Core Viewpoint - The performance of pork companies in the first half of 2025 appears strong, with significant profit increases, yet the capital market remains skeptical, leading to many pork stocks languishing at low levels and some becoming "zombie stocks" unable to benefit from market uptrends [1][3]. Group 1: Financial Performance - Major pork companies reported impressive profits: Muyuan Foods achieved a net profit of 10.53 billion yuan, a year-on-year increase of 1169.77%; Wens Foodstuff Group reported a net profit of 3.475 billion yuan, up 159.12%; New Hope recorded a net profit of 754.9 million yuan, a 162% increase; and Dekang Agriculture and Animal Husbandry posted a net profit of 1.292 billion yuan [1]. - The profits are primarily driven by cost reductions rather than price increases or scale expansions, as raw material prices like corn and soybean meal have declined, coupled with improved production efficiency [3][4]. Group 2: Industry Challenges - The industry faces a significant overcapacity issue, with the number of breeding sows still at 40.42 million as of July 2025, exceeding the normal holding capacity [3]. - The market has not yet seen a supply-demand gap due to prolonged profitability since May 2024, with larger scale farms dominating the market, which hinders natural capacity reduction [4][5]. Group 3: Policy and Regulation - The Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission have mandated that 25 leading pork companies reduce their breeding sows by 1 million by January 2026, with penalties for non-compliance [3][5]. - The policy's effectiveness may be limited due to structural differences in the industry, where large companies comply while smaller farms may not, potentially undermining the intended impact of the regulations [5][7]. Group 4: Market Dynamics - The industry has been in a profitable cycle since May 2024, but as of September 2025, the self-breeding model has begun to incur losses, with an average loss of 24.44 yuan per pig [11]. - The average price of pigs has dropped to approximately 12.6 yuan/kg, while the average cost is around 12.8 yuan/kg, indicating that further price declines are necessary for significant capacity reduction [11][14]. Group 5: Future Outlook - Even if production capacity decreases, overall supply may not decline due to increased production efficiency, which has risen significantly from 15.3 in January 2021 to 20.8 in January 2025 [13]. - The expectation for a reversal in the pork cycle should be tempered, as the industry is transitioning to a "micro-profit norm," shifting investment logic from "betting on cycles" to "selecting stocks" [16][17].

Core Viewpoint - The pig market is experiencing a downturn despite the traditional peak season, with prices dropping and concerns over overcapacity in the industry [1][4][6]. Group 1: Market Performance - As of September 26, the average price of external three yuan pigs in China was 12.71 yuan/kg, down 0.04 yuan/kg from the previous day, with half of the regions experiencing prices in the "5 yuan pig price zone" [1]. - The average price of pigs in the third week of September was 13.85 yuan/kg, and the average pork price was 24.51 yuan/kg, reflecting a 0.8% decrease from the previous week [1]. - The cumulative output of listed pig companies from January to August 2025 reached 126 million heads, a year-on-year increase of 21.12% [6]. Group 2: Industry Dynamics - The current pig industry is in its sixth cycle, with the internal expansion phase nearing its end, leading to accelerated capacity reduction due to policy and losses [3][12]. - The Ministry of Agriculture plans to reduce the breeding sow stock by approximately 1 million heads to 39.5 million [8]. - By the end of July 2025, the breeding sow stock was at 40.42 million heads, which is 103.6% of the normal holding capacity, indicating a need for capacity regulation [5][9]. Group 3: Consumer Behavior and Price Trends - Consumer demand is expected to recover during the Mid-Autumn Festival and National Day, potentially stabilizing prices [3]. - The market is witnessing a negative cycle where lower prices lead to panic selling among farmers, further driving prices down [7]. - The industry is shifting towards a more structured approach, with a focus on quality and differentiation rather than merely reducing capacity [12][13]. Group 4: Policy and Strategic Adjustments - The government is actively implementing measures to control pig production, including meetings with major pig companies to discuss production adjustments [8][9]. - Companies like Wens Foodstuffs and Muyuan Foods are reducing their breeding sow numbers and controlling the weight of pigs at slaughter [12]. - The industry is expected to evolve into a "30-30-40" structure, with 30% of large enterprises ensuring basic capacity, 30% focusing on niche markets, and 40% being flexible family farms [13].

