Core Viewpoint - Dekang Agriculture and Animal Husbandry (02419.HK) reported a revenue increase of 24.3% year-on-year for the first half of 2025, reaching 11.695 billion yuan, but net profit declined by 24.06% to 1.36 billion yuan, indicating a situation of "increased revenue without increased profit" [1][2] Revenue and Profit Analysis - The company's sales volume of live pigs reached 5.1174 million heads, a year-on-year increase of 27.1%, while sales of yellow feather broilers were 42.7033 million heads, up 7.2% [1][2] - The revenue from the pig segment was approximately 9.879 billion yuan, a 32.6% increase year-on-year, but the sales cost increased by 17.3% to 9.666 billion yuan, nearly equaling the entire revenue of the pig segment [2][3] Segment Performance - The poultry segment reported revenue of about 1.336 billion yuan, down 13.5% year-on-year, with average prices for yellow feather broilers declining by 20.9% due to weak demand in the catering industry [3] - The auxiliary products segment achieved revenue of approximately 481 million yuan, a year-on-year increase of 16.1% [3] Market Dynamics and Future Outlook - The company noted that the fluctuation in performance reflects the cyclical nature of the pig industry, with significant past losses and gains influenced by market conditions [4][5] - For the second half of 2025, the company plans to focus on the synergistic development of its three main segments, aiming to enhance market share and operational efficiency [6]

Summary of the Conference Call for Muyuan Foods Co., Ltd. Company Overview - **Company**: Muyuan Foods Co., Ltd. - **Industry**: Swine farming and meat processing Key Points and Arguments Financial Performance - In 2024, Muyuan Foods achieved a positive free cash flow of approximately 18 billion yuan, attributed to cost control and reduced capital expenditures [2] - The net profit for the first half of 2025 reached 10.53 billion yuan, with expectations to exceed the previous year's total [2][12] - The dividend payout ratio reached 47.5%, with total shareholder returns (including stock buybacks) amounting to 6.11 billion yuan, representing 58% of net profit [3] Cost Control - As of July 2025, the cost per kilogram of pork dropped to 11.8 yuan, the lowest among listed companies, achieved through enhanced internal efficiency [2][4] - The strategic focus has shifted from expansion to internal optimization and shareholder returns [2][6] Industry Dynamics - The swine farming industry is entering a capacity regulation phase, with stricter policies limiting production capacity, leading to reduced capacity fluctuations and stabilized prices [2][7] - The market share of large-scale farming entities has increased to 70%, while smallholders have decreased to 30%, enhancing market stability [8] Future Projections - The expected price center for pork is 14 yuan per kilogram, with an estimated output of 90 million pigs, potentially leading to a net profit of 30 billion yuan [5][13] - Long-term free cash flow is projected to stabilize around 40 billion yuan, with dividends potentially ranging from 20 billion to 30 billion yuan [14] Strategic Focus - Future strategies will prioritize improving internal efficiency and increasing shareholder returns, with a potential increase in dividend payout ratios to 60% or even 80% as debt levels decrease [6][14] - The company is actively pursuing international expansion, having entered the Vietnamese market and planning further growth through mergers and joint ventures [5][19] Market Perception - Currently valued at approximately 250 billion yuan, market perception remains unclear, often viewing the company as a cyclical stock despite significant changes in capital expenditure and debt management [15][22] Challenges and Responses - The industry faces challenges such as high feed costs and complex disease environments, but Muyuan has effectively controlled disease spread and optimized costs through advanced technologies [17][18] Global Expansion Plans - Muyuan's global expansion will focus on supply chain, breeding, and pig farming, with funds raised from the Hong Kong stock issuance likely directed towards these initiatives [19] Overall Outlook - The future outlook for Muyuan Foods is positive, with expectations of substantial free cash flow and dividend potential, necessitating a reevaluation of its market position and growth prospects [21][22]

