Investment Rating - The report maintains an "Overweight" rating for the agriculture, forestry, animal husbandry, and fishery industry [48]. Core Viewpoints - The SW agriculture, forestry, animal husbandry, and fishery industry outperformed the CSI 300 index, rising by 4.87% from October 31, 2025, to November 13, 2025, exceeding the index by approximately 5.04 percentage points [11]. - All sub-sectors within the industry recorded positive returns during the same period, with notable increases in agricultural product processing (9.03%), fishery (8.12%), animal health (5.57%), planting (4.57%), breeding (2.94%), and feed (2.45%) [12]. - Over 90% of individual stocks in the industry achieved positive returns, indicating strong overall market performance [13]. - The industry valuation has rebounded, with the overall price-to-book (PB) ratio at approximately 2.94 times as of November 13, 2025, which is still relatively low compared to historical levels [17]. Industry Important Data - **Pig Farming**: The average price of external three yuan pigs decreased from 12.52 CNY/kg to 11.74 CNY/kg during the reporting period. The cost of corn and soybean meal showed fluctuations, with corn priced at 2260.39 CNY/ton and soybean meal at 3072 CNY/ton as of November 13, 2025 [21][23]. - **Profitability**: As of November 14, 2025, self-breeding pig farming reported a loss of 114.81 CNY per head, while purchasing piglets resulted in a loss of 205.64 CNY per head, indicating a decline in profitability [26]. - **Poultry Farming**: The average price of broiler chicks was 3.49 CNY per chick, slightly down from the previous week, while the average price of white feather broilers increased to 7.12 CNY/kg, with a loss of 0.95 CNY per bird [28][31]. Industry Important News - The Ministry of Agriculture and Rural Affairs emphasized accelerating the self-reliance and controllability of seed technology during a recent meeting, highlighting the importance of domestic seed sources and innovation in the seed industry [35]. Company Important News - Key companies to watch include Muyuan Foods (002714), Wens Foodstuff Group (300498), and others, which are positioned to benefit from industry trends and potential recovery in profitability [48][49].

Core Insights - The feed sector experienced a decline of 0.24% on November 14, with Zhongchong Co., Ltd. leading the losses [1][2] - The Shanghai Composite Index closed at 3990.49, down 0.97%, while the Shenzhen Component Index closed at 13216.03, down 1.93% [1] Market Performance - Tianma Technology (603668) saw a price increase of 3.29%, closing at 14.44, with a trading volume of 446,400 shares and a turnover of 642 million yuan [1] - Other notable gainers included Kesi Thought (001313) with a 3.16% increase and Baiyang Co., Ltd. (002696) with a 0.84% increase [1] - Zhongchong Co., Ltd. (002891) led the declines with a drop of 2.53%, closing at 57.47, with a trading volume of 33,300 shares and a turnover of 193 million yuan [2] Capital Flow - The feed sector experienced a net outflow of 80.91 million yuan from institutional investors and 50.57 million yuan from retail investors, while individual investors saw a net inflow of 131 million yuan [2] - Tianma Technology had a net inflow of 32.96 million yuan from institutional investors, while Hai Da Group (002311) had a net inflow of 15.96 million yuan [3] - Conversely, companies like Boen Group (001366) and Hefa Co., Ltd. (603609) experienced significant net outflows from institutional and retail investors [3]

