Can Muyuan Share Be Able To Carry Over 43 Million "Tianliang" Expectations

Dong Peng, researcher of the 21st Century Capital Research Institute

"Decline, 20% start, 30% a lot." It is not too much to describe the recent group stocks. It is also because of the previous continuous rise, so that the stock price base is higher, concentrated killing down, investors are likely to be injured.

In contrast, the general industry prosperity, the stock price downturn for a long time plate, on the contrary, is very resistant to decline, or even rise.

Just take the 100 billion market value stocks as an example. In the process of falling from February 1 to March 9, only less than 30% of stocks rose against the market, and they were mainly concentrated in steel, insurance, aquaculture and other industries which were left out in the early stage.

Among them, muyuan shares ranked the third with a 19.06% increase, and the maximum withdrawal from the peak during the period was less than the average value of 20.52% of the 100 billion market value stocks, with obvious anti falling characteristics.

However, tracing to the industry fundamentals, under the background of the obvious recovery of pig inventory, the "value return" of pig price within the year, and the ultra-high profit base in 2020, why can muyuan share set a record high in the secondary market adjustment? Will the business plan disclosed in the future really reach the "daily quantity" of 43 million heads predicted by the seller's organization?

The top priority is that the price of pigs has fallen, and the corresponding profit expectation of the company is being readjusted.

Muyuan

In 2019, the wealth of Qin Yinglin and Qian Ying, the actual controllers of muyuan shares, will be 100 billion yuan. By 2020, their wealth will "expand" to 200 billion yuan.

There are only 10 rich people (families) in this level in China. Qin Yinglin and his wife are No. 10, and they are worthy of being the first person in China's animal husbandry.

The rapid expansion of wealth comes from its highly held muyuan shares.

Even under the background that the pig price did not perform better in 2020, its stock price performance was still commendable, and reached the year's high in July of that year. Then, with the fall of pig price in the third quarter, muyuan shares adjusted continuously.

At that time, all parties in the market also showed very consistent expectations for the decline of pig prices in 2021.

According to the data of the Ministry of agriculture and rural areas, by the end of November 2020, the number of live pigs and breeding sows in China has returned to more than 90% of the annual level. 23 provinces have completed the task of capacity recovery ahead of schedule, and said that "it will return to the normal level by the first half of next year at the latest".

Only from 2021 onwards, the stock of muyuan has two rounds of pull up.

The first was in early January, rising from 77 yuan to 98 yuan; the second was from late January to late February, from 82 yuan to 131 yuan.

On the contrary, the trend of pigs dropped from 37 yuan per kilogram in late January to less than 28 yuan in late February.

Why does the stock price deviate from the basic downward trend and upward trend?

The key, obviously, is in the secondary market.

During the pull up period of muyuan shares, it is the top stage of the upstream and downstream plates of "old hot spot" new energy vehicles.

Ningde times, BYD and Ganfeng lithium industry, the three major industry leaders, peaked on January 8, February 3, and January 25, respectively. At that time, these stocks have accumulated a considerable increase of more than 200% in 2020.

"Price comparison" relationship, including institutions will naturally choose to sell the high rise, to buy stagflation plate.

At that time, muyuan shares was a good choice.

On January 4, the sales data of muyuan in December last year were released, and the annual performance was locked. Although the follow-up performance forecast showed that the annual net profit was 27 billion yuan to 29 billion yuan, slightly lower than the market expectation, it was enough to support the sentiment.

Because, after the adjustment in the third and fourth quarters of last year, muyuan shares is still one of the most profitable companies in the whole market.

According to the forecast EPS median of 7.61 yuan and the closing price of 77.1 yuan at the end of 2020, the dynamic valuation of muyuan shares is no more than 10.13 times.

Looking back at the hot spots at that time, the valuation of leading companies in the new energy industry chain was generally more than 50 times, and it was easy to choose where the capital would flow.

In addition, although the live pig spot continued to decline from January to February this year, the pig futures reflecting the price expectation began to show a wave of obvious pull-up in late January.

The converted price is equivalent to 29.8 yuan / kg from the low point of 24.5 yuan / kg.

The capital market attaches great importance to expectations. The prices of stocks and futures have already taken into account the expectations. With the effect of "price comparison" and rotation of the above-mentioned secondary market sectors, muyuan shares reached a record high of 131 yuan on February 22, and remained standing firm in the subsequent adjustment of group stocks.

