Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the agricultural sector compared to the overall market performance [4][5]. Core Insights - The report highlights a slight increase in the number of breeding sows, emphasizing the long-term value of quality pig farming enterprises [3]. - The report notes that the agricultural index rose by 0.9%, mirroring the performance of the Shanghai and Shenzhen 300 index, with significant stock movements observed in various companies [4][5]. - The report suggests focusing on leading brands in the pet food sector due to their strong domestic sales performance and the potential for continued earnings surprises [4][5]. - The report indicates that pig prices have consistently outperformed market expectations, with a potential re-evaluation of price expectations for the second half of the year [4][5]. Summary by Sections Livestock Farming - The average selling price of pigs was reported at 13.91 RMB/kg, reflecting a week-on-week decrease of 3.5% due to seasonal demand weakness [4]. - The report indicates that the breeding sow inventory showed a slight increase in May, with various consulting firms reporting growth rates between 0.32% and 0.92% [4][5]. - The report emphasizes the importance of low-cost pig farming enterprises in achieving excess profits in the long term [4]. Pet Food Industry - The "618" shopping festival saw robust sales in the pet food sector, with leading brands showing significant performance improvements [4]. - Notable brands such as Guai Bao Pet and Zhong Chong Co. have seen their rankings improve significantly in various categories on major e-commerce platforms [4]. - The report suggests that the pet food industry's continued growth is supported by strong marketing efforts and increased market share for leading brands [4]. Animal Health - The report notes a recovery in the sales of veterinary vaccines, with a year-on-year increase of 23.02% in the number of vaccine batches approved for sale [4]. - The profitability of downstream farming enterprises is expected to drive sustained demand for immunization products, benefiting animal health companies [4].