20180828-广发证券_香港_-A-Share_Agriculture_Sector_African_swine_fever_epidemic_spreads_further__impact_dependent_on_size_of_farm_2页_347kb

A-Share Agriculture Sector Summary

Core Content

This document provides an analysis of the impact of the African swine fever (ASF) outbreak on the agriculture sector, particularly focusing on the hog industry in China. It outlines the current situation, potential economic effects, and investment implications.

Main Points

• Outbreak Overview:
  On August 17, the Animal Husbandry and Veterinary Bureau of Yueqing city in Wenzhou, Zhejiang Province, reported pig deaths of unknown causes. This was confirmed as African swine fever by the China Center for Animal Health and Epidemiology on August 22. The outbreak has affected 430 pigs with 340 deaths. This is the fourth case since the beginning of August and the first to occur south of the Yangtze River.

• Impact on Farms:
  The epidemic primarily affects small and medium-sized farms. Larger farms are expected to be less impacted due to their greater capacity to manage and respond to such diseases.

• Sales Volume Decline:
  Sales volume is expected to decline in line with the intensity of the ASF outbreak in the three provinces affected (Henan, Jiangsu, and Liaoning).

• Hog Price Pressure:
  The outbreak is expected to put short-term pressure on hog prices due to reduced demand and the sale of assets at low prices. If the epidemic worsens and spreads, the hog cycle turning point may occur earlier than anticipated, similar to the experience during the porcine reproductive and respiratory syndrome (PRRS) outbreak in 2005/06.

• Risks:
  The key risks associated with the ASF outbreak include price fluctuations, uncertainty in the epidemic's development, and concerns about food safety.

Sector Ratings

The document includes definitions for sector ratings:

• Positive: Sector expected to outperform the benchmark (Hong Kong Hang Seng Index) by more than 10%.
• Neutral: Sector relative performance is expected to range between -10% and 10%.
• Cautious: Sector expected to underperform the benchmark by more than 10%.

Analyst Certification

The research analyst(s) certifies that:

1. All views expressed in the report accurately reflect their personal opinions.
2. No part of their remuneration is directly or indirectly linked to specific recommendations or views in the report.

Disclosure of Interests

• GF Securities (Hong Kong) and its affiliated companies do not hold any shares of the securities mentioned in the report.
• There are no investment banking relationships with the companies discussed in the past 12 months.
• The analysts and their associates do not serve as officers of the companies mentioned and have no financial interests in the securities.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The research report is intended solely for GF Securities (Hong Kong) clients.
• The report may not be distributed in certain jurisdictions where it is unlawful.
• GF Securities (Hong Kong) does not guarantee the accuracy or completeness of the information and accepts no liability for any losses resulting from its use.
• Investments involve risks, and past performance does not guarantee future results.

Copyright

• The document is copyrighted by GF Securities (Hong Kong) Brokerage Limited.
• No part of the material may be copied, reproduced, or re-disseminated without prior written consent.

Contact Information

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