The mainstream of "price compensation by quantity": Moyuan's sales volume is top three

In the first two months of this year, although the stock price of muyuan shares was disturbed by market fluctuations and expectations, it is bound to return to the company's operation level in the long run.

This logic is the "anchor" of stock pricing in mature markets.

As the market price and cost of pig industry are relatively transparent, and the business of muyuan shares is highly concentrated, the general direction can be obtained through the evolution of the relationship between quantity and price.

However, from the past experience, the cost side of cyclical industries has a small range of change, especially the enterprises located in the upstream of the industrial chain have the most limited cost fluctuation. Therefore, such enterprises have the strongest profitability elasticity, which is mainly driven by the increase of product prices.

In contrast, new production capacity requires a lot of capital, construction cycle, equipment debugging, capacity climbing and other factors existing in some industries. The explosive driving effect of output and sales volume on the performance of cycle stocks is worse. This idea is also applicable to muyuan shares.

Since 2006, the domestic pig industry has experienced three complete cycles, including July 2006 to May 2009, May 2009 to April 2014, April 2014 to may 2018.

The latest round of "pig cycle" started in the second half of 2018. Suspected African swine plague was found in Shenyang and confirmed on August 3 of the same year.

However, the price response of live pigs is relatively lagging behind. In the first half of 2019, the head pig enterprises are still in the loss.

Starting from June 2019, the breeding enterprises began to cross the break even line. In addition, the non plague situation had a huge impact on the live pigs on hand. After the supply-demand relationship reversed, the price of pigs soared.

In early November 2019, the average pig price in 22 provinces and cities hit a high of 40.98 yuan / kg, and then fell back.

After that, as the whole industry was in the state of supplementary hurdles, the supply of live pigs was still tight, supporting the high operation of pig prices in 2020.

Conduction to the enterprise management level, the profit margin of muyuan shares increased sharply.

Before the rise of pig price in the first half of 2019, the gross profit rate of the company's H1 raw pig was 4.34%. When the pig price rose to more than 30 yuan / kg in 2020, the gross profit rate of the company increased sharply to 63.27% of H1 in 2020.

In other words, the core of the profitability of lashengmuyuan shares is the pig price, and a small part of the sales growth driven.

In terms of the pig price in 2021, although there are occasional repeated outbreaks in some areas, the general trend of pig inventory recovery remains unchanged, and the industry supply and demand will inevitably balance, and the main logic supporting the price rise will gradually disappear. Accordingly, when the price of pig turns down, the gross profit rate of muyuan shares will be reduced accordingly.

This is an objective law, which can not be avoided, and the initiative driving the company's performance growth will also disappear.

At present, the solution of various breeding enterprises is to "make up the price by quantity", and hedge the price decline by increasing the volume of sales, but the effect is questionable.

The 21st Century Capital Research Institute has learned that the total breeding cost of head pig enterprises is about 15 yuan / kg. If the price is 30 yuan / kg, the average gross profit is 1650 yuan.

When the selling price drops to 20 yuan / kg, the corresponding gross profit is 550 yuan. In other words, if you want to achieve a profit of 1650 yuan, you need to raise two more pigs. In terms of listed companies, it is also necessary to maintain a growth rate of more than 200%.

This is also the plan of various breeding enterprises. New hope will sell 8.2925 million pigs in 2020, and the target of 2021 given by the company in the previous survey is "internal assessment target of 25 million pigs", that is, the planned marketing will increase by 201% year on year.

In contrast, muyuan shares is "silent, stuffy work" enterprise character.

As of March 9, all the sales data of the first two months of the four head pig enterprises in a share market were released, and the large-scale strength exceeded the second half of 2019, which was the highest in this round of pig cycle.

Among them, the total pig sales volume of muyuan shares from January to February was 4.887 million, equivalent to the sum of Wen's shares, Zhengbang technology and new hope.

In terms of growth rate, the sales volume of muyuan shares in the same period of last year was 1.395 million, with an increase rate of 250.3%, which was higher than the increase of 158.5% of new hope and 139.8% of growth of Zhengbang technology.

In contrast, only the previous capacity base is good, but the capacity expansion in recent two years is obviously weak, the sales growth is not obvious, which may be related to the company's own business strategy.

In terms of the sales rhythm in 2020, the sales of pig breeding enterprises from January to February is the low point, and the growth of sales is mainly concentrated in the second half of the year.

In the background of relative "off-season", as a micro sample of listed pig enterprises, collective large-scale needs to be paid attention to. If this trend continues, pig prices will fall further.

