Group 1 - The report highlights a reversal in the pig farming dilemma, indicating a potential recovery in the industry due to policy-driven capacity adjustments and supply reductions [2][8]. - The current pig cycle is in a de-stocking phase, with the number of breeding sows in China decreasing from a peak of 41.42 million in 2024 to 40.43 million in June 2025, a decline of approximately 2.4% [22][23]. - The Ministry of Agriculture and Rural Affairs has set a target to reduce the breeding sow population by about 1 million heads, aiming for a total of 39.5 million [22][23]. Group 2 - Short-term pig prices are expected to decline due to reduced second fattening and seasonal demand, but a long-term increase is anticipated if the breeding sow population stabilizes below 39.5 million [26][29]. - As of July 25, 2025, the profit from self-breeding pig farming was 62.16 yuan per head, a decrease of 31.61% from the previous week, while the loss from purchasing piglets expanded to 71.39 yuan per head [32][33]. - The report emphasizes that large-scale enterprises will have more stable profitability compared to smallholders due to cost advantages and industry chain synergies [32]. Group 3 - The report identifies two key companies in the pig farming industry: Yongshun Biological and Dayu Biological, detailing their business models and market positions [3][35]. - Yongshun Biological focuses on the research, production, and sales of veterinary biological products, with over 30 types of vaccines for pigs and poultry, maintaining over 90% of its revenue from vaccine sales [3][37]. - Dayu Biological specializes in feed additives and veterinary drugs, with its feed additive and feed businesses accounting for 65.39% and 29.74% of its revenue, respectively [50][56]. Group 4 - The report provides an overview of the pig farming industry chain, which includes upstream breeding, feed production, and veterinary supplies, midstream modern farming practices, and downstream processing and distribution [21][24]. - The entire industry chain is heavily influenced by technological advancements, management practices, disease control, and is subject to environmental regulations and government oversight [21][24].

Group 1 - The Chinese pig farming industry has experienced significant capacity expansion since 2020, leading to oversupply and sustained low prices, resulting in continuous losses for most pig farming companies, with only Zhengbang Technology remaining profitable in 2023. However, overall profitability is expected to improve in 2024, with net profits turning positive for most companies [1] Group 2 - Since March 2021, the net profit level of large-scale pig farming in China has fluctuated significantly, remaining in a loss state from early 2023 until September 2023, when it turned profitable. It is projected that net profits will decline again until April 2025, reaching 86 yuan per head [2] Group 3 - The net profit of free-range pig farming in China has shown a similar trend to that of large-scale farming. The lowest net profit was recorded in June 2021 at -665 yuan per head, while the highest was in October 2022 at 1246 yuan per head. By April 2025, the net profit for free-range farming is expected to be 50 yuan per head [4] Group 4 - The cost of large-scale pig farming in China has been on a downward trend since March 2021, decreasing from 2884 yuan per head to 2033 yuan per head by April 2025, indicating effective cost control [8] Group 5 - Similarly, the cost of free-range pig farming has also decreased from 2971 yuan per head in March 2021 to 2123 yuan per head by April 2025, reflecting good cost management [9]

