(report producer/analyst: West China Securities Kou Xing Lu Zhouwei Liu Laizhen)
1, palm oil is widely used and mainly relies on imported
.1 Palm oil comes from palm fruit pressing. Indonesia and Malaysia are the main producers
Palm oil is one of the three largest vegetable oils and has a long history of consumption: palm oil is a tropical woody vegetable oil . It is one of the largest vegetable oil varieties in the world with the largest production, consumption and international trade volume in the world. It accounts for more than 30% of the total oil production. It is known as the "three largest vegetable oils in the world" together with soybean oil and rapeseed oil, and has a edible history of more than 5,000 years.
palm oil is pressed from palm fruits on oil palm trees. The flesh and kernels produce palm oil and palm kernel oil respectively. The traditional concept of palm oil only includes the former. After the palm fruit is boiled, crushed and extracted, raw palm oil is obtained. The raw palm oil is refined and free fatty acids , natural pigments and odor are removed, and refined palm oil (RBD PO) and palm salad oil (RBD PKO) are obtained. According to different needs, palm oil with different melting points such as 24 degrees, 33 degrees, and 44 degrees can be obtained through partial extraction.
Indonesia and Malaysia are the main producers of palm oil: referring to the forecast data of the US Department of Agriculture, global palm oil production is expected to be 79.14 million tons in 2022, an increase of 2.8% year-on-year. Palm oil production has increased by 3.4% annually in the past 10 years, and the total output has steadily increased. Southeast Asia and Africa are the main production areas of palm oil, with production accounting for about 88% of the world's total palm oil production. Indonesia (46.5 million tons/year) and Malaysia (19.8 million tons/year) are the world's major palm oil producers. The two account for more than 80% of the global production of palm oil, and the remaining producers are Nigeria , Thailand, etc.
Oil palm is commercially good, and the yield is certainly seasonal: Oil palm is a crop that blooms and bears fruit all seasons and has harvests for many years. Its commercial production can last for 25 years. Oil palm is the most efficient oil-producing plant in the world. palm tree usually starts to bear fruit in 2-3 years, enters a prosperous period from 8-15 years, and begins to age and reduce production after 18-20 years. Currently, Malaysia can produce up to about 5 tons of oil per hectare of oil, with a production of five times higher than peanuts of the same area and nine times higher than soybeans. Oil palm production is obviously seasonal. The booming period of Malaysia's palm oil is in September and October, and it begins to decline in November, and the low periods in January, February and March.
.2. Palm oil is widely used in the food and industry, and domestic palm oil import dependence is high
Palm oil is widely used in the catering industry, food industry and oil chemical industry: compared with other edible oils, palm oil products show greater advantages in frying and barbecuing food. In my country, the main indicator of edible refined palm oil is that the melting point does not exceed 24℃-33℃. It is used for the cooking and frying of food (bread, biscuits, etc.), and the annual demand accounts for the vast majority of the import volume. In the food industry, palm oil is easily digested, absorbed, and promotes health like other cooking oils. It is generally processed into shortening , margarine, hydrogenated palm oil, frying grease and special grease. Refined palm oil used in the industry requires that the melting point is not less than 44°C, and is mainly used to make soap, stearic acid and glycerol .
my country is the third largest importer of palm oil: According to the China Research and Development Research Institute, the main consumer countries and regions of palm oil include China, India, Indonesia, and EU 7 countries.
At present, the world's largest palm oil consumer is India, accounting for about 16% of global palm oil consumption; Indonesia is the world's second largest palm oil consumer, accounting for about 14% of global palm oil consumption; the EU is the world's third largest palm oil consumer, accounting for about 11% of global palm oil consumption; China is the world's third largest palm oil importer, and the world's fourth largest palm oil consumer, accounting for about 9% of the global palm oil market.
Domestic palm oil consumption is around 6 million tons, and basically all rely on imports. Because the melting point of palm oil is high, consumption has a certain seasonality. The consumption in summer is relatively large and the winter is smaller, and the seasonality of consumption is directly reflected in the seasonality of imports. (Report source: Yuanzhan Think Tank)
2. Palm oil price is affected by supply and demand and substitute prices
.1. Palm oil price fluctuations and influencing factors
Palm oil price is mainly affected by changes in supply and demand: Palm oil prices fluctuate greatly, and there are many factors that affect palm oil price, mainly including the weather, output, export volume, end-of-term inventory, etc. of the main producers Indonesia and Malaysia, domestic palm oil port inventory and import volume in the midstream stage, downstream edible vegetable oil consumption, instant noodles production, etc., and soybean oil and rapeseed oil substituted on palm oil also have an impact on palm oil prices.
Palm oil prices have remained high this year, with the highest spot price exceeding 16,000 yuan/ton. In the past two months, the price has risen first and then fallen, and the price fluctuates greatly.
5 palm oil prices continued to be high in May. We analyzed the reasons as follows:
Malaysia's palm oil production showed a downward trend: Malaysia's palm tree age is aging year by year, and the problem of shortage of foreign workers has not been properly resolved, which directly affects Malaysia's palm oil production. Compared with the average tree age of Indonesian oil palm, the average tree age of Malaysian oil palm is 15-16 years, and it has entered a period of production recession.
