According to statistics from 37 listed companies tracked by Shenwan Hongyuan Agriculture, Forestry, Animal Husbandry and Fishery, the total net income attributable to mothers in Q3 2024 was 18.4 billion yuan, an increase of 358% year-on-year, with hog farming and pet food performance leading the way.
According to the Zhongtong Finance and Economics APP, Shenwan Wanguo issued a research report stating that after the completion of the U.S. general election, the theme of food security should be given high priority, focusing on investment opportunities in the seed/planting industry sector. In addition, benefiting from the recovery of the hog farming industry, the overall performance of the agriculture, forestry, animal husbandry, and fishery industry in the third quarter of 2024 saw significant growth; in terms of broiler farming, prices of chicks, broilers, and chicken meat all showed slight strength, with weak demand remaining the biggest constraint on the broiler industry; the pet food industry, which maintains a high level of consumption prosperity, is also recommended for close attention, as the turning point of rapidly improving market share and profitability of leading companies is expected to arrive.
Key report last week: 'Livestock and poultry farming performance realized, continued prosperity of pet food industry - Summary of the Agriculture, Forestry, Animal Husbandry, and Fishery Industry's third quarter report in 2024.'
Shenwan Hongyuan's main points are as follows:
Last week, the Shenwan Hongyuan Agriculture, Forestry, Animal Husbandry, and Fishery Index rose by 6.0%, while the CSI 300 Index rose by 5.5%.
Top five gainers: Xiwang Foodstuffs (61.4%), Zhanjiang Guolian Aquatic Products (31.4%), Hainan Shennong Technology (24.1%), Shandong Homey Aquatic Development (20.7%), and special treat Tianbang (18.1%); top five losers: Winall Hi-Tech Seed (-5.2%), SDIC Zhonglu (-1.4%), Wanxiang Doneed (-0.2%), Lontrue Co.,Ltd. (1.1%), and Wellhope Foods (1.3%). Pay attention to the theme of food security and focus on investment opportunities in the seed/planting industry sector. After the completion of the U.S. general election, expectations of trade protectionism are on the rise again. The U.S. is an important source of grain imports for China, and any changes in bilateral trade terms may affect the supply of domestic soybeans, corn, and other agricultural products. At the same time, after experiencing the first year of commercial planting in 2024, transgenic corn has performed well, with expectations for further acceleration in promotion in 2025.
Benefiting from the recovery of the hog farming industry, the overall performance of the agriculture, forestry, animal husbandry, and fishery industry in the third quarter of 2024 saw a significant increase.
According to the statistics of 37 listed companies tracked by Shenwan Nonglin Muye, the total net income attributable to the mother in Q3 2024 reached 18.4 billion yuan, a year-on-year increase of +358%, with hog farming and pet food performance leading the way. The rise in pig prices combined with cost optimization has led to major pig enterprises turning losses into significant profits. However, after entering a profitable cycle, the growth rate of listed pig enterprises' slaughtering has become more differentiated, with some enterprises showing a year-on-year decline in slaughtering volume, while the unit profit levels also vary significantly. Domestic and overseas sales of pet food jointly drove performance to continue to grow. Overseas market demand is strong, export business maintains fast growth; raw material costs continue to decline, while the domestic market remains highly prosperous, with the pet food industry showing outstanding performance in the third quarter report. In Q3 2024, the main listed pet food companies achieved a total revenue of 2.95 billion yuan, a year-on-year increase of +20%; and a total net income attributable to the mother of 0.36 billion yuan, a year-on-year increase of +77%.
Hog Farming: Last week, pig prices fluctuated downward, while piglet prices continued to rise.
According to Yongyi Consulting, the average national sales price of third-generation foreign pigs on November 10th was 16.76 yuan/kg, a week-on-week decrease of -2.7%. Last week, the price of 15kg piglets was 530 yuan/head, a week-on-week increase of +30 yuan/head, rising for the fourth consecutive week, an increase of about 92 yuan/head from the beginning of October. Investment analysis opinion: The cycle trend is weakening, but the profitability cycle is still expected to continue. Pay attention to the repair of the balance sheet of leading companies and shareholder returns, and focus on the long-term value of leading pig enterprises. Caution is advised in resuming and expanding production. In this profit cycle, the industry's production capacity is limited, and pig prices in 2025 are expected to outperform market expectations. Meanwhile, leading pig companies are rapidly repairing their balance sheets, capital expenditure is significantly shrinking, and cash flow is expected to continue to improve. In a low-profit cycle, cost advantages will be further magnified, focusing on the realization of profits and the long-term value of leading pig companies.
Chicken Farming: Chick prices, broiler chicken prices, and chicken meat prices have all fluctuated slightly stronger.
According to SteelHome data, the average sales price of white-feathered broilers represented by chicken seedlings last week was 4.28 yuan per bird, a week-on-week increase of +0.47%. Last week, the national front-end transaction price of white-feathered broilers was 3.76 yuan per catty, a week-on-week increase of +0.80%, and the comprehensive sales price of processed white-feathered broilers was 9271.0 yuan per ton, a week-on-week increase of +0.70%. The previous tightness in chicken seedlings has transmitted to the broiler end, with tight social chicken supply supporting current broiler and chicken meat prices. Overall, the tight supply side is the main factor supporting the recent price increase in chicken seedlings since the fourth quarter, while the demand side remains weak, keeping chicken meat prices at the bottom. Marginal improvements in supply and demand can be expected, and the profitability of poultry farming and slaughtering is expected to continue to improve. The slight retreat in the peak of broilers and chicken meat supply has been seen, with weak demand still a major constraint on the poultry industry.
Pet Food: The performance of 'Singles' Day Sales' was impressive, emphasizing industry prosperity and focusing on leading companies.
In the second stage of the 2024 'Singles' Day Shopping Festival,' the pet category performed well, with leading brands standing out. According to the Tmall-Singles' Day Pet Industry Battle Report, from October 21st to 31st, the overall transaction growth rate of the pet category exceeded 40%, with four brands achieving transaction volume of over one billion yuan for the first time in 2024; 59 brands exceeding ten million yuan, an increase of 16 compared to the previous year. Based on the data from the first day of the 'Singles' Day Carnival' on October 31st, the Top 5 brands of Tmall pet brands' transaction ranking were: Midofy, Blue, Xianlang, Flegeart, and Royal; while the Top 5 brands of Tmall International Pet Singles' Day Carnival were: Desire, Aikenar, Natural Beneful, Dachongai, and Royal. Store self-broadcasting and influencer live streaming are the rapid growth points of the pet category of this year's 'Singles' Day,' with pet consumption thriving, domestic brands smoothly moving towards high-end, and the turning point of increased market share and profitability of leading companies looming.
Investment advice:
Recommend following Guai Bao Pet(301498.SZ), Yantai China Pet Foods(002891.SZ), Petpal Pet Nutrition Technology(300673.SZ). For hog farming, suggest paying attention to Muyuan Foods(002714.SZ), Wens Foodstuff Group(300498.SZ).
Risk warning: Continuous low prices of hogs and broiler chickens; Delay in the promotion of transgenic corn; Outbreak of farming epidemic.
