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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 of 1.25-1.5 billion yuan attributable to shareholders in H1 2024, turning losses into profits YoY. The company's performance is believed to be outstanding. Based on calculations, it is expected that the average profit of hog farming per capita in Q2 2024 will be close to 220-240 yuan, corresponding to the complete cost of hog farming close to 14.5 yuan/kg and the cost will steadily decrease. The company has sufficient reserve capacity for hog production, and the completed capacity of existing boar farms is about 46 million heads, with an effective feeding capacity of about 35 million heads in the fattening stage. It is expected that future sales will maintain a steady growth and will benefit from the rebound in the hog price market.
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.
Hong Kong Stock Concept Tracking | Pig prices rise and costs decrease, the "scissors difference" expands, and many pig companies' profitability recovers. Is the turning point of the cycle here? (Attached Concept Stocks)
According to the sales report released by the pig industry, the recovery of pork prices has brought sustained repair of corporate profitability.
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