Core Viewpoint - The significant growth in Muyuan Foods' performance in the first half of 2025 is attributed to increased pig sales and reduced breeding costs, positioning the company favorably in the market [2][3]. Financial Performance - In the first half of 2025, Muyuan Foods achieved operating revenue of 76.463 billion yuan, a year-on-year increase of 34.46% [2]. - The net profit attributable to shareholders reached 10.53 billion yuan, reflecting a staggering year-on-year growth of 1169.77% [2]. - The company sold 46.91 million pigs, including 38.394 million commercial pigs, 8.291 million piglets, and 225,000 breeding pigs [2]. Cost Management - The breeding cost for pigs decreased to below 12.1 yuan per kilogram by June 2025, with the company managing to keep costs under 12.5 yuan per kilogram [2]. - The overall pig price fluctuated around 14.5 yuan per kilogram in the first half of the year, contributing to improved gross profit margins [2]. Production and Capacity - Muyuan Foods slaughtered 11.4148 million pigs in the first half of 2025, marking a year-on-year increase of 110.87% [3]. - The company's production capacity utilization rate reached 78.72% due to the expansion of sales channels [3]. Strategic Initiatives - The company is actively reducing its breeding sow inventory in response to national policies, decreasing from a peak of 3.621 million to 3.43 million by July 2025, with plans to further reduce to 3.3 million by year-end [3]. - Muyuan Foods is expanding into international markets, having established a subsidiary in Vietnam and submitted an application for H-share listing in Hong Kong [3]. Shareholder Returns - The company plans to distribute a cash dividend of 9.32 yuan per 10 shares, totaling 5.002 billion yuan, which represents 47.5% of the net profit attributable to shareholders for the first half of 2025, marking a record high [4].

Core Viewpoint - The company, Muyuan Foods, reported a significant increase in net profit, exceeding 10.5 billion yuan, driven by cost advantages and a rise in pig sales despite a downturn in pig prices [1][3]. Financial Performance - For the first half of 2025, Muyuan Foods achieved revenue of 76.463 billion yuan, a year-on-year increase of 34.46% [2][3]. - The net profit attributable to shareholders reached 10.53 billion yuan, marking a staggering growth of 1169.77% compared to the same period last year [1][3]. - Basic earnings per share were reported at 1.96 yuan, reflecting a year-on-year increase of 1206.67% [3]. - The net cash flow from operating activities was 17.35 billion yuan, up 12.13% from the previous year [3]. Dividend Distribution - The company announced a cash dividend of 9.32 yuan per 10 shares (tax included), totaling 5.002 billion yuan, which represents 47.5% of the net profit for the first half of 2025 [3][5]. Operational Highlights - Muyuan Foods reported an increase in pig sales, with a total of 46.91 million pigs sold, including 38.39 million market pigs, 8.29 million piglets, and 0.225 million breeding pigs [5]. - The company processed 11.41 million pigs and sold 127.36 thousand tons of fresh and frozen pork products [5]. Financial Health - As of the end of June, Muyuan Foods had a debt-to-asset ratio of 56.06%, a decrease of 2.62% from the beginning of the year [4]. Industry Context - Despite the strong performance of Muyuan Foods, the overall pig price remains low, indicating that the pig cycle has not yet reversed, with expectations of only moderate seasonal price increases in the second half of the year [7][9].

Real Estate - Developers are facing significant inventory pressure, with unsold housing area expected to rise from 670 million square meters in 2023 to 750 million square meters by the end of 2024, and further to 798 million square meters by February 2025 [2] - The number of second-hand homes listed for sale is also increasing, with a projected 2.7 million listings across 100 cities by April 2025, marking an 18.6% year-on-year increase [2] - Developers are employing strategies of "visible stability and hidden price drops," with some properties listed at 85,000 yuan per square meter but selling for under 70,000 yuan after discounts [2] - Homeowners are also adjusting prices, with some in Hangzhou reducing their asking prices by 300,000 yuan over four months [2] - For first-time buyers, this period presents a "window of opportunity" as down payments and monthly payments are lower than rental costs, but caution is advised in cities with high inventory and population outflow [2] Automotive - The luxury car market has experienced a significant shift, with traditional brands like BMW, Audi, and Mercedes-Benz drastically reducing prices due to severe overcapacity, with industry utilization rates potentially dropping below 60% [5] - Promotions and discounts are rampant, with prices for models like BMW starting at 150,000 yuan and Audi at 160,000 yuan [5] - Consumers are advised to be cautious of "residual value traps" and to prefer new electric vehicles over older gasoline models [5] Home Appliances - The home appliance market has seen a price drop since the second half of 2024, with reductions ranging from 300 to 500 yuan for common products like TVs and refrigerators [7] - The average price of a 75-inch 4K TV has fallen below 4,000 yuan, a 42% decrease compared to three years ago, while energy-efficient air conditioners are now available for under 2,000 yuan [7] - The price reductions are attributed to rapid technological advancements and high inventory levels, creating a favorable buying opportunity for consumers [7] Pork Industry - The pork market is experiencing a price decline, with average prices dropping to 14 yuan per kilogram in many regions, and some areas seeing prices fall to 10 yuan [9] - Despite the lower prices, industry insiders warn of potential losses, with predictions of a 300 yuan loss per pig sold, leading to possible bankruptcies if conditions do not improve [11] - The government is implementing measures to control production capacity, including reducing the number of breeding sows and managing the weight of pigs being sold [11] General Market Trends - A broader trend of price reductions is observed across various sectors, including luxury goods, fruits, and coffee, indicating a potential economic slowdown [13] - Consumers are encouraged to be mindful of spending and to focus on self-improvement as a long-term investment strategy [16]