Core Viewpoint - The A-share listed pig farming companies are experiencing a "volume increase and price decrease" pattern in the first half of 2025, with several leading companies like Muyuan Foods showing positive performance forecasts [1][2]. Industry Overview - As of July 25, 2025, there are 35 pig-related stocks in China's A-share market, with 20 companies disclosing June sales data. Most companies reported a year-on-year increase in sales volume, but sales revenue did not grow correspondingly due to a decline in selling prices [2][13]. - The Ministry of Agriculture and Rural Affairs held a meeting on July 23, 2025, emphasizing the need for market guidance and policy support to stabilize the pig market and promote the industry's transformation and upgrade [3]. Company Performance - In June 2025, the total sales volume of the 20 listed pig companies exceeded 17 million heads, with Muyuan Foods, Wens Foodstuff Group, and New Hope leading in sales volume [4][6]. - Muyuan Foods reported sales of 701.9 thousand heads and sales revenue of 12.799 billion yuan, with a year-on-year sales volume increase of 58.35% and revenue increase of 27.65% [6]. - Wens Foodstuff Group sold 300.73 thousand heads with a revenue of 4.92 billion yuan, showing a year-on-year sales volume increase of 28.93% but a revenue decrease of 5.40% [6]. - New Hope sold 133 thousand heads with a revenue of 1.871 billion yuan, reflecting a slight sales volume increase of 3.38% but a significant revenue decline of 19.14% [6]. Market Dynamics - The overall pig farming industry has been profitable for 14 consecutive months since May 2024, with the production situation generally favorable [4]. - The average selling price of pigs has decreased, impacting revenue despite increased sales volumes [7][12]. - Some companies, such as Muyuan Foods and Zhengbang Technology, managed to achieve both sales volume and revenue growth [7]. Future Outlook - Muyuan Foods expects a net profit of 10.2 to 10.7 billion yuan for the first half of 2025, representing a year-on-year growth of over 1,129% [14]. - New Hope anticipates a turnaround in performance, attributing improvements to enhanced production management and cost reductions [15]. - Companies are exploring international markets, with plans to expand into Southeast Asia, the Middle East, and Europe, aiming to enhance their global presence [16].

Core Insights - The Ministry of Agriculture and Rural Affairs convened major pig farming companies to discuss promoting high-quality development in the pig industry, signaling a shift towards efficiency rather than scale [1][2] - The industry is transitioning from a focus on scale to efficiency, with leading companies like Muyuan, Wens, and New Hope benefiting from cost reduction and efficiency improvements [3][4] - The government aims to stabilize pig prices and prevent overproduction, indicating a commitment to maintaining industry balance and supporting cost-effective producers [4][6] Industry Dynamics - The recent meetings and discussions reflect a clear "anti-involution" strategy, aiming to curb reckless expansion among high-cost producers [2][4] - The profitability of pig farming has been consistent for 14 months, with 11 out of 14 listed pig companies reporting positive performance in their semi-annual reports [3][4] - Large funds are increasingly investing in leading pig farming companies, as evidenced by significant inflows into the livestock farming ETF (516670), which has seen over 100 million yuan in recent investments [4][6] Market Trends - The ETF related to livestock farming shows strong upward momentum, indicating growing investor interest in the sector [6] - The government's proactive stance on industry regulation is expected to increase in intensity, reinforcing the trend towards prioritizing quality over quantity in production [4][6] - The focus on cost control and efficiency is likely to further enhance the competitive edge of leading companies in the pig farming sector [4][6]

Market Overview - The domestic market indices showed positive performance with the Shanghai Composite Index closing at 3,581.86, up by 0.62% [2] - The agricultural sector underperformed slightly with a decline of 0.14% in the agricultural, forestry, animal husbandry, and fishery sector [4] Agricultural Sector Insights - The report highlights a favorable investment opportunity in Haida Group, driven by expected recovery in the feed industry as upstream raw material prices stabilize and downstream farming conditions improve [4] - Recent data indicates a decline in pig prices, with average prices in key provinces showing a decrease of 4.88% in Sichuan and Guangdong, while the average pork price increased by 0.29% [4] - The report discusses the cyclical nature of the pig industry, emphasizing that the current market may be overly pessimistic regarding the impact of rising pig production capacity on profitability [4] - Recommendations include companies like Wen's Foodstuffs, Shennong Group, and New Hope, which are expected to benefit from the anticipated recovery in the pig farming sector [4] Poultry and Pet Food Industry - The poultry sector is projected to see performance driven by new demand recovery in 2025, with Shennong Development positioned well for growth [4] - The pet food market is highlighted as a key area for growth in 2025, with a focus on brands that are leading in profitability and market trends, recommending Guibao Pet Food as a top pick [4] Textile and Apparel Sector - Nine Star Holdings reported a revenue increase of 2.9% in Q2 2025, with footwear manufacturing also showing growth [6][8] - The report notes that the sports apparel segment is experiencing robust demand, with brands like Anta Sports and Li Ning showing varied performance in retail sales [10] - Recommendations for the textile sector include companies with strong mid-year performance certainty, such as Bailong Oriental and Zhejiang Natural [10] Jewelry Sector - The gold and jewelry retail sector saw a year-on-year growth of 6.1% in June 2025, indicating stable demand [10] - Companies like Laoputang and Chaohongji are recommended for their potential recovery based on channel scale and franchise resources [10]

