Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The agricultural sector's public fund heavy holdings increased in Q2 2025, driven by US-China tariff disruptions, fundamental improvements, and policy catalysts [4][12] - The total market capitalization of the agricultural sector reached 1,320.8 billion, with a quarter-on-quarter increase of 6.80%, accounting for 1.74% of the A-share market [12][16] - The investment logic for the pig farming sector is improving, with expectations of a price increase in the second half of 2025 [20] Summary by Sections Public Fund Holdings - In Q2 2025, the public fund heavy holdings in the agricultural sector accounted for 0.47% of the total public stock investment, with a quarter-on-quarter increase of 0.07 percentage points [12][14] - The feed and breeding sub-sectors saw the most significant increase in public fund holdings, while other sub-sectors remained relatively stable [15] Individual Stocks - Leading companies in the feed and breeding sectors, such as Haida Group and Muyuan Foods, saw significant increases in their public fund holdings, with Haida Group's holdings rising by 51% to 12.44 billion [17][19] - The top public fund holdings in the agricultural sector for Q2 2025 were Haida Group, Muyuan Foods, and Wens Foodstuffs, with respective holdings of 12.44 billion, 6.64 billion, and 6.20 billion [19] Investment Recommendations - The report recommends investing in Muyuan Foods, Wens Foodstuffs, and other companies in the pig farming sector due to improving investment logic [20] - The feed sector is expected to benefit from strong overseas demand, with recommendations for Haida Group and New Hope [20] - The pet sector is highlighted for its growth potential, with recommendations for Guibao Pet and Zhongchong Co. [20]

Summary of the China Pet Food Sector Conference Call Industry Overview - The conference call focused on the **China Pet Food Sector**, discussing earnings previews and market dynamics for Q225. Key Companies Discussed 1. **Gambol** 2. **China Pet Foods (CPF)** 3. **Petpal** Core Insights and Arguments Market Performance - **Gambol** shares dropped over **15%** recently, while **China Pet Foods** fell more than **10%** due to: - **Overseas sales deceleration** attributed to tariffs, with pet food exports to the U.S. declining by **42% YoY** in April-May [2][3] - **Increased domestic competition** during the 618 festival, leading to deeper promotions and margin pressure [2] Earnings Expectations - **Gambol**: - Expected **Q225 overseas sales** to decline by **25% YoY** due to tariffs, while domestic sales are projected to grow by **30-35% YoY** [3] - Estimated **net profit** to remain flat YoY at **Rmb162 million** [3] - **China Pet Foods (CPF)**: - Anticipated **Q225 sales growth** of **13.5%**, with domestic sales up **30% YoY** and overseas sales up **10%** [4] - Projected **net profit** increase of **33% YoY** to **Rmb115 million** [4] - **Petpal**: - Expected **Q225 sales decline** of **9%**, with domestic sales down **11%** and overseas sales down **8%** due to tariffs [5] - Estimated **net profit** decrease of **11%** to **Rmb50 million** [5] Revisions and Valuations - **Gambol**: - Revenue estimates for **2025-27** revised down by **3.8-4.3%** and EPS cut by **13-14%** due to tariff uncertainties and increased promotions [6] - Price target reduced to **Rmb96.5** from **Rmb113.1**, implying a **53.5x 2025E PE** [6] - **Petpal**: - EPS for **2025-27** revised down by **6-7%** due to tariff pressures [6] - Price target lowered to **Rmb17.0** from **Rmb18.5**, implying a **30x 2025E PE** [6] Ratings - **China Pet Foods (CPF)**: Rated as **Buy** due to strong brand growth and North American capacity expansion [7] - **Gambol** and **Petpal**: Rated as **Neutral**, reflecting fair valuations and ongoing U.S. tariff uncertainty [7] Additional Important Points - Potential risks for the pet sector include: - Slower-than-expected expansion of domestic brands - Pet food safety issues - Profitability challenges due to price wars and rising raw material costs [23][24][25][26] - The report emphasizes the importance of monitoring tariff impacts and competitive dynamics in the pet food market [23][24][25][26]