In the first quarter, it is expected to grow year on year, with 43 million heads to be verified

Under the expectation that the price of pig will fall in the year, the focus of the market has also shifted to the level of "quantity".

Different from several other breeding enterprises, the sales data of muyuan shares in January and February each year are released by merger, so it was not officially released until this week.

In this regard, the seller's organization commented on the sales data of muyuan shares, saying that the company's pig output in 2021 is expected to reach 43 million. However, the total volume of muyuan shares in 2020 is still no more than 18.12 million, which is equivalent to the expected value given by the seller, with an increase of 137%.

Interestingly, after the media report on March 9, the research paper mysteriously disappeared the next day, leaving only traces on some websites.

In fact, more than 40 million are expected to come out.

At least, from the perspective of muyuan shares, it has this capacity foundation.

In July 2020, the company said in an institutional survey that "as of June 30, the company's built capacity should be around 35 million heads, and the capacity at the end of the year may reach 40 million to 50 million heads."

What is slightly contradictory is that while giving a 137% increase in sales volume, the above seller estimated the profit of muyuan shares in 2021 to be 34.622 billion yuan, with a year-on-year increase of no more than 20%, and gave a rating of "continue to recommend".

When the researcher issued the report, it was obvious that he had "made provision" for the expected fall of pig price in the year.

However, the 21st Century Capital Research Institute believes that from the sales data from January to February, muyuan shares is still expected to achieve growth in the first quarter, even in the context of a high profit base of 4.131 billion yuan in the first quarter of 2020.

The judgment is still based on the relationship between volume and price, that is, the growth of sales volume can completely cover the impact of the decline of pig price.

According to the data previously given by muyuan shares, the company's cost will fluctuate around 15 yuan / kg in 2020. According to this standard, the gross profit rate of muyuan shares is about 44.4% from January to February this year. During this period, the pig sales income is 12.281 billion yuan, and the estimated gross profit is 5.45 billion yuan, which does not include the sales volume in March.

If the price and sales volume changes in March are limited, the company's gross profit in the first quarter of this year is expected to be around 8.175 billion yuan, with an annualized profit of 32.7 billion yuan, slightly lower than the expected value of the above seller's organization.

Based on the average annual profit estimates of the seller and the 21st Century Capital Research Institute, the earnings per share of muyuan shares is expected to be 8.9 yuan in 2021.

Based on the closing price of 105.65 yuan on March 11, the PE of the company is about 11.87 times.

Compared with the historical valuation trend of the company, we can see that Q1 company was in a loss state in 2019, but the stock price continued to rise under the stimulation of non plague, which made the valuation of Q2 turn negative in that year. Then, with the rise of pig price and the rapid release of profits, the valuation continued to fall.

Today, the level of about 12 times is lower than Q4 in 2020, which is near the historical low point.

From this perspective, there is still room for improvement.

However, the above conclusions are all based on the sales data of muyuan shares from January to February. There are still many uncertain factors in the future performance realization and stock price changes.

Public opinion is positively correlated with stock price, and institutional activity increased in the first two months

Compared with the market before 2015, all aspects of the A-share market have undergone great changes.

From the perspective of media, financial community and we media are rising. As far as the news of listed companies is concerned, the change from deep case reports to pure information is obvious. In addition, with the increase of content suppliers, the market is full of redundant and useless information.

At the institutional level, due to the rapid expansion of the number of listed companies, institutions can not cover all listed companies, the market polarization is serious, leading companies are sought after, and small market value enterprises are ignored.

The 21st Century Capital Research Institute believes that, regardless of the advantages and disadvantages of the evolution of the above industry trends, it at least provides us with a new perspective to observe the sample companies, that is, there is a certain correlation between stock price volatility and market attention.

Therefore, this issue of "21 hard core investment research" takes muyuan shares as a sample, and tries to find the relationship between it and stock price volatility through some quantitative indicators that can measure the degree of concern.

From the perspective of observation, the media and institutions are the main dimensions. The former evaluation factors include public opinion information statistics, hot stock ranking and other indicators, while the latter includes the seller's Research Report publishing frequency, institutional trading activity and other indicators.

Before December 2018, the company's public opinion attention was blank, which may be related to the lack of data collected by the institution and the insufficient attention of muyuan shares.

Since then, the continuous data can be roughly divided into three stages, from the end of 2018 to February 2020, from February to November 2020, and from November 2020 to now.

