In July, the price of live pigs in Guangdong returned to the high-price region of the country, and there may still be room for upward movement in August.
According to Zhuo Chuang information, in July, under high temperature weather, the consumption of pork was weak, and the high price of live pigs in Guangdong has already exceeded 21 yuan per kilogram. The reasons are that the planned slaughter of breeding units in July was significantly reduced, some of the previous pig disease losses caused some slaughter gaps, and the second feeding behavior reduced the number of pig sources intercepted. There are limited sources of pigs of suitable weight for slaughter in July, and the supply and demand are both reduced. In addition, the mood of the breeding side is boosted. The pig prices in Guangdong market fluctuate upward during the off-season, and the price of live pigs in Guangdong may still have room to rise in August due to limited supply this month. However, the increase in August may be restricted due to demand constraints.
GTJA released a research report stating that the current position of the pig cycle and the valuation position of the sector do not match, and the upward movement of the breeding sector comes from the repair of valuation and the repair of future cycle expectations. At the current stage, based on the β angle, there is room for valuation repair in the sector.
1) The current market capitalization per head is the same as or lower than the valuation level during the deep loss period in the past. The valuation of some companies with a market capitalization per head of 1,000-2,000 yuan has been reset to the same level as the reset cost. Even if the industry has marginal deterioration and potential bearish factors, it is difficult to drive the valuation downward. There is room for valuation repair;
2) From the perspective of high point expectations, the current price expectation of the cycle high point is relatively low. Under the weak expectation and strong reality, the spot price has already led the rise, and has exceeded the expectation of the high point. Even if the relevant companies follow the spot price, there is room for valuation repair.
Domestic hog farming related enterprises:
COFCO Joycome (01610), Dekang Agriculture and Animal Husbandry (02419)
Overseas hog farming enterprises: WH Group (00288)