Investment Rating - The industry investment rating is "Positive" (maintained) [2] Core Viewpoints - The rhythm of pig sales led to July pig prices rising less than expected, but the outlook for future prices remains optimistic. In July 2025, the national average selling price of live pigs was 14.55 yuan/kg, up 1.89% month-on-month but down 23.21% year-on-year. The slaughter volume in July was 4.1583 million heads, down 3.67% month-on-month but up 1.80% year-on-year. The completion rate of pig sales in July was 97.11% of the planned output, with an increase of 6.60% in planned output for August compared to July [6][15][22]. Summary by Sections Industry Overview - The increase in pig prices in July was less than expected due to the accelerated growth rate of pigs in May and June, leading to earlier sales in July. The price peaked at 15.46 yuan/kg on July 3 and fell to 14.09 yuan/kg by the end of July. The supply gap and supportive policies suggest a positive outlook for future prices [6][15][18]. Supply and Structure - As of August 7, 2025, the proportion of large pigs (over 150kg) in the sales structure decreased, while the proportion of breeding stock increased. The breeding stock increased by 0.52% month-on-month, and the average profit per head for self-breeding and self-raising in July was 101.66 yuan, a month-on-month increase of 304.30% [7][16][22]. Corporate Performance - In July 2025, 12 listed pig companies reported a total of 15.2799 million heads sold, a year-on-year increase of 24.82%. The average selling prices for major companies increased month-on-month, with prices for companies like Muyuan, Wens, and New Hope rising by 1.6% to 3.4% [8][28][33].

Group 1 - The livestock ETF (159865) has seen a net inflow of 34 million units, indicating strong capital interest in livestock assets [1] - The "pig cycle" is fundamentally an output capacity cycle rather than just a price cycle, with the time lag from sow replenishment to fattened pig output being significant [1] - Since 2019, the financial situation at the bottom of the current cycle is the most pressured since 2006, with a focus on reducing losses and debt rather than rapidly increasing production capacity [1] Group 2 - The livestock farming industry is expected to enter a profit cycle starting from Q2 2024, but the average speed of debt reduction indicates a long road ahead for the industry [1] - Market expectations regarding the impact of rising pig production capacity on the profit cycle may be overly pessimistic, potentially overlooking the positive effects of declining raw material costs and a potential macro demand rebound in 2025 [1] - The sustainability of the current profit period in the pig farming industry may exceed market pessimism [1]

Core Insights - The report highlights the recovery cycle in the feed industry and marginal improvements in livestock farming, suggesting potential investment opportunities in related sectors [5][6] - The agricultural sector, particularly the livestock segment, is experiencing fluctuations in prices, with a noted decrease in pig prices and an increase in chicken prices, indicating a complex market dynamic [6][8] - The AI pharmaceutical sector is witnessing significant commercial validation, as evidenced by a major contract signed by Jingtai Holdings, reflecting the growing demand for AI technologies in drug development [11][14] Market Trends - The domestic market indices showed positive movements, with the Shanghai Composite Index closing at 3,665.92, up by 0.50% [4] - The agricultural sector's performance is highlighted by a 2.52% increase in the agriculture, forestry, animal husbandry, and fishery sector, ranking it 10th among sub-industries [6] - The robotics industry is also gaining traction, with over 1,500 robot products showcased at the World Robot Conference, indicating a growing interest in automation technologies [8] Industry Analysis - The feed industry is expected to see a recovery due to declining upstream raw material prices and improving conditions in the livestock sector, particularly for companies like Haida Group [6][8] - The pig farming industry is entering a profit cycle, but the overall debt reduction trend suggests a cautious approach to capacity expansion [6][8] - The AI pharmaceutical industry is on the brink of an explosive growth phase, with increasing collaborations between AI firms and traditional pharmaceutical companies [11][14] Company Insights - Wanchen Group is positioned as a leading player in the snack food market, with a significant revenue increase of 247.9% in 2024, driven by its aggressive store expansion strategy [19][20] - The company has established a robust supply chain and operational capabilities, which are critical for maintaining its market leadership in the competitive snack food sector [20] - The report forecasts continued revenue growth for Wanchen Group, with projected revenues of 551.32 billion, 670.39 billion, and 792.89 billion from 2025 to 2027 [20]