The peak value of public opinion index appears in November 2019, July 2020 and January 2021.

These three nodes correspond to the three highs of the spot price of live pigs since the current cycle, which are about 40 yuan, 37 yuan and 35 yuan per kilogram.

In contrast, more than 97% of the company's income comes from pigs, and the two are highly correlated.

In the above three operation cycles, from the end of 2018 to February 2020, the public opinion index of muyuan shares continuously increased with the stock price, with obvious positive correlation characteristics; from February to July 2020, the public opinion index rose and the stock price rose, and from July to November in the second half of the period, public opinion attention and stock price fell together.

In November 2020, media attention will rise again, and muyuan shares will reach a record high.

However, the overall attention is slightly weaker than the previous two rounds, and the company's share price has slightly declined.

Comparing the market attention ranking and stock price changes of muyuan shares, we can see that the two maintain a certain correlation.

During the observation period, the more typical two times were January 3 and January 25, which respectively released the sales data of December last year and the performance forecast of 2020 for muyuan shares. On that day, the company's attention index rose sharply, and then the stock price rose periodically.

If the correlation between the stock price of the follow-up companies and the above indicators such as media attention continues to maintain, it is expected that the stock price will perform better before and after the release of the first quarter performance forecast and the 2020 annual report.

For the institutional dimension, we selected two indicators, namely, the frequency of the seller's Institutional Research Report and the trading data of block trading institutions.

The frequency of research reports issued by the seller's institutions is affected by factors such as the time point of issuing periodic reports of listed companies and wind data storage.

However, only from the performance of the available data, in recent January, there were 20 sellers' organizations that predicted the performance of muyuan shares, compared with 18 in the previous four months, and the last time the number reached 20, which needs to be traced back to six months ago, when muyuan stock was in the adjustment stage, and soon afterwards, the stock price bottomed out periodically.

In contrast, the index of activity of block trading of institutional seats is easier to quantify.

According to statistics, since January, there have been 11 purchases of institutional seats. Such intensive trading activities last occurred from August 24 to September 17, 2020, with a total of 8 transactions.

The difference is that since January, most of the seats sold are securities business departments, and almost all sellers around September 2020 are institutional seats.

In this way, the "gold content" of institutional transactions from the beginning of the year to the present is higher than that in September 2020, and this may be a relatively certain increase in the annual report and first quarter report of the company.

Difficult variables

There are too many factors that affect the rise and fall of stock price. Industry and company research is just to help us solve a small part of many variables, such as the trend of enterprise profit change. However, we can only predict the short-term profit. The longer the time, the more interference factors, the lower the accuracy.

This is a problem that can not be solved by "21 hard core investment and research", as well as research institutions and investment institutions. Whenever the supply and demand of the industry or the emergence of new technologies, or the problems of the enterprise's own operation and capital, the value of the enterprise needs to be reassessed accordingly.

In terms of the sample muyuan shares in this period, the short-term visible variables include the following aspects.

One is to weaken the risk of the core logic of the company's stock price rise. In the process of the decline at the end of February, the price of pigs has dropped to the two low points since 2020. With the gradual increase of pig production, it is inevitable to further fall back.

The selling price of muyuan shares, 26.95 yuan / kg from January to February this year, is also very close to the low point of 26.2 yuan / kg in May 2020. If further decline, the average profitability of the company's pig head will fall back to the September level of 2019 pig price, which will directly lead to the decline of the company's profit margin.

However, according to the above estimated 44.4% gross profit rate from January to February, it is obvious that there is still a lot of room for decline.

Second, compared with the historical sales trend, except for the decline in sales volume due to non plague situation in 2019, muyuan shares maintained growth in other years.

However, there is a problem: the larger the base, the slower the growth rate.

On the basis of achieving 18 million head sales in 2020, can the company continue to maintain a sales growth rate of more than 100% this year?

In the 2020 annual report to be released next, will its business plan give a listing plan of 43 million as expected by the seller?

Even if the target of 43 million units is given, can it be completed on schedule this year?

Will the local recurrence of non plague affect the large volume of listed companies?

Finally, there are variables from the secondary market.

After this round of killing and falling of A-share market, will the trend of institutional conglomeration continue?

In the decline cycle of pig price, can we give a higher valuation standard to muyuan shares?

No matter which interference factor changes, the market's current expectation of muyuan shares will be adjusted accordingly. These variables need time to be verified step by step.

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