue to advance at the established pace. Other projects in the non-main sales areas will also be adjusted appropriately according to the future evolution of the pig cycle." The person in charge said.

　　Wen's shares also told the Sino-Singapore Jingwei client that in order to cope with the decline in pig prices, the company strictly controlled the pace of the start of new pig farming projects in the construction of pig farms. At the same time, it has stopped outsourcing pig seedlings since May.

It is expected that the pace of slaughter production in the second half of the year will be significantly accelerated. In the future, as the company’s slaughter volume increases and the number of outsourced piglets decreases, the company’s pig breeding costs will continue to decline.

　　Earlier, Muyuan said in answering investors’ questions that in the first quarter of 2021, the complete cost of commodity pigs for Muyuan would exceed RMB 16 per kilogram, and the cost of breeding from April will fall below RMB 16.

　　According to a recent research report by Huaan Securities, according to estimates, in the second quarter of 2021, the complete cost of Muyuan’s fattening pigs will fall to less than 15 yuan/kg. The company has different costs in different regions. The complete cost of leading regions is about 14 yuan/kg. Less than 13 yuan/kg, and the cost of some newly-built subsidiaries is about 20 yuan/kg; Zhengbang Technology’s total cost of pig breeding in the first quarter is 21-22 yuan/kg, and it is reduced to about 20 yuan/kg in the second quarter.

　　Live pig futures have also become one of the tools for companies to deal with the downside risks of the pig cycle.

The Sino-Singapore Jingwei client combed and found that many pig raising companies such as Jinxinnong and Zhengbang Technology have carried out related businesses.

　　Jin Xinnong introduced in the performance forecast that since the listing of live pig futures in 2021, the company's futures decision-making group has comprehensively considered domestic live pig production capacity recovery, market conditions, future live pig price trends and the company's 2021 live pig sales plan and other factors, and gradually established positions. Hog futures hedging contract.

Taking into account the changes in the market, as of June 30, 2021, the company has actively liquidated all hog futures contracts held.

According to calculations, the company's pig hedging business achieved a profit of 109 million yuan in the second quarter and a cumulative loss of 22.067.1 million yuan from January to June.

　　When answering questions from investors, Tianbang also mentioned that the company is paying close attention to matters related to hog futures and is carrying out research, trading and delivery of hog futures.

In the future, the company will consider using live pig futures as a hedging tool to reduce the risk of large fluctuations in pig prices.

　　Still profitable?

　　Zhu Zengyong told the Sino-Singapore Jingwei client that starting from September 2020, this round of pig cycle has entered a downward phase. Judging from the current situation, relevant breeding companies will still face greater pressure on profitability for a period of time in the future.

　　"According to the second quarter of the hog inventory and sow inventory released by the National Bureau of Statistics, the hog inventory is almost close to the 2017 level, and the sow inventory is even higher than in 2017, which means that the growth of hog supply will continue for some time. "Zhu Zengyong said.

　　According to the National Bureau of Statistics, as of the end of the second quarter, there were 439.11 million live pigs, a year-on-year increase of 29.2%; among them, there were 45.64 million breeding sows, an increase of 25.7%.

　　Zhu Zengyong introduced that the production capacity of reproductive sows represents the supply of live pigs in the next year. The above data means that in the first half of 2022, if there is no impact from emergencies, the supply of commercial pigs will continue to grow.

In other words, in the first half of 2022, pig prices are still at risk of falling.

　　Yongan Futures also mentioned in a recent report that the current live pig industry chain is still dominated by oversupply, the production capacity of live pigs is still being released, and the supply of commodity pigs in the future will still be loose.

　　"The entire production cycle of live pigs is relatively long, and some large-scale enterprises have been relatively slow to adjust production arrangements according to market conditions. Therefore, the supply of the entire commercial pig will also show a significant increase in the next half of the year, but the overall market situation is better than in the second quarter. ." Zhu Zengyong said.

　　Kaiyuan Securities analyst Chen Xueli pointed out that under the effect of cost improvement and price recovery, the losses of pig breeding companies in the second half of the year are expected to ease compared with the second quarter, and companies with outstanding cost control capabilities are expected to continue to achieve profitability in the second half of the year.

　　It is worth mentioning that the current prices of live pigs and pork have rebounded.

According to the monitoring of the Ministry of Agriculture and Rural Affairs, from July 5 to July 11, 2021, the average purchase price of pigs at designated slaughter companies above designated size was 17.05 yuan/kg, up 0.3% month-on-month and down 54.0% year-on-year.

The average ex-factory price of white strip meat was 22.75 yuan/kg, up 0.5% month-on-month and down 51.8% year-on-year.

　　On July 18, the Huashang Reserve Commodity Management Center issued a notice that the third central reserve frozen pork purchase and storage in 2021 will be carried out on July 21, and this time 20,000 tons will be listed for auction.

It is understood that since the beginning of this year, the national level has carried out two central reserve frozen pork purchasing and storage auctions. Counting this time, the central reserve frozen pork purchasing and storage auctions will total 53,000 tons.

(Zhongxin Jingwei APP)