Swine fever in China makes Brazilian meatpackers enjoy historical high

The African swine fever epidemic in China continues to boost the actions of Brazilian meatpackers. As there are still no signs that the virus is under control (on the contrary, the Chinese herd only decreases), investors have strengthened their focus on valuing the main meat companies: JBS, BRF, Marfrig, and Minerva. Together, the four slaughterhouses have never experienced such a positive tide on the stock market, and the situation of 2019 is unlikely to be repeated.

In September, JBS’s shares renewed their historical highs and the Batista family company took third place among B3’s most valuable private non-financial groups, surpassing Vivo.

The month was also very positive for Marfrig, which had two new slaughterhouses allowed to export to China, which contributed to the rise of almost 32% of its shares. Marcos Molina’s company also counted on the exaggerated optimism of the launch of the vegetable burger.

In this euphoric environment, the meatpackers are among the highest values of Ibovespa. This year, JBS is ahead. Securities rose 183%, the highest in the index. For investors, the bet on Marfrig yielded 101% between January and September, the fourth most relevant valuation. In seventh position is BRF, with a valuation of almost 75%.

Minerva, which is not part of the Ibovespa, was also benefited by the positive outlook for China – the Asian country cleared the company’s two slaughterhouses for export in September. In 2019, the company’s stock rose 96%.

At market value, the upward trend of the meatpackers meant an increase of R$77bn. Together, the four companies are now worth R$131bn.

According to market analysts, Chinese herd data continue to decrease. It is also worth remembering that China consumes 50% of global pork production.

In addition, the dollar has also been favoring exports. For analysts, the trend is that the stocks of meatpackers continue to surf the Chinese tide.

The following graph, made from DataLiner data, shows beef exports from Brazil from January 2006 to August 2019:

Chart Source: DataLiner/Datamar

Article Source: Valor

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