美股制药业美国专业制药对动物健康的意义

1、FOCUSEquity Research28 January 2020US Specialty Pharma & Americas AgribusinessASF Implications on Animal Health in 20African Swine Fever (ASF) continues to persist but could the impact on sectors start to wane? We analyze management commentaries and the latest USDA report that indicates global S

2、wine herds will decline 23% in 2020, which would shift trends in global food protein production and consumption from the continuing ASF. Our Animal Health (AH) group has an average 40% exposure to global proteins, and of this 12%INDUSTRY UPDATEU.S. Specialty PharmaceuticalsNEUTRALUnchangedFor a full

3、 list of our ratings, price target and earnings changes in this report, please see table on page 2.is Swine. We draw threes from our analysis: 1) ASF may pose ongoingheadline risk as newer cases continue to crop up sporadically. 2) However, in 2020, the AH sector is likely for the first time to see

4、limited impact to revenues with a recovery in the Swine segment as re-herding lifts 2H-20. 3) Despite re-herding, protein shortages should persist in 2020, likely leading to above-average returns for protein companies.Investment Views: Upgrading PAHC to EW: 1) While ZTS & ELAN (OWs) have withsto

5、od ASF impact better owing to growth from petcare, 2H20 tailwind from the anticipated recovery in the Swine segment should strengthen fundamentals further. 2) We upgrade PAHC from UW to EW as we see limited risks from ASF, and believe PAHCs underperformance vs. peers and current valuations price in

6、weaker growth dynamics. 3) We highlight TSN as Top Pick; we believe JBS, PPC, SAFM, BRF and MRFG will benefit from the US/BZ protein supply.What has changed? 1) Latest ASF trends per USDA: Jan 2020 USDA report states Chinas herd will decline 23% in 2020 (vs. 25% fall projected in Oct-19), with globa

7、l Swine exports set to grow 10% in 2020 & China imports by 40+%. 2) Shift in mgmt commentaries: while remaining cautious, companies anticipate an improvement towards 2H-20. 3) Commercial scale re-herding is a favorable macro shift: as Chinas re-herding shifts Pork production away from small-scal

8、e farmers to larger commercial entities with stringent biosecurity and are natural clients for our group.Impact on AH sector - 2020 and beyond: We estimate the three Livestock firms in our AH group to have an average 12% exposure as per 2018 levels. Despite a 20%+ further culling in Swine herd (per

9、USDA), commercial scale re-herding in China may push our AH group towards a 2H-20 recovery for the first time in the last three years. Tailwinds from Poultry, Aqua and Beef should also be sustained. We highlight PAHCs developmental efforts towards a vaccine for ASF in the longer run.Agribusiness Ind

10、ustry In our base case we expect only modest margin fall-through for now, yet we see incremental chances of better than guided (and consensus) results for FY20 for most companies within the sector. On the negative side, with higher commodity cost exposure, we see some headwinds for TSN in its prepar

11、ed foods business as well as an adverse margin environment for HRL (EW).European Chemicals DSM (OW) is seeing negative impact from ASF as the decline in Swine population cannot be offset by higher Poultry production. This is partly why growth in 2020 will be H2-weighted. Longer term, we continue to

12、see it as a positive,U.S. Specialty Pharmaceuticals Balaji Prasad, MDbalaji.prasad BCI, USAnn-Hunter Van KirkAnn-Hunter.VanKirk BCI, USStephen Ragard, CFAstephen.ragard BCI, USAmericas Agribusiness Benjamin M. Theurer+52 55 5241 3322benjamin.theurer BBMX, MexicoAntonio Hernandez+ 52 55 5241 3323anto

13、nio.hernandez BBMX, MexicoEuropean Chemicals Sebastian Satz, CFA+ 44 (0) 20 3134 7201sebastian.satz Barclays, UKthough, as the Swine industrywill become more industrialized.Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports

14、. As a result, investors should be aware that thefirm may have aof interest that could affect the objectivity of this report. Investorsshould consider this report as only a single factor in making their investment decision.This research report has been prepared in whole or in part by equity research

