2025-07-07 15:44Investment Rating - The report maintains a "Buy" rating for Haid Group with a target price of RMB67.00, indicating a potential upside of 14.4% from the current price of RMB58.59 [5][9][32]. Core Insights - The hog weight reduction has had a limited impact on prices in 2025, with an increase in average hog weight observed in May 2025. This trend is driven by higher profits from larger hogs compared to smaller ones [3][10]. - Stable sow inventories are reported, with a slight month-on-month increase of 0.1% to 40.42 million heads as of the end of May 2025. This stability suggests an abundant hog supply, contributing to a downward trend in hog prices [4][13]. - The Hog Breeding Index has risen approximately 5% since the end of May 2025, indicating profitability in hog breeding during the first half of 2025, which is expected to maintain or increase sow inventories [4][13]. Summary by Sections Hog Weight and Prices - The average hog weight in China increased in May 2025, driven by profit motivations. Farmers are unlikely to comply with directives to reduce hog weight if larger hogs yield higher profits [3][10]. - A reduction in hog weight has led to increased supply in early June 2025, which may have pressured hog prices. However, early sales by large-scale farmers could help ease oversupply in July, potentially leading to price improvements [12][13]. Sow Inventories and Production Indicators - Sow inventories remained stable in the first half of 2025, with significant improvements in production indicators, including an 11% year-on-year increase in market pigs per sow and a 6% increase in piglets per sow [4][24]. - The report suggests that the hog price is on a downward trend for 2025-26, as stable sow inventories act as a leading indicator for supply [4][13]. Company Preferences - Haid Group is preferred due to expected improvements in feed sales volume in both domestic and international markets, with a likely increase in gross profit per ton in 2025 [5][9]. - Muyuan Foods and Wens Foodstuff Group are rated as "Hold," with target prices of RMB39.40 and RMB16.60, respectively, indicating potential downsides of 6.2% and 2.8% from current levels [6][32].