Investment Rating - The report maintains an "Overweight" rating for the pet industry, indicating that the industry index is expected to outperform the market index by over 10% in the next six months [4]. Core Insights - The pet industry in China is projected to continue its rapid growth, with the urban pet consumption market expected to increase from 170.8 billion yuan in 2018 to 300.2 billion yuan by 2024, reflecting a CAGR of approximately 9.9% [3]. - The pet food market is anticipated to grow from 89.1 billion yuan to 158.5 billion yuan during the same period, with a CAGR of about 10.1% [3]. - The pet healthcare market, including vaccines and medications, is expected to see significant growth, with a projected increase from 8.54 billion yuan to 37.22 billion yuan, representing a CAGR of 27.8% [3]. - The report highlights that the pet ownership penetration rate in China is still relatively low compared to mature markets, indicating substantial room for growth [3]. Market Dynamics - The pet ownership demographic is shifting towards younger generations, with post-90s pet owners constituting 41.2% and post-00s pet owners rising to 25.6% [3]. - The report notes that the pet industry in China is characterized by a low concentration of market players, with the top three companies holding only 3.6% of the market share [3]. - The competitive landscape is fragmented, with numerous small and medium-sized enterprises alongside established brands like Guai Bao Pet and Zhong Chong Co [3]. Investment Recommendations - The report suggests focusing on key players in the pet industry, including Guai Bao Pet (301498), Zhong Chong Co (002891), Yi Yi Co (001206), Yuan Fei Pet (001222), Tian Yuan Pet (301335), and Pu Lai Ke (603566) [3].

Core Viewpoint - The AI Fund Minsheng Jianyin Dividend Return Mixed Fund (690009) reported a profit of 2.2766 million yuan for Q2 2025, with a net asset value growth rate of 4.33% during the period [3] Fund Performance - As of the end of Q2 2025, the fund's scale was 54.2078 million yuan [15] - The fund's weighted average profit per share for the period was 0.1049 yuan [3] - The fund's unit net value as of July 21 was 2.505 yuan [3] - The fund's one-year cumulative net value growth rate was 6.05%, ranking 732 out of 880 comparable funds [3] - The fund's three-month net value growth rate was 4.02%, ranking 757 out of 880 comparable funds [3] - The fund's six-month net value growth rate was 5.25%, ranking 598 out of 880 comparable funds [3] - The fund's three-year net value growth rate was -23.05%, ranking 672 out of 871 comparable funds [3] Investment Strategy - The fund manager, Deng Kaicheng, maintains a positive outlook on value style and dividends, focusing on stable investments while seeking flexible dividend opportunities [3] - The fund continues to allocate a significant portion to the financial sector and actively seeks companies with improved operations and higher dividend payouts [3] Risk Metrics - The fund's three-year Sharpe ratio was -0.3336, ranking 749 out of 875 comparable funds [8] - The maximum drawdown over the past three years was 33.6%, ranking 513 out of 873 comparable funds [10] - The maximum drawdown in a single quarter occurred in Q1 2021, reaching 18.96% [10] Portfolio Composition - The average stock position over the past three years was 74.32%, compared to the industry average of 80.43% [13] - The fund reached its highest stock position of 77.33% at the end of H1 2024, with a lowest position of 35.27% at the end of Q1 2019 [13] - As of Q2 2025, the fund's top ten holdings included companies such as Chao Hong Ji, Zhong Chong Co., Runben Co., and Meidi Group [17]