Core Insights - The pet consumption sector is experiencing rapid growth, with projected sales of 9.4 billion yuan during the 2025 Double Eleven shopping festival, representing a 59% increase from 2024 [1][2] - Tmall dominates the pet sales market, accounting for 64% of sales, with a significant increase in daily sales during the event compared to September [3] - Domestic brands are rising in prominence, with top brands performing well on major platforms like Tmall and JD [4] - There is a clear trend towards premium and specialized pet products, reflecting a shift in consumer behavior towards viewing pets as family members [5] Industry Growth - The pet consumption market is projected to grow significantly, with Tmall's pet sales showing a consistent double-digit growth over four years, surpassing 50 billion yuan in annual transaction volume [3] - JD Supermarket reported a 25% year-on-year increase in new users during the Double Eleven period [2] - The overall pet consumption on platforms like Douyin is also increasing, with notable growth in pet apparel and grooming products [2] Brand Performance - The top five brands on Tmall and Douyin during Double Eleven are all domestic brands, indicating a strong local market presence [4] - Notable brands such as Guobao Pet and its products, including Maifudi, are among the top performers in the pet food category [4] Consumer Trends - The Engel coefficient for pet spending on Tmall has decreased by 2.93% over three years, indicating a diversification in pet-related expenditures [5] - There is a growing demand for high-end pet food products, with an increasing share of premium offerings in the market [5] - The market is seeing a shift towards more refined and emotional consumption patterns, as pets are increasingly viewed as integral family members [5] Investment Opportunities - The pet industry in China is expected to continue its rapid growth, with domestic brands enhancing their market competitiveness through innovation [6] - Recommended investment targets include Zhongchong Co., Ltd. (002891.SZ), Guobao Pet (301498.SZ), and Petty Co., Ltd. (300673.SZ) [6]

Investment Rating - The report suggests a positive outlook for the pet industry, highlighting the rapid growth of domestic brands and recommending attention to specific companies such as Yantai China Pet Foods, Gambol Pet Group, and Petpal Pet Nutrition Technology [8][9]. Core Insights - The pet consumption sector is experiencing significant growth, with sales reaching RMB 9.4 billion during Double 11 in 2025, marking a 59% increase from 2024 [4][5]. - Tmall dominates the pet sales market with a 64% share, while JD.com and TikTok account for 21% and 14% respectively [5][6]. - Domestic brands are rising in prominence, with all top five brands on Tmall and TikTok being local, including Gambol Pet Group's Myfoodie and Frigate [6][7]. - There is a clear trend towards refined pet consumption, with pets increasingly viewed as family members, leading to higher quality and frequency of purchases [7][8]. Summary by Sections Sales Performance - The pet sector on comprehensive e-commerce platforms achieved RMB 9.4 billion in sales during Double 11 2025, a 59% increase from the previous year [4]. - JD.com saw a 25% increase in new users during the event, while pet apparel GMV grew by 42% and grooming services by 32.93% on smzdm.com [4][5]. Market Share - Tmall accounted for 64% of pet sales, with daily sales during the first phase of Double 11 reaching 280% of September's daily sales [5]. - The annual transaction scale on Tmall surpassed RMB 50 billion, with over 100 million users [5]. Brand Performance - The top five brands on Tmall and TikTok during Double 11 were all domestic, with Gambol Pet Group's Myfoodie and Frigate making the list [6]. - On JD.com, Royal Canin and Myfoodie ranked first and second in dog/cat dry food sales [6]. Consumption Trends - The Engel coefficient for pet spending on Tmall decreased by 2.93% over three years, indicating a richer pet consumption landscape [7]. - High-end pet foods have seen an increase in market share for three consecutive years, reflecting a trend towards premium products [7].