Core Viewpoint - The swine market is experiencing a downturn despite the traditional peak season, with prices dropping significantly and concerns over overcapacity in the industry [1][7]. Price Trends - As of September 26, the average price of external three yuan pigs in China is 12.71 yuan/kg, with a notable decline in prices across various regions [1]. - The average price of pigs in the third week of September was reported at 13.85 yuan/kg, while pork averaged 24.51 yuan/kg, reflecting a week-on-week decrease of 0.8% [1]. Market Dynamics - Analysts indicate that the high inventory levels and pressure on enterprises to sell are contributing to the lack of a market bottom, despite government measures to regulate production capacity [3][5]. - The current swine industry is in its sixth cycle, with expectations that the effects of capacity reduction will become evident by the second half of 2026, potentially leading to price increases [5]. Supply and Demand Factors - The overall high inventory levels, coupled with insufficient consumer demand, have resulted in a "peak season not peaking" scenario for pig prices [7]. - By November 2024, the number of breeding sows is expected to reach a peak of 40.8 million, indicating a continued supply pressure [7]. Corporate Actions - Major companies are actively reducing their breeding sow numbers and controlling production to address overcapacity issues [16][17]. - For instance, companies like Wens Foodstuffs and New Hope are maintaining stable inventory levels and controlling the weight of pigs at the time of sale [17]. Market Sentiment - There is a shift in market sentiment, with some farmers exhibiting panic selling behavior, leading to a negative feedback loop where lower prices prompt quicker sales, further driving prices down [8]. - Despite the challenges, there is a consensus in the industry regarding the need for proactive capacity reduction and quality improvement [8]. Structural Changes - The industry is expected to evolve into a "three-three" structure, with 30% of leading enterprises ensuring basic capacity, 30% focusing on niche markets, and 40% consisting of medium-sized family farms leveraging flexibility [18].

Core Viewpoint - The pig market is experiencing a downturn despite the traditional peak season, with prices dropping and concerns over excess production capacity [1][2][3] Price Trends - As of September 26, the average price of external three yuan pigs in China is 12.71 yuan/kg, down 0.04 yuan/kg from the previous day, with half of the regions experiencing prices in the "5 yuan pig price zone" [1] - The average price of pigs in the third week of September was 13.85 yuan/kg, and the average pork price was 24.51 yuan/kg, reflecting a 0.8% decrease from the previous week [1][2] Supply and Demand Dynamics - High inventory levels and the release of production capacity by leading enterprises are contributing to the oversupply in the pig industry, compounded by weak consumer demand [2][3] - The number of breeding sows is projected to reach a high of 40.8 million by November 2024, indicating sustained supply levels [2] Industry Adjustments - Major pig farming companies are actively reducing production capacity, with a consensus on the need for quality improvement and capacity reduction [5][6] - Companies like Wens Foodstuffs and New Hope are implementing measures to control the number of breeding sows and reduce average slaughter weights [8] Market Sentiment and Future Outlook - Analysts suggest that the market may stabilize by November as excess capacity is gradually absorbed, with potential for price recovery [5][6] - The industry is expected to evolve into a "three-three" structure, balancing large enterprises, specialized farms, and medium-sized family farms to better withstand cyclical fluctuations [9]

Core Viewpoint - The pig market in China is experiencing a downturn despite traditionally being a peak season, with prices dropping and signs of overcapacity in the industry [2][4]. Price Trends - As of September 26, the average price of external three yuan pigs was 12.71 yuan/kg, a decrease of 0.04 yuan/kg from the previous day, with half of the country experiencing prices around 5 yuan/kg [2]. - The average price of pigs was reported at 13.85 yuan/kg and pork at 24.51 yuan/kg, reflecting a 0.8% decline from the previous week [2]. Market Dynamics - The current pig industry is in its sixth cycle, with the internal expansion phase nearing its end, leading to accelerated capacity reduction due to policy and losses [2][5]. - The overall high inventory levels and the pressure to release stock from leading enterprises contribute to the overcapacity issue, compounded by weak consumer demand [4][6]. Production and Supply - The number of breeding sows is projected to remain high, with 40.8 million expected by November 2024, indicating a potential increase in supply by Q3 2025 [5]. - Major pig farming companies reported a cumulative output of 126 million pigs from January to August 2025, a year-on-year increase of 21.12% [6]. Policy and Regulation - The government has initiated measures to reduce the breeding sow population by approximately 1 million heads to stabilize the market [9][10]. - The central government has also been actively using reserve frozen pork to influence market prices, with 15,000 tons released in late September [10]. Industry Adjustments - Companies are adopting strategies to optimize their operations, such as reducing the number of breeding sows and controlling the weight of pigs at slaughter [13][14]. - Some smaller enterprises are shifting towards differentiated products, such as high-end pork, to maintain profitability despite market fluctuations [14][15]. Future Outlook - Analysts suggest that the market may stabilize by November as excess capacity is gradually absorbed, with a potential for price recovery [7][10]. - The industry is expected to evolve into a "three-three" structure, balancing large enterprises, specialized farms, and medium-sized family farms to better withstand market cycles [15].

