Shenwan Hongyuan Securities·2026-01-12 08:12Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the sector compared to the overall market performance [4]. Core Insights - The report highlights a rebound in pig prices, which are stabilizing and maintaining strength. The focus is on the release of the pet industry white paper [1][4]. - The report suggests that the pig farming sector is experiencing a clear bottoming trend, with a focus on the progress of capacity reduction. The supply fundamentals for the first half of 2026 remain unchanged, indicating a prolonged bottoming period for the cycle [4]. - The pet industry is expected to see a valuation switch as it undergoes adjustments, with significant data from the 2026 China Pet Industry White Paper being released [4]. Summary by Sections Market Performance - The Shenwan Agricultural, Forestry, Animal Husbandry, and Fishery Index increased by 1.0%, while the CSI 300 rose by 2.8%. The top five gainers included Dahu Co. (17.8%), Zhongshui Fishery (16.1%), and Biological Co. (15.5%) [4][10]. - The report emphasizes the importance of monitoring the reduction of pig production capacity and suggests positioning in leading pig farming companies [4]. Pig Farming - As of January 11, the average selling price of external three yuan pigs was 12.70 yuan/kg, reflecting a week-on-week increase of 2.1%. The supply of large pigs is tight, and the price has rebounded to near the breakeven point for farming [4][3]. - The report indicates that the price of weaned piglets has also increased, reaching 251 yuan/head, close to the industry cost level [4][3]. Pet Industry - The 2025 urban pet (dog and cat) consumption market size reached 312.6 billion yuan, with a year-on-year growth of 4.1%. The dog market size was 160.6 billion yuan, growing by 3.2%, while the cat market size was 152.0 billion yuan, growing by 5.2% [4][3]. - The average annual spending per pet owner has shown a slight upward trend, with dog owners spending an average of 3,006 yuan and cat owners spending 2,085 yuan [4][3]. Poultry Farming - The price of white feather broiler chicks has decreased, with an average selling price of 3.15 yuan/chick, down 6.5% week-on-week. The supply of broilers remains tight, with the average selling price of white feather broilers at 3.79 yuan/kg [4][3]. - The report suggests that the theme of abundant supply in white feather broilers will continue into 2025-2026, with a focus on leading companies and long-term value [4].