Core Viewpoints - The pig farming sector is experiencing a favorable configuration opportunity due to accelerated breeding stock reduction driven by market and policy resonance, with current prices at a relatively low level [18][43]. - The beef industry is in a cyclical uptrend, with demand increasing and supply constraints expected to continue until 2027, making it a favorable time to invest in beef-related companies [18][51]. - The poultry sector is seeing improved investment logic as it enters a demand peak season, despite challenges from disease outbreaks and production capacity reductions [19][4]. Pig Farming - The supply pressure in pig farming is gradually increasing, leading to continued downward pressure on prices, with the national average price at 11.87 yuan/kg as of November 11, 2025, down 4.85 yuan/kg year-on-year [20][23]. - Policy measures are focused on reducing breeding stock, particularly among large enterprises, while smaller farms are expected to reduce stock due to losses and disease impacts [29][41]. - The current market conditions suggest a significant opportunity for investment in the pig farming sector, with recommended companies including Wens Foodstuffs, Muyuan Foods, and Juxing Agriculture [18][43]. Beef Industry - The beef supply is tightening, with a decrease in stock levels and an expected cyclical uptrend in demand, particularly as domestic beef consumption continues to rise [46][51]. - The average beef price in September 2025 was 70.52 yuan/kg, reflecting a year-on-year increase of 5.36% [51]. - Recommended companies in the beef sector include Bright Dairy, Fucheng Co., and several Hong Kong-listed firms such as Modern Farming and China Shengmu [18][51]. Poultry Sector - The white chicken market is entering a peak demand season, with prices expected to rise due to reduced production capacity and increased demand [19][4]. - The supply of white feather chicken breeding stock is projected to decline, supporting a price increase for meat chickens in 2026 [19][4]. - Recommended companies in the poultry sector include Shennong Development and Hefeng Co. [19][4]. Seed Industry - The grain price cycle is at a low point, with expectations for upward trends supported by food security policies and the acceleration of genetically modified seed commercialization [19][5]. - Recommended companies in the seed industry include Dabeinong Technology, Longping High-Tech, and Denghai Seeds [19][5]. Pet Industry - The pet food export volume in China increased by 7.55% year-on-year from January to September 2025, indicating strong growth in the sector [19][7]. - Domestic pet consumption is expected to continue growing, driven by emotional value and increasing market share of domestic brands [19][7]. - Recommended companies in the pet sector include Guibao Pet, Zhongchong Co., and Petty Co. [19][7].

Core Viewpoint - The recent share reduction by Tongyi Chunxiao No. 19 Private Securities Investment Fund, a significant shareholder of Zhongchong Co., Ltd., reflects a strategic exit, raising approximately 262 million yuan, while the company faces challenges in profitability despite revenue growth [1][3][4]. Group 1: Share Reduction Details - Tongyi Chunxiao No. 19 completed its share reduction plan, selling a total of 4.56 million shares, which constitutes 1.50% of Zhongchong's total share capital [1][4]. - The fund executed the reduction through both centralized bidding and block trading, achieving an average selling price of 58.37 yuan per share for 3.04 million shares and 55.59 yuan per share for 1.52 million shares [3][4]. - Following the reduction, Tongyi Chunxiao No. 19 no longer holds any shares in Zhongchong, while the controlling shareholder's stake slightly decreased from 24.03% to 24.02% due to the increase in total share capital [4]. Group 2: Financial Performance - In the first three quarters of 2025, Zhongchong reported a revenue of 3.86 billion yuan, marking a year-on-year increase of 21.05%, while net profit reached 333 million yuan, up 18.21% [6]. - However, in Q3 2025, the company experienced a decline in net profit by 6.64% year-on-year, with revenue of 1.43 billion yuan, reflecting the first quarterly profit drop of the year [6]. - Increased expenses, particularly a 38.62% rise in sales expenses and a 44.5% increase in R&D costs, have pressured profitability amid a competitive market environment [6]. Group 3: Project and Market Challenges - Key production projects aimed at supporting the main grain business are currently at "zero investment," which may affect investor confidence [7]. - The expected production start dates for these projects have been postponed to June 30, 2027, and November 30, 2026, respectively [8]. - The stock price of Zhongchong has seen significant fluctuations, rising from 17.77 yuan per share in July 2024 to a high of 53.38 yuan per share by October 14, 2025, but has since experienced a notable decline [8].