国家统计局数据显示，6月末全国存栏生猪4.24亿头，增长2.2%。其中能繁母猪存栏4043万头，为正常 保有量的103.7%，接近产能调控合理区域上限。同时，5月龄以上的中大猪存栏量和上半年全国新生仔 猪量均处于历史高位，这意味着下半年和明年春节后生猪出栏将明显增多。 农业农村部生猪产业监测预警专家朱增勇称："如果不及时采取产能调控，将有可能导致猪价在消费旺 季不旺，明年上半年尤其是春节后生猪养殖可能会出现亏损。" 当前，我国生猪产业正处于第6轮"猪周期"，随着生产效率持续提升和猪肉消费增长趋缓，生产大起大 落、价格大涨大跌风险依然存在。8月第1周猪价已降至每公斤14.53元，同比下降28.1%。为此，农业农 村部会商研判，将实施有效的生猪产能综合调控。按目前的生产和消费趋势，全国需要再调减约100万 头产能，能繁母猪总量保持在3950万头左右。 朱增勇称："引导生猪龙头企业发挥产能调控带头作用，合理淘汰能繁母猪，减少低质低效产能，适当 调减能繁母猪存栏。减少二次育肥，控制肥猪出栏体重，严控新增产能，避免盲目扩张'拼规模'，降低 后期生猪供过于求的市场风险，保障生猪价格和养殖收益的稳定。" 大型企业去产能 避 ...

Investment Rating - The report maintains an investment rating of "Buy-A" for Haida Group and "Buy-B" for Shengnong Development, Wen's Shares, and others [7]. Core Insights - The report suggests focusing on the recovery cycle of feed and the marginal improvement in breeding [1]. - The pig price has decreased week-on-week, with average prices in key provinces showing a decline [3]. - The feed industry is expected to see a bottoming out and recovery due to the decline in upstream raw material prices and improvements in the downstream breeding sector [3]. - The report highlights the potential growth of Haida Group's overseas feed business as a new performance growth point [3]. Industry Performance - For the week of August 4 to August 10, the CSI 300 index rose by 1.23%, while the agriculture sector increased by 2.52%, ranking 10th among sectors [2][24]. - The top-performing sub-industries included broiler chicken breeding, fruit and vegetable processing, and pig breeding [2][24]. Pig Breeding Sector - As of August 8, the average price of external three-way cross pigs in Sichuan, Guangdong, and Henan was 13.30, 15.39, and 13.83 yuan/kg, respectively, reflecting a week-on-week decline of 2.92%, 4.05%, and 3.82% [3][33]. - The average pork price was 20.41 yuan/kg, down 0.92% from the previous week [3][33]. - The self-breeding profit was 45.13 yuan/head, while the profit from purchasing piglets was -134.14 yuan/head [3][33]. Poultry Sector - As of August 8, the weekly price of white feather broiler chickens was 7.14 yuan/kg, up 4.54% week-on-week [3][47]. - The price of broiler chicks was 3.13 yuan/chick, reflecting a week-on-week increase of 21.79% [3][47]. - The profit from chicken breeding was 0.62 yuan/chick, while egg prices fell by 6.94% to 6.70 yuan/kg [3][47]. Feed Processing Sector - In June 2025, the total industrial feed production in China was 27.67 million tons, a month-on-month decrease of 0.1% but a year-on-year increase of 6.6% [54]. - The production of compound feed, concentrated feed, and additive premix feed saw year-on-year growth of 6.6%, 3.4%, and 8.7%, respectively [54]. Recommendations - The report recommends stocks such as Wen's Shares, Shengnong Group, Juxing Agriculture, Tangrenshen, and New Hope in the pig breeding sector due to expected profitability recovery starting from Q2 2024 [4]. - It also highlights the potential of domestic pet food brands like Guibao Pet and Zhongchong Shares, which are expected to perform well in the upcoming years [5].