Investment Rating - The report maintains a "Recommended" rating for the agricultural, forestry, animal husbandry, and fishery industry [1][8][64] Core Viewpoints - The report highlights the long-term value reassessment opportunities in the pig industry, with expectations of price fluctuations in the range of 14-15 CNY/kg post-Chinese New Year 2025, indicating a potential downward trend in prices due to supply pressures [4][15] - The poultry sector is experiencing price declines, with a focus on marginal improvements in the cycle, while the animal health sector is expected to see performance recovery and investment opportunities in the pet medical industry [5][6][28] - The pet economy is thriving, with domestic brands rapidly emerging, and the report anticipates continued improvement in industry profitability [7][58] Summary by Sections 1. Pig Industry - The average price of pigs is currently around 14.6 CNY/kg, with a slight weekly decline [14] - The report recommends companies with low costs and strong financials, specifically highlighting Wens Foodstuffs, Muyuan Foods, and Juxing Agriculture [15][64] 2. Poultry Industry - The report notes a decline in poultry prices, with a focus on the cyclical improvements expected in the future [27] - Recommendations include Shennong Development and Lihua Stock [5][28] 3. Animal Health - The animal health sector is expected to see a recovery in performance, supported by the profitability of the pig farming industry [6][38] - Investment opportunities in the pet medical sector are highlighted, with a market size of approximately 840 billion CNY [7][38] 4. Planting Industry - The report indicates a decrease in wheat and corn prices, with recommendations for companies involved in genetically modified seeds [44][50] 5. Feed Industry - The total industrial feed production in the first half of 2025 reached 15,850 million tons, showing a year-on-year growth of 7.7% [48][50] - Recommendations include Haida Group and attention to He Feng Stock [50] 6. Pet Industry - The pet consumption market is projected to reach 300.2 billion CNY in 2024, with a growth rate of 7.5% [55][58] - Recommended companies in the pet food sector include Guai Bao Pet, Zhongchong Stock, and Petty Stock [58][64]

Investment Rating - The report maintains a "Positive" outlook on the pig farming industry, emphasizing the long-term value of quality pig enterprises amidst the "anti-involution" trend [3][4]. Core Insights - The report highlights the slight increase in the breeding sow inventory in Q2 2025, indicating a potential adjustment in production capacity going forward [3]. - It notes the ongoing decline in average slaughter weights for pigs, suggesting a shift in market dynamics and the need for quality-focused investments [3]. - The report also discusses the recovery in the chicken breeding sector, with a noted increase in the price of broiler chicks, although challenges remain due to high inventory levels [3]. - In the pet food sector, the report indicates a stable growth trajectory despite some short-term sales fluctuations, with a focus on leading brands [3]. - The animal health segment is expected to see a recovery in performance driven by improved profitability in livestock farming and rising demand for vaccines [3]. Summary by Sections Pig Farming - The average price of pigs is reported at 14.39 CNY/kg, with a week-on-week decline of 2.0% [3]. - The average slaughter weight for pigs has decreased to 128.83 kg, down 0.2 kg from the previous week [3]. - The breeding sow inventory at the end of Q2 2025 is reported at 40.43 million heads, a slight increase of 40,000 heads from Q1 2025 [3]. Chicken Farming - The average price of broiler chicks has increased by 54.3% week-on-week to 1.25 CNY/chick [3]. - The average price of broiler chickens is reported at 3.15 CNY/kg, with a week-on-week increase of 3.3% [3]. - The report anticipates a potential rebound in chick prices during July and August, despite current inventory pressures [3]. Pet Food - The total sales of pet food during the 5-6 month period reached 5.83 billion CNY, reflecting a year-on-year growth of 6% [3]. - The cumulative sales for the first half of 2025 reached 14.91 billion CNY, showing a year-on-year increase of 12% [3]. - Leading brands are expected to continue outperforming the market, with a focus on product innovation and market leadership [3]. Animal Health - The report notes a 15.8% year-on-year increase in vaccine approvals, with a total of 9,128 batches approved from January to May 2025 [3]. - The recovery in livestock profitability is expected to drive demand for animal health products, particularly vaccines [3].