15、 analysts based outside the US who are not registered/qualified as research analysts with FINRA.PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 27.获取报告1、2、3、每周群内7+报告；当日华尔街日报、4、行研报告均为公开利归原作者所有，起点财经仅分发做内部学习。扫一扫 关注公号回复：加入“起点财经”群。Barclays | US Specialty Pharma & Ameri

16、cas AgribusinessSummary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)Phibro Animal Health Corp. (PAHC)UW EW24.8418.00 23.00281.10 1.1111.05 1.061Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and

17、 EPS estimates are shown in the reporting currency. FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS: Rating Suspended Industry View: Pos: Positive; Neu: Neutral; Ne

18、g: NegativeValuation Methodology and RisksValuation Methodology: Our $23 PT is based on a 20x NTM P/E multiple.Risks which May Impede the Achievement of the Barclays Research Valuation and Price Target: Risks to our EW thesis include: Upside: 1) Stronger-than-expected global growth, particularly in

19、emerging markets, 2) ASF recovery faster than expected. Downside: 1) Lower than expected international expansion and margin expansion with Osprey integration, 2) Slower than expected approval from regulatory agencies on swine product submissions.Source: Barclays Research.28 January 20202U.S. Special

20、ty PharmaceuticalsPhibro Animal Health Corp. (PAHC)CompanyRatingPricePrice TargetEPS FY1 (E)EPS FY2 (E)Old New27-Jan-20OldNew%Chg Old New %Chg Old New %ChgU.S. Specialty PharmaceuticalsNeu NeuBarclays | US Specialty Pharma & Americas AgribusinessWHAT THIS REPORT OFFERS28 January 20203Our analyst

21、s from the U.S. Specialty Pharmaceuticals, Americas Agribusiness and European Chemicals Sector have teamed up to lay out the impact of African Swine Fever (AFS) during different stages of pork production on Animal Health (AH) and Animal Nutrition companies in contrast to protein processors.Since the

22、 first ASF outbreak reportedin August 2018, the has spread fast through China and other Southeast Asian countries as well as some Eastern European countries. While no outbreak has been reported on the American continent, we saw significant impact for AH and animal nutrition companies in 2019. While

23、the impact for protein producers in the U.S. and Brazil has been somewhat limited, we believe the benefits of protein supply shortage are yet to be seen. The impact during different times is mainly a consequence of the fairly slow hog breeding cycle. We have seen significant herd reductions in China

24、 immediately affecting demand for animal nutrition and AH, which clearly has had an impact on companies within our U.S. Specialty Pharma and European Chemicals Sector coverage; while negative for the latter two, we expect a positive impact for companies under our Americas Agribusiness coverage, whic

25、h is yet to be seen. We are just getting behind the reduction of stock that was build due to early slaughter, and we expect 7% global protein shortage in 2020. Nonetheless, re-herding has been initiated and should start to benefit AH and Animal Nutrition companies by 2H20. But we dont expect this to

26、 take away any of the tailwinds for protein processors, as the industrialized rebuild will likely be slow and assumes no further outbreaks of ASF.In the chart below we highlight the lengthiness of the hog lifecycle, which lasts about 18 months. We should see some relief for the early stage impacted

27、companies in the back half of 2020, while production shortage should ease slowly, which should continue to benefit protein companies globally with sourcing not impacted by ASF.Source: Company Reports, USDA, Barclays ResearchBarclays | US Specialty Pharma & Americas AgribusinessEXECUTIVE SUMMARY2

28、8 January 20204African Swine Fever (ASF) Implications for multiple sectors a recap on the diseaseASF facts and myths What ASF is, and what it is not.· It is highly contagious and deadly to hogs only it is not harmful to humans or any other animal who are not part of theSuidae Family.· It i

29、s a fever (a Haemmorrhagic one) not a flu. Currently, there is no vaccine and no cure.· It is a hardy with multiple transmission vectors and can survive long periods outside any host and even in extreme situations, i.e. close to 4 hours clocking at 56 C (133F), more than a year in Parma ham and

