Tianfeng Securities·2025-05-04 13:04Investment Rating - Industry rating: Outperform the market (maintained rating) [15] Core Views - The pig farming sector shows significant profitability but with large disparities due to cost differences, leading to a "stronger becoming stronger" scenario [19][21] - The poultry sector is experiencing a structural decline in production capacity, with a focus on the white chicken segment as it approaches its lowest point [22][24] - The seed industry faces inventory pressure, but the biological breeding sector is expected to accelerate due to supportive policies [29][30] - The pet industry is witnessing rapid growth of domestic brands, with a focus on high-income growth companies [32][33] - The feed sector is recommended for investment due to improving market demand and cost control capabilities [34] Summary by Sections Pig Farming Sector - Q1 sales prices for pigs were low, averaging 14.5-15.5 CNY/kg, down from 16-17 CNY/kg in Q4 2024 [19] - Companies like Shennong and Juxing saw over 60% year-on-year growth in output [19] - Average profit per pig improved significantly, with leading companies achieving profits of 300-350 CNY per head [19][21] - Some companies are returning cash to shareholders with high dividend payout ratios [19] Poultry Sector - The white chicken segment is under pressure, with significant price declines and narrowing profits [22] - The egg-laying chicken sector is benefiting from rising chick prices and sales, with companies like Xiaoming showing substantial profit growth [28] - The yellow chicken segment is experiencing a supply contraction, with demand expected to improve gradually [26][27] Seed Industry - The seed sector is under pressure with a net profit decline of 37.6% in Q1, primarily due to excess supply [29] - High R&D investment is noted, with leading companies like Longping High-Tech maintaining a strong position [29][30] - New regulations are expected to bolster the biological breeding sector, enhancing competitiveness [30][31] Pet Industry - Major pet food companies reported strong revenue growth, with brands like Maifudi leading the market [32] - The demand for elderly pet care products is increasing significantly, indicating a shift in consumer preferences [32] - The pet economy is thriving, with a focus on high-growth domestic brands [33] Feed Sector - The feed sector is recommended for investment, with companies like Haida Group showing improved revenue and profit [34] - The market for aquaculture feed is expected to recover, driven by rising fish prices and supportive consumption policies [34] Animal Health Sector - The animal health sector is experiencing revenue and profit differentiation, with some companies benefiting from price increases in raw materials [35] - New product opportunities in the pet health segment are emerging, providing potential growth avenues [35][36]