Investment Rating - The report suggests a positive outlook for the pig farming industry, indicating a shift towards stable and high-quality development, with a recommendation to focus on leading pig farming companies that demonstrate good performance and dividend payouts [6][5]. Core Insights - The pig farming industry is entering a new phase characterized by improved profitability and stability, driven by effective cost management and policy support for capacity reduction. The report emphasizes the importance of recognizing the strength of current policies aimed at reducing production capacity [6][5]. - In the first half of 2025, the pig farming sector saw a significant increase in supply, with a slight decline in pig prices year-on-year. However, listed companies in the sector reported substantial revenue growth and profit increases, primarily due to volume-driven strategies [6][21]. - The report highlights that the current profitability cycle in the pig farming industry is expected to be prolonged, with conservative market expectations and limited capacity expansion. The anticipated supply pressure may lead to continued losses for some farming operations [6][5]. Summary by Sections 1. Overview of the Pig Farming Industry in H1 2025 - The average price of pigs in H1 2025 was 14.80 yuan/kg, reflecting a year-on-year decrease of 4.21%. The supply of pigs increased due to higher production efficiency and a growing number of breeding sows [10][11]. - The slaughter volume from designated slaughterhouses increased significantly, with a year-on-year rise of 21.4% in Q2 2025, indicating stable demand despite price fluctuations [11][12]. 2. Performance Review of Listed Pig Farming Companies - In H1 2025, the total revenue of listed pig farming companies reached 201.9 billion yuan, a year-on-year increase of 17.9%, while net profit surged by 865.5% to 15.9 billion yuan [21][22]. - The leading companies, such as Muyuan Foods and Wen's Foodstuffs, reported substantial increases in both revenue and profit, with Muyuan achieving a 45% increase in the number of pigs slaughtered [27][26]. 3. Industry Outlook under the "Anti-Internal Competition" Policy - The report anticipates that the policy measures aimed at reducing production capacity will accelerate the pace of capacity reduction in the industry, with plans to cut 1 million breeding sows within six months [6][5]. - The industry is expected to transition towards a more stable and high-quality development phase, with improved profitability and cash flow for leading companies [6][5]. 4. Investment Analysis - The report suggests that investors should focus on companies with strong performance and reliable dividend payouts, as these firms are likely to experience a reassessment of their value in the market [6][5]. - The report indicates that the current cycle of profitability in the pig farming industry is expected to last longer than anticipated, with limited capacity expansion and ongoing supply pressures [6][5].

Core Insights - The pig prices have reached a new low for the year, with average prices at 12.83 yuan/kg and piglet prices at 24.08 yuan/kg as of September 23 [1] - The livestock farming ETF (516670) has seen a decline of 1.66% in early trading, with significant capital inflow of over 81 million yuan in the past five trading days, indicating a counter-trend investment strategy [1] - The profitability of pig farming has dropped below cost levels, with external piglet farming losses at -199.31 yuan per head and self-breeding losses at -24.44 yuan per head, marking a return to losses after over 16 months of profitability [2] - A meeting on pig production capacity control was held on September 16, with plans to reduce the breeding sow population by approximately 1 million heads, bringing the total to about 39.5 million heads [2] - The industry is expected to undergo accelerated capacity reduction due to the dual pressures of "anti-involution" policies and losses leading to production cuts, suggesting a potential upward trend in pig prices and sector performance [3] Industry Summary - The pig farming sector is experiencing a significant downturn, with prices and profits declining sharply, leading to a comprehensive loss situation for farmers [2] - The current market conditions indicate an oversupply of pigs, with increased supply from group farms and stricter environmental regulations affecting piglet replenishment sentiment [1][2] - The livestock farming ETF closely tracks the swine farming industry, with a significant portion of its holdings in major pig farming companies, indicating a concentrated investment in this sector [3]