30、 many years in frozen product.Why ASF in particular matters it has been prevailing in Eastern Europe for a while nowWith China representing 48% of global pork production and 50% of global pork consumption, any internal supply shortage (like the one caused by ASF) will have significant implications f

31、or the global supply/demand balance. This will likely result in companies producing animal-based protein either in the US or in Brazil, benefitting significantly in the medium to long term, while companies engaged in feed additives with exposure to China will remain under pressure. It is our underst

32、anding that eradicating a “tough” like the ASF will probably take years, if not decades. Despite intensive research, scientists havent yet managed to develop a safe and effective vaccine.Eradication is the best prevention but takes time and requires a joint effortThe broadly used swill feeding techn

33、ique is a major contributor to the spread of the , particularly in emerging markets. Swill feeding has been prohibited in most developed markets as a result, yet a full eradication of the is a lengthy process. The current outbreakstarted in a small region in the northeast, but due to a lack of trans

34、port control and insufficient culling, the has spread to other areas and affected most of Eastern China and several hog herds, expanding lately into Vietnam, Laos and Cambodia. While China farmers claim that just about 1mn hogs have been affected, the number could be much higher, at 200mn, given com

35、mentaries from both AH and animal protein companies.Putting the numbers into context and their potential impact on companies under coverageTo better put the size in context, lets assume 200mn hogshave been affected, or simply have been taken out of the current herd, this represents 40% of Chinas por

36、k production, 20% of the worlds pork production and 6% of the worlds animal-based protein production for sure not an easy number to rebuild. The European Union (behind China) is the largest pork producing economic area the EU has an average hog herd of 150mn. In other words, the EU would have to at

37、least double production to fill the void. While with a 100mn hog herd in the U.S., farmers would have to increase hog supply by 150% to make up for the losses.The fact that ASF has not been reported on the American continent makes us believe that within our Americas Agribusiness Sector TSN and JBS a

38、re best positioned to benefit most while PPC, BRFS, SAFM and MRFG should also see some benefits from the global supply imbalance through their chicken, pork and beef businesses. Particularly, TSN and JBSs chicken and pork businesses could see EBIT levels returning to 12% levels last seen in 2015/16.

39、Within our U.S. Specialty Pharmaceuticals Sector, ASF has hurt ZTS, ELAN & PAHC over the last 5-6 quarters, and this may persist through 1H-20. However, the 12% exposure of the AH sector to Swine is likely to see a recovery towards 2H-20, contributing positively. Also, demand for Poultry & A

40、qua has grown recently due to shifts in protein consumption dynamics and, combined with Beef, we see these continuing to be a tailwind. We also note PAHCs developmental efforts towards a vaccine for ASF in the longer run and, if successful, it could create a blockbuster franchise.Within our European

41、 Chemicals Sector, we see most impact for DSM as the decline in swine population cannot be offset by higher poultry production. This is partly why growth in 2020 will be H2-weighted. Longer term, we continue to see it as a positive, though, as the swine industrywill become more industrialized.Barcla

42、ys | US Specialty Pharma & Americas AgribusinessCurrent Overview of ASF and latest USDA Report AnalysisPork Production to decline by 23% in 2020, per USDAThe USDA published its latest Livestock and Poultry World Market Trends earlier this month, in which it raised global Pork production estimate

43、s 4% for 2020 on strong gains in average carcass weights and, to a lesser extent, slaughter. The sharp decline in Pork population globally (with 200M reduction from China alone), a sharp reduction in breeding herd and the continued impact from ASF will reduce production 23% year-over-year in 2020. T

44、his still compares favourably vs. the USDAs earlier number of a 25% decline in 2020, published in October 2019.The European Union remains the key supplier of Pork to China since the hit from ASF. However, a few other markets that are likely to see their China market share increase in 2020 are the ex