Investment Rating - The investment rating for the agriculture, forestry, animal husbandry, and fishery industry is "Positive" (maintained) [1] Core Views - The report highlights that the investment logic for live pigs is marginally improving, supported by both fundamental and policy factors, with expectations of rising prices in the second half of 2025 [25] - The domestic pet consumption market remains stable, but trade tensions have put pressure on exports, with a notable decline in sales and export figures [20][29] Summary by Sections Weekly Observation - Short-term supply increases have led to a decline in pig prices, but after market adjustments, prices may rise further [4][13] - As of July 18, the average price of live pigs was 14.19 yuan/kg, down 3.34% from the previous week [13][14] Weekly Market Performance - The agriculture index underperformed the market by 0.83 percentage points, with the Shanghai Composite Index rising by 0.69% [30][32] - The animal health sector showed the highest gains among sub-sectors [30] Price Tracking - The average price of live pigs decreased to 14.27 yuan/kg, while the price of piglets increased slightly to 31.96 yuan/kg [41] - The price of corn decreased to 2473 yuan/ton, while soybean meal prices rose to 2928 yuan/ton [15][56] Key News - As of the end of Q2 2025, the number of breeding sows was reported at 40.43 million, with overall meat production showing a slight increase [38] - The report indicates a stable trend in domestic pet food sales, with a total of 31.87 billion yuan in sales for June, down 7.98% year-on-year [20][23] Recommendations - Recommended stocks in the pig farming sector include Muyuan Foods, Wens Foodstuff Group, and others, while in the feed sector, Hai Da Group and New Hope Liuhe are highlighted [25][29]

Investment Rating - The report maintains an "Overweight" rating for the agriculture, forestry, animal husbandry, and fishery industry [45][46]. Core Insights - The SW agriculture, forestry, animal husbandry, and fishery industry slightly underperformed the CSI 300 index, with an increase of 0.74% from July 4 to July 17, 2025, lagging behind the index by approximately 0.93 percentage points [11][14]. - Most sub-sectors recorded positive returns during the same period, with animal health, agricultural product processing, breeding, and planting sectors increasing by 8.71%, 2.56%, 1.42%, and 0.46% respectively, while the fishery and feed sectors saw declines of 1.8% and 4.2% [14][15]. - The overall price-to-book (PB) ratio for the industry is approximately 2.66 times, indicating a slight recovery, but still remains at a historical low, around 59.2% of the valuation center since 2006 [21][22]. Industry Key Data - **Pig Farming**: - The average price of external three yuan pigs decreased from 15.31 CNY/kg to 14.37 CNY/kg between July 4 and July 17, 2025 [24]. - As of June 2025, the breeding sow inventory reached 40.43 million heads, slightly up by 0.02% from the previous month, which is 103.7% of the normal holding capacity of 39 million heads [24]. - The profit from self-breeding pigs is 90.89 CNY/head, while the profit from purchased piglets is -18.66 CNY/head, both showing a decline compared to the previous week [29]. - **Poultry Farming**: - The average price of broiler chicks in major production areas was 1.37 CNY/chick, showing a slight increase, while the average price of layer chicks was 3.88 CNY/chick, which slightly decreased [31]. - The average price of white feather broilers was 6.4 CNY/kg, which has also decreased, with a profit of -2.93 CNY/chick, showing a slight recovery compared to the previous week [34]. - **Feed Costs**: - The spot price of corn was 2409.12 CNY/ton, showing a decline, while soybean meal prices were 2952 CNY/ton, which fluctuated in the last two weeks [26]. Industry Outlook - The report anticipates an overall increase in pig production capacity this year, which may suppress pig prices. The breeding sow inventory has some room for reduction [45]. - The poultry sector continues to face pressure on profitability, with opportunities for marginal improvement [45]. - In the feed sector, there are opportunities arising from increased concentration among leading companies, cost reduction, and overseas expansion [45]. - The domestic pet market is expected to maintain rapid growth, with leading domestic brands likely to see significant growth [45]. Recommended Stocks - Key stocks to focus on include: - Muyuan Foods (002714) - Wens Foodstuff Group (300498) - Shennong Development (002299) - Haida Group (002311) - Bio-Stock (600201) - Zhongchong Co., Ltd. (002891) - Yiyi Co., Ltd. (001206) [46].