Group 1: Company Overview - Yuran Dairy's stock price has increased from 1.03 HKD to 3.92 HKD, indicating significant growth potential despite current valuations [1][3] - The company has a strong relationship with Yili, selling nearly all its products to them, which provides a stable revenue stream [3][4] - Yuran Dairy's high debt ratio is a concern, but its cash flow is robust due to guaranteed sales to Yili [4][8] Group 2: Investment Strategy - The investment approach for Yuran Dairy has shifted from a left-side trading strategy (buying on dips) to a right-side strategy (buying on upward trends) [2][4] - The company is expected to benefit from an industry cleanup starting in the second half of 2024, which could improve profitability [2][8] - The current market conditions and capital inflow into the dairy sector have positively impacted Yuran Dairy's stock price [4][5] Group 3: Market Dynamics - The dairy farming industry is facing high levels of debt and losses, with 90% of companies in the sector currently unprofitable [8] - The cyclical nature of the pig farming industry is highlighted, suggesting that similar dynamics may affect dairy farming in the future [5][8] - The upcoming third quarter is critical for cash flow management in the dairy sector due to the need for feed purchases [7][8]

Summary of Key Points from Conference Call Industry Overview - The conference call focuses on the pig farming sector, particularly the impact of policies, environmental regulations, and market dynamics on the industry [1][2][3]. Core Insights and Arguments - **Policy Impact**: Government policies aim to stabilize pig prices and CPI through measures like production limits and environmental regulations, which may extend the industry's profitability cycle [1][2][3]. - **Environmental Regulations**: Nationwide environmental rectification is being implemented, requiring companies to meet compliance standards to avoid penalties or shutdowns. Compliance is crucial for sustainable development [1][5]. - **Price Forecast**: Future pig prices are expected to fluctuate between 14-16 RMB/kg, influenced by breeding increments, weight reduction effects, market demand, and frozen meat indicators. Effective production limits could extend the profitability cycle into next year [1][6]. - **Company Performance**: Companies like DeKang, Muyuan, and Bangji Technology are performing well under current conditions. DeKang has cost and volume advantages, Muyuan is reducing costs and exceeding profit expectations, while Bangji is expanding its industry chain [1][7]. - **Industry Transition**: Pig farming enterprises should actively adjust and transform by utilizing idle capacity, optimizing production structures, and enhancing environmental compliance to adapt to new policies and improve competitiveness [1][8]. Additional Important Content - **Agricultural Sector Growth**: Recent surges in agricultural stocks and futures are attributed to intensified policy support aimed at eliminating inefficient production capacity and stabilizing the industry [2]. - **Current Pig Cycle**: The current pig cycle began in March 2024, with a peak in August 2024. The cycle has been compressed due to African swine fever, but limited production increases and ongoing de-capacity efforts may prolong profitability [3][9]. - **Innovative Models**: The industry is seeing innovative models such as partnerships with farmers, family farm arrangements, and light-asset models, which are becoming standardized and cost-effective [10][11]. - **Core Competitiveness**: Cost control is identified as the core competitiveness for pig farming enterprises, with a focus on seed resources, management levels, feed quality, and innovative models [12]. - **Company Recommendations**: DeKang is highlighted for its robust gene pool and policy alignment, with a potential market space of 500-1,000 billion RMB. Muyuan is noted for its strong innovation and profitability, while Bangji Technology is expected to grow its market value significantly [13][15]. - **Future Price Trends**: The pig farming sector is expected to see stock price increases in the next three months, driven by strong policy support and company innovations [16]. - **Environmental Policy Trends**: The ongoing environmental policies are expected to continue shaping the industry, with gradual implementation rather than abrupt shutdowns [19]. - **Market