In addition, Malaysia's palm planting industry is extremely dependent on foreign workers. More than 80% of the workers in the plantation come from overseas. Since foreign workers were unable to enter the country in March 2020, the shortage of labor in Malaysia's palm plantations has increased from 50,000 in 2019 to 75,000 in September 2021. The shortage of fruit shovelers will lead to untimely harvesting of palm fruit buns, affecting palm oil production.
substitute supply has decreased, and dependence and demand for palm oil have continued to grow after the epidemic: due to the drought weather in major producers such as Argentina and Brazil , soybean oil and rapeseed oil production is expected to decrease. GTAS data shows that Argentina's soybean oil exports in the first quarter of 2022 were 693,000 tons, about half of the 1.2 million tons in the first quarter of 2021. Ukraine and Russia account for 60% of global rapeseed oil production. Against the backdrop of the Russian-Ukrainian conflict, the production and export of sunflower oil are restricted and the prices have risen sharply.
Indonesia announced a ban on exports, and market supply decreased: on April 28, Indonesia announced a ban on exports of palm oil to protect domestic consumption. This move further reduced the supply of palm oil, causing palm oil prices to rise again.
6 since June, the price of palm oil has declined. Our analysis is mainly because:
Indonesia's ban has been cancelled, accelerating exports: Due to limited storage capacity, Indonesia lifted the ban on May 23 to accelerate exports. In order to free up tank capacity, reduce production losses entering the peak production season, stabilize palm fruit prices, and reduce protests, the Indonesian government introduced a series of policies to stimulate exports in mid-June, including the increase of DMO from 1 to 3 in May to 1 to 5, the imposition of special export taxes to increase additional export quotas and the reduction of export taxes and other measures, which released palm oil inventory accumulated during the short-term export ban, and the supply of palm oil increased in the short-term.
6 expects to increase production of horse brown in June, and the market competition is fierce in the short term: Malaysia has more holidays in May, with 6 days of public holidays and 4 days of production areas and states in the country. Holidays after June decreased. In previous years, Eid can basically have a month-on-month increase of more than 10% higher than the seasonal one. Indonesia's accelerated exports and expected increase in horse palm production have led to an increase in supply in the short term, resulting in a continuous decline in palm oil prices.
.2. Supply and demand are still important indicators for observing the price trend of palm oil
In the short term, the Indonesian government's determination to accelerate exports before the end of July remains unchanged, inventory will be further released, Malaysia's palm oil has begun to increase production, and the market supply has increased, so the possibility of short-term prices returning to the previous high is not high. However, Indonesia's export policies are changing, and the short-term Indonesian production problem has not been solved. The industrial demand for oil and fat has grown, forming a certain price support, so it is expected that it will be difficult to fall rapidly in the short term.Therefore, the future trend of palm oil price still needs to observe the macro environment and changes in global supply, but it is difficult to return to the previous high, and the cost pressure of various demand companies has been alleviated.
3, industry target
.1. Palm oil cost accounts for a relatively high target
.2. Important targets: Ligao Food , Anjing Food
Ligao Food: The company's oil cost accounts for about 17%, and the rise in palm oil prices has put significant pressure on gross profit in 2021. According to our speed of measurement, if the price of palm oil drops by 10%, it will drive the gross profit margin to increase by about 1.1pct. After the epidemic, downstream demand has recovered and the cost of raw materials has declined, and the company's fundamentals are better.
We expect the company's revenue growth rate to be 25.7%/31.2%/24.9% in 22-24, respectively, and the net profit attributable to shareholders is 30/43/580 million yuan, respectively, and the corresponding growth rate is 6.8%/42.2%/35.9% respectively, and the EPS is 1.79/2.54/3.45 yuan, respectively, and the valuation of closing price 97.22 yuan on June 29, 2022 is 54/38/28 times.
Anjing Food: company's oil and fat costs account for about 5%, which is not high, but the price has risen a lot, which still has an impact on gross profit margin. The price decline will have a positive impact on gross profit margin; the price of fish juice in the company's other raw materials has fallen by more than 5%, and the price of meat has dropped a lot, and the pressure on the cost side continues to ease. The company's performance is stable, and the B-side business benefits from the relaxation and recovery of catering, the number of pre-made dishes continues to increase, and the overall cost is down, and the performance is expected to exceed expectations.
We expect the company's revenue growth rate to be 25.4%/26.5%/19.0% in 22-24, respectively, and the net profit attributable to shareholders is 91/1.14/1.39 billion yuan, respectively, with the corresponding growth rate to be 33.9%/25.2%/21.2%, respectively, and the EPS is 3.11/3.90/4.72, respectively, and the valuation corresponding to the closing price of 163.66 yuan on June 29, 2022 is 53/42/35 times.
4, risk warning
Palm oil price declined less than expected: Although the high point of palm oil price has fallen significantly, subsequent prices still need to pay attention to changes in supply and demand and adjustments to Indonesia's export policy, and the price decline is less than market expectations.
core target cost decreases less than expected: price drop is still concerned about the company's procurement price and procurement cycle, and there is a certain transmission time, and there is a possibility that the core target cost decreases less than expected.
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