Investment Rating - The report maintains an investment rating of "Outperform" for the agricultural, forestry, animal husbandry, and fishery industry [1][9]. Core Insights - The agricultural, forestry, animal husbandry, and fishery industry is currently experiencing weak market demand and low prices for livestock and poultry, particularly in the pig farming sector, which has seen a significant price drop [9][12]. - The report highlights that the industry is currently undervalued, with price-to-earnings (P/E) and price-to-book (P/B) ratios below historical averages, suggesting potential for valuation recovery [9][12]. Summary by Sections Market Review - In June 2025, the agricultural, forestry, animal husbandry, and fishery index rose by 1.13%, underperforming the CSI 300 index, which increased by 2.50%, resulting in a relative underperformance of 1.37 percentage points [9][12]. - The planting sector showed the highest gains, while the animal health processing sector experienced the largest declines [12]. Livestock Farming Data Tracking - **Pig Farming**: The average trading price for pigs in June 2025 was 14.28 yuan/kg, down 2.16% month-on-month and 21.81% year-on-year. The market shifted to a surplus situation, leading to price declines [9][17]. - **Broiler Chickens**: The average price for broiler chicks in June 2025 was 2.15 yuan/chick, reflecting a slight decrease. The cautious replenishment of chicks due to declining prices further pressured the market [9][27]. Pet Food Sector - In May 2025, pet food exports totaled 28,900 tons, a year-on-year decrease of 5.52%. The cumulative export value for the first five months was $581 million, up 4.59% year-on-year [9][34]. Major Agricultural Product Price Tracking - The report includes tracking of key agricultural product prices, indicating fluctuations in corn, wheat, and soybean meal prices during June 2025 [9][39]. Industry Dynamics and Company News - The report outlines significant events in the industry, including a decrease in grain imports and ongoing developments in the seed industry aimed at enhancing agricultural productivity [9][46]. - Key announcements from listed companies in the sector include various asset restructuring and financing activities [9][48].

Core Insights - The article discusses how certain industries are thriving despite the prevailing narrative of economic hardship, highlighting eight sectors that present significant business opportunities in a low-desire society [3][4]. Group 1: Key Industries - The second-hand economy is booming, with companies like Dabaiku in Japan and Hongbulin in China seeing substantial revenue growth as consumers turn to second-hand luxury goods [8][6]. - The pet economy is flourishing, with brands like Inaba and Guobao experiencing strong stock performance, as consumers prioritize spending on pet products over traditional family expenses [9][10]. - The adult care market, exemplified by Unicharm's success in Japan, is projected to grow significantly in China, driven by an aging population [14][16]. - Health food and beverage sectors are expanding, with brands like Dongfang Shuye and Jianchun capitalizing on the rising health consciousness among consumers [19][20]. - The beauty economy remains robust, with products like collagen supplements and home beauty devices achieving high sales, indicating a persistent demand for beauty solutions [23]. - Outdoor and leisure products are gaining traction, with brands like Snow Peak and Kailas seeing increased sales as consumers seek outdoor experiences [25]. - The emotional economy is on the rise, with brands like Labubu and Rio catering to consumers' desires for comfort and enjoyment [27][28]. - The convenience economy is thriving, with frozen food brands and smart home appliances addressing the needs of younger generations who prioritize time-saving solutions [32][33]. Group 2: Market Trends - The article emphasizes that even in a low-desire period, there are significant opportunities for companies that can identify and invest in counter-cyclical sectors [36]. - The upcoming seminar aims to provide insights into the methodologies of successful consumer giants in Japan and China, focusing on efficiency, demand reconstruction, and capital strategies [37].