Agricultural products industry-feed industry pattern: the strong break through

Main points of the report

Omni-directional perspective of feed industry

We summarize the development process of the feed industry into the following three characteristics: (1) the industry has changed from "emphasis on scale" to "emphasis on quality and service". (2) the variety of manufacturers has changed from diversification to specialization. (3) with the acceleration of industry integration, the industry has changed from decentralization to market share to the concentration of large and medium-sized enterprises.

Industry segmentation: each field has its own story

From the rapid growth stage to the secondary growth stage, each subdivision shows different characteristics: poultry feed: from the rapid growth stage to the secondary growth stage, the poultry industry has experienced a process from the rapid growth of production, the absolute majority to the slow growth of production and the sharp decline in the proportion. The national poultry output in 2013 was 81 million tons, with a compound growth rate of 2.8% in the past four years, down nearly 6 percentage points from the previous (2001-2005).

The fundamental reason is that the industry has experienced H1N1, "quick chicken" incident, H7N9, resulting in a depression in the industry.

With the gradual warming of the industry, the new hope is expected to stand out by virtue of its industry-wide advantages.

Pig feed: the pig feed industry is characterized by rapid expansion in the secondary growth period, which is consistent with the scale of China's live pig industry. The industry's pig feed output in 2013 was 80 million tons, with a compound growth rate of 11.1% in the past four years, compared with a compound growth rate of 8.2% between 2001 and 2005. The fundamental reason for the rapid expansion of pig feed market lies in the promotion of large-scale breeding to give pig feed growth space. We believe that "specialization + building service platform" is an effective weapon for high-quality pig feed manufacturers to stand out, while twins and Dabinong are pig feed enterprises with similar high-quality genes.

Aquatic materials: compared with the compound growth rate of 12.8% in 2001-2005, the compound growth rate was only 6.7% in the past four years, and the proportion also changed from an upward trend to hovering between 9% and 10%. Because of its high barriers the aquatic industry has a significant Matthew effect and serious polarization. Enterprises that enter first, such as Haida and Tongwei, have an absolute advantage. Tongwei has maintained a leading position in the industry in terms of production, producing and selling 2.22 million tons of aquatic feed in 2013, followed by Haida with 1.94 million tons. Tianbang and Wofeng are small in scale, only 100,000 tons. Revenue in Shanghai has developed rapidly in the past two years, surpassing Tongwei in one fell swoop. The reason is that cross-border diversification has dragged down the development of Tongwei feed business, making Haida seize market share from Tongwei in the past. But as Tonway spun off polysilicon and refocused on the feed market, it is trying to regain its lost share.

Company Breakthrough: vertical Integration or Specialization + Service

We believe that the path for feed enterprises to successfully break through and achieve re-growth in the future is vertical integration or specialization + service. For example, Prenner, Tyson Foods and other high-quality enterprises under the secondary growth of the American feed industry, the integration of breaking off glumes under the second growth change of China's feed industry represents a new hope, and the representative of "specialization + service" is expected to successfully break through under the industry reform and achieve a second take-off.