Core Viewpoint - Zhongchong Co., Ltd. has experienced a stock price increase of 66.93% year-to-date, indicating strong market performance in the pet food industry [1][2]. Company Overview - Zhongchong Co., Ltd. is located in Yantai, Shandong Province, established on January 18, 2002, and listed on August 21, 2017. The company primarily engages in the research, production, and sales of pet food for dogs and cats [1]. - The revenue composition of the company includes pet snacks (62.89%), pet staple food (32.21%), and pet supplies and others (4.90%) [1]. Financial Performance - For the period from January to September 2025, Zhongchong Co., Ltd. achieved an operating income of 3.86 billion yuan, representing a year-on-year growth of 21.05%. The net profit attributable to the parent company was 333 million yuan, reflecting an 18.21% increase year-on-year [2]. - The company has distributed a total of 322 million yuan in dividends since its A-share listing, with 264 million yuan distributed over the past three years [3]. Shareholder Information - As of October 20, 2025, the number of shareholders for Zhongchong Co., Ltd. was 43,000, a decrease of 3.09% from the previous period. The average circulating shares per person increased by 3.19% to 7,071 shares [2]. - Among the top ten circulating shareholders, Hong Kong Central Clearing Limited holds 14.32 million shares, a decrease of 7.01 million shares from the previous period. Dongfanghong Industrial Upgrade Mixed Fund is a new entrant among the top ten shareholders with 1.79 million shares [3].

Investment Rating - The report maintains a "positive" outlook on the agricultural, forestry, animal husbandry, and fishery sectors, with specific attention to the potential for value reassessment in leading pig farming companies [2][3]. Core Insights - The agricultural sector's net profit for the first three quarters of 2025 increased by 11% year-on-year, with five sub-sectors showing profit growth, including animal health (+96%) and agricultural processing (+50%) [11][12]. - The pig farming industry is experiencing significant challenges, with a notable decline in pig prices leading to widespread losses among companies, although some are still managing to maintain profitability due to cost advantages [3][19]. - The pet food sector continues to show strong domestic sales growth, while exports are negatively impacted by increased tariffs, highlighting a divergence in performance between domestic and international markets [3][6]. Summary by Sections 1. Agricultural Sector Overview - The agricultural sector's net profit for Q1-Q3 2025 reached CNY 369.4 billion, reflecting an 11% increase year-on-year, with most sub-sectors reporting profit growth [11][12]. - In Q3 2025, the sector's net profit dropped by 58% year-on-year, with significant declines in the feed and breeding industries [13][14]. 2. Key Sub-Sectors Performance 2.1 Pig Farming - The pig farming sector saw a 30% increase in the number of pigs slaughtered in the first three quarters of 2025, but Q3 prices fell sharply, leading to a 68.4% drop in net profit for the quarter [21][16]. - The average profit per pig for self-breeding operations was approximately CNY 60 per head, but this dropped to CNY 43 in Q3, indicating a significant decline in profitability [32][33]. 2.2 Chicken Farming - The white feather chicken segment is facing price declines, but downstream companies are seeing profit recovery due to improved cost structures [53][59]. - The yellow feather chicken segment is experiencing a significant downturn, with profits down by 75.2% year-on-year for the two listed companies in this category [3][59]. 2.3 Pet Food - The domestic pet food market remains robust, with a 17.7% increase in revenue for the first three quarters of 2025, while exports to the U.S. fell by 25.6% due to tariffs [3][6]. - Leading domestic brands are gaining market share, with significant growth in online sales [5][6]. 2.4 Animal Health - The animal health sector reported a 70.2% increase in net profit, driven by high livestock inventory levels and the introduction of new products [4][3].