45、port-oriented countries of Brazil, Canada and the US, with the US exposed to the vagaries of a US-China trade deal. It is worth noting that the Jan 2020 USDA reports shows that 26.5% of US Pork exports went to China in November 2019, which compares with 4.9% for November 2018, thus emphasizing the i

46、mportance of easing trade tensions between the US and China.US Exports to China on the rise as Trade tensions easeFIGURE 1Global Pork Production and Consumption; China represents nearly half of both categories; Primary Export Markets are the EU & Brazil; data prior to first China ASF outbreak in

47、 August 2018Source: USDA, Barclays Research28 January 20205Barclays | US Specialty Pharma & Americas AgribusinessFIGURE 2EU Exports have risen sharply mostly to China, and expected to rise another 7% in 20201K MetricTonsFIGURE 3Brazil is the other major exporter which is likely to see a sharp ri

48、se in exports 63% in 2020 per USDA1K MetricTons4,5004,0003,5003,0002,5002,0001,5001,00050001,6001,4001,2001,00080060040020001,4003,9003,6502,9332,85786078673020172018201920202017201820192020Source: USDA Report Jan 2020, Barclays ResearchSource: USDA Report Jan 2020, Barclays ResearchFIGURE 4US expor

49、ts are set to increase in double digitsFIGURE 5 due to imports to China, which are set to rise nearly 50% in 20201K MetricTons1K MetricTons3,5003,0002,5002,0001,5001,00050004,0003,5003,0002,5002,0001,5001,00050003,7003,2212,8652,6652,5552,6001,6201,56120172018201920202017201820192020Source: USDA Rep

50、ort Jan 2020, Barclays ResearchSource: USDA Report Jan 2020, Barclays Research28 January 20206Barclays | US Specialty Pharma & Americas AgribusinessFIGURE 6Of the nearly billion heads of pork in 2017; Chinas share was 400M+, half of which were culled as per industry estimatesTotal WorldMexico My

51、anmarRussian FederationViet NamGermanySpainBrazilUnited States of AmericaChina, mainland9671718222728304173435MM headsSource: FAO 2017 Data, Barclays ResearchFIGURE 7China to continue to see a steep decline in 2020 1K HeadFIGURE 8 in both Beginning & Production stocks1K Head500,000450,000400,000

52、350,000300,000250,000200,000150,000100,00050,0000800,000700,000600,000500,000400,000300,000200,000100,0000442,092441,589705,000428,070685,000335,000490,000412,00020172018201920202017201820192020Source: Bloomberg, Barclays ResearchSource: Bloomberg, Barclays Research28 January 20207ASF will continue

53、to have an impact in 2020 with global Swine herds likely to decline by 23% (vs. earlier expectation of 25%). Thus, demand from China will continue to rise with exports picking up for all major exporters from Brazil and European Union countries. US will likely join this export spurt if trade tensions

54、 between the two countries continue to ease. AH companies supplying these geographies will benefit both from greater demand as exports rise and for the first time in the last couple of years from re-herding demand.Barclays | US Specialty Pharma & Americas AgribusinessU.S. SPECIALTY PHARMA: 2020

55、ASF IMPACT MAY BE NEUTRAL FOR THE ANIMAL HEALTH GROUPWe estimate low teens exposure to swine for our Animal Health groupFor our AH coverage (ZTS, ELAN & PAHC), we estimate sales to the Swine segment to represent 11%-14% of total revenues and 13-22% of Livestock revenues (see figure below).On a g

56、eographical basis, we estimate exposure to China to be in the mid-single digits across our coverage. For ZTS, China drove 4% of total revenues in 2018 but nearly 75% of swine revenues were international. For PAHC and ELAN, based on reported Asia-Pacific sales figures, we estimate China to have driven 8% of total revenues for each company.FIGURE 9Comparison of our 2018 swine revenue estimates as a % of total revenue across our Animal Health GroupFIGURE 10Revenue exposure to China (per our 2018 Estimates)8%8%14%12%11%4%Z T SP A H CE L A N *Z T SP A H C *E L A N *Estimated