Tianfeng Securities·2025-05-25 10:30Investment Rating - Industry rating: Outperform the market (maintained rating) [11] Core Views - The pet economy in China is rapidly developing, with domestic brands rising quickly. Focus on companies with high domestic income growth. Key recommendations include pet food companies such as Guibao Pet, Zhongchong Co., Petty Co., and Lusi Co. Additionally, attention is suggested for pet medical companies like Ruipu Biology and pet supplies companies like Yuanfei Pet and Tianyuan Pet [2][16]. Summary by Sections Pet Sector - The 618 shopping festival on Taobao saw significant sales, with 653 pet brands achieving over 100% year-on-year growth in the first hour. Notably, domestic brands like Fresh and Frigat saw sales growth exceeding 200%. The top live-streamer, Li Jiaqi, collaborated with leading domestic brands to offer discounts over 30%, enhancing consumer engagement and brand loyalty [1][15]. - In April 2025, Douyin's pet category sales reached 763 million yuan, a year-on-year increase of 40.77%, with sales volume up 53.35% [1][16]. - Pet food exports from China showed continuous growth, with 110,200 tons exported from January to April 2025, reflecting a year-on-year increase of 16.17% and generating 3.26 billion yuan in revenue, up 7.21% year-on-year [1][16]. Swine Sector - As of May 24, 2025, the average price of live pigs in China was 14.36 yuan/kg, down 2.84% from the previous week. The industry is facing weak demand, with slaughterhouses showing low inventory levels and a decrease in daily slaughter rates [3][17]. - The sector is characterized by low valuations and expectation discrepancies. The average market value per head for leading companies like Muyuan Foods and Wens Foodstuffs is currently below historical averages, suggesting potential investment opportunities [4][18]. Poultry Sector - The white chicken segment is facing uncertainties in breeding imports due to outbreaks of avian influenza, leading to a 34.01% year-on-year decline in breeding stock updates from January to April 2025 [5][19]. - The yellow chicken supply is tightening, with prices sensitive to demand changes. The current low inventory levels and potential policy-driven demand recovery could benefit companies like Lihua Co. and Wens Foodstuffs [6][22]. - The egg-laying chicken sector is experiencing high prices for chicks due to restricted imports, with prices remaining stable at 4.15 yuan/chick as of May 24, 2025 [7][23]. Planting Sector - The Ministry of Agriculture has outlined key support directions for grain and oil production, emphasizing the importance of biotechnology in enhancing crop yields and promoting food security [8][24]. - Recommendations include seed companies like Longping High-Tech and Dabeinong, and agricultural resource companies like Xinyangfeng [8][25]. Feed and Animal Health Sectors - The feed sector is highlighted with a focus on Haida Group, which is expected to benefit from market recovery and increased market share [9][26]. - The animal health sector is adapting to new demands, with companies like KQ Bio and Zhongmu Co. recommended for their potential in the evolving market landscape [10][27].