Investment Rating - The report maintains a "Positive" outlook on the agricultural, forestry, animal husbandry, and fishery industry for the third quarter of 2025 [2] Core Insights - The agricultural, forestry, animal husbandry, and fishery sector's net profit increased by 11% year-on-year in the first three quarters of 2025, with five sub-industries showing profit growth [16][17] - The overall performance of the sector declined in Q3 2025, with a 58% year-on-year drop in net profit, primarily due to significant losses in the breeding industry [18][19] - The pig farming sector faced a downturn with falling prices and a return to industry-wide losses, while the poultry sector showed mixed results with white feathered chickens stabilizing and yellow feathered chickens experiencing a significant decline [22][58] - The pet food segment continues to thrive domestically, although exports have been negatively impacted by increased tariffs [22][58] - The animal health sector benefited from high livestock inventory levels, leading to substantial revenue growth for companies in this space [22][58] Summary by Sections 1. Overview of Agricultural, Forestry, Animal Husbandry, and Fishery Sector - The sector's net profit for Q1-Q3 2025 reached 369.4 billion, marking an 11% increase year-on-year [16] - In Q3 2025, the sector's net profit was 95.9 billion, reflecting a 58% decrease year-on-year and a 27% decrease quarter-on-quarter [18] 2. Key Sub-Industry Performance 2.1 Pig Farming - The pig farming sector's revenue for Q1-Q3 2025 was 3036.4 billion, with a 9.9% year-on-year increase, but Q3 saw a significant profit drop of 68.4% [22] - The average profit per head for self-bred pigs was approximately 60 yuan, with significant variations among companies [36][38] 2.2 Poultry Farming - White feathered chicken companies reported a revenue of 243.4 billion in the first three quarters of 2025, with a net profit increase of 104.6% [64] - Yellow feathered chicken prices declined significantly, leading to a challenging market environment [58] 2.3 Pet Food - The pet food sector achieved a revenue of 103.0 billion in the first three quarters of 2025, with a year-on-year growth of 17.7% [22] - Domestic brands are gaining market share, while exports to the U.S. have decreased by 25.6% due to tariffs [22] 2.4 Animal Health - The animal health sector's revenue reached 132.7 billion in Q1-Q3 2025, with a 70.2% increase in net profit [22] - New product launches have contributed to above-average growth for some companies in this sector [22]

Summary of Agricultural Sector Conference Call Industry Overview - The agricultural sector is currently undervalued, with a PB percentile ranking low among the 31 sub-industries in the Shenwan index, indicating potential investment opportunities due to low valuations in various sub-sectors [1][3][6] Key Insights and Arguments - **Animal Health Sector**: This sub-sector has seen the highest growth, driven by specific events rather than a broad sector effect, with a 73% increase since September 2024 [4][5] - **Swine Farming**: Expected government interventions to address falling pig prices and production capacity reduction, with a focus on increasing imports of U.S. agricultural products like soybeans and wheat, which could lower feed costs and improve market expectations for swine farming [1][6][8] - **Seed Industry**: Potential investment opportunities driven by policy changes and a rebound in grain prices, particularly during the year-end policy announcement period [1][10] - **Pet Food Industry**: Facing intensified domestic competition and impacts from the U.S.-China tariff war, but leading companies like Guai Bao and Zhong Chong are expected to emerge stronger [1][13] - **Poultry Farming**: The high incidence of avian influenza during the peak season (October to February) may create investment opportunities, particularly in regions like France and the U.S. [2][14] Market Performance - The agricultural sector's performance has been relatively weak, ranking 22nd in terms of price changes since September 2024, but improved to 17th since April 2025 [3] - Specific stocks have shown significant gains, often driven by unique events rather than core business logic, indicating a lack of consistent performance across the sector [5] Future Investment Opportunities - The agricultural sector may benefit from ongoing anti-involution policies and low valuations across sub-sectors, particularly in swine farming, where supply increases, cost reductions, and consumption recovery are anticipated [6][9] - Recommended stocks include leading companies in swine farming like Muyuan and Wens, as well as low-cost or growth-oriented firms [9] Additional Insights - The seed industry may see price recovery due to recent declines in corn prices, which were driven by weather-related issues rather than supply increases [10][11] - The rubber industry is currently stable but faces short-term challenges; however, long-term prospects remain positive [12]