Core Insights - The pig farming industry in China is undergoing a significant transformation, moving away from traditional small-scale operations to large, technologically advanced farms driven by capital investment and efficiency [3][5][42] - The industry is characterized by a "de-scaling" trend, where small farmers are being pushed out due to market pressures, high costs, and technological advancements [5][43] Group 1: Industry Overview - China is the world's largest consumer of pork, slaughtering approximately 700 million pigs annually, which accounts for over half of global pig farming [1] - Despite being a major producer, China remains a net importer of pork, requiring millions of tons from abroad each year [1] - The pig price index is a crucial economic indicator, reflecting the supply chain's impact on the broader economy and public welfare [3] Group 2: Market Dynamics - The "pig cycle" is a fundamental aspect of the industry, where price fluctuations lead to cycles of overproduction and underproduction, typically lasting 3-4 years [6][11] - The cycle is influenced by the time lag in pig production, which takes 10-18 months from breeding to market [6][8] - Market participants often react to price signals too late, leading to a boom-and-bust cycle that disproportionately affects small farmers [9][14] Group 3: Challenges and Risks - The African Swine Fever (ASF) outbreak has severely impacted China's pig population, reducing it by nearly 30% within a year of its introduction in August 2018 [20] - The disease's high mortality rate and complex transmission methods pose significant challenges for small farmers, who lack the resources to implement stringent biosecurity measures [22][28] - Rising operational costs, particularly feed, which constitutes about 60% of total costs, further strain small-scale operations [28][30] Group 4: Technological Advancements - Large-scale farms leverage advanced technologies in breeding, feeding, and environmental control, giving them a competitive edge over traditional methods [32][36] - Innovations such as genetic selection and smart feeding systems enhance productivity and reduce waste, making large farms more efficient [32][39] - The integration of technology from companies like Huawei into pig farming operations exemplifies the shift towards industrialized meat production [36][39] Group 5: Future Outlook - The future of China's pig farming industry is expected to be dominated by a few large players, leading to a high concentration of market share among companies like Muyuan, Wens, and New Hope [43] - Smaller farmers may need to adapt by partnering with larger firms to mitigate risks associated with market volatility and disease outbreaks [44]

Core Viewpoint - The livestock sector is experiencing significant capital inflow, with the Livestock ETF (159865) seeing over 600 million yuan in net inflows for five consecutive days, indicating strong investor interest in this area [1]. Group 1: Industry Dynamics - The Ministry of Agriculture and Rural Affairs is implementing capacity regulation measures, with a focus on reducing the number of breeding sows by 1 million over the next six months, which is expected to accelerate capacity reduction in the industry [1]. - The current "anti-involution" policy and the dual impact of losses and production cuts are likely to push the industry into a phase of accelerated capacity reduction, suggesting a favorable environment for investment in leading pig farming companies [1]. Group 2: Investment Opportunities - The livestock sector may have entered a configuration phase, with attention on the marginal changes in the Livestock ETF (159865) [2]. - For investors without stock accounts, alternative investment options include the Guotai CSI Livestock Breeding ETF Link A (012724) and Link C (012725) [2].

Market Overview - On September 19, A-shares saw a decline across all major indices, with the Shanghai Composite Index down by 0.30%, the Shenzhen Component Index down by 0.04%, and the ChiNext Index down by 0.16% [1] - The CSI A50 index increased by 0.33%, outperforming other indices [1] - The total trading volume in the Shanghai and Shenzhen markets was 23,238 billion RMB, a significant decrease of over 811.3 billion compared to the previous trading day [1] Index Performance - The CSI A50 index has risen by 12.04% year-to-date, while the Shanghai Composite Index has increased by 13.97% [2] - The ChiNext Index has shown a year-to-date increase of 44.33%, while the Shenzhen Component Index has increased by 25.51% [2] - The Hang Seng Technology Index rose by 0.37% and has a year-to-date increase of 40.87% [2] Sector Performance - The coal sector (1.97%), non-ferrous metals (1.19%), and building materials (1.05%) were the top-performing sectors [4] - Conversely, the automotive sector (-1.94%), pharmaceutical and biotechnology (-1.41%), and computer sector (-1.26%) experienced the largest declines [4] Fund Flow - The ETF market continued to see a net inflow, totaling 17.694 billion RMB this week [5] - Cross-border ETFs and stock ETFs were the main contributors to inflows, with net inflows of 17.655 billion RMB and 7.588 billion RMB, respectively [5] - Stock (broad-based) ETFs saw a significant net outflow of 16.252 billion RMB, indicating a declining preference for broad-based ETF investments [6] Investment Trends - The livestock ETF (159867) saw a net subscription of 10.5 million units, marking nine consecutive days of net inflow [11] - The chemical ETF (159870) recorded a net subscription of 1.75 billion units, driven by the strengthening of solid-state battery concepts [12] - The non-ferrous metals sector is experiencing increased interest, particularly in gold stocks, as gold prices have recently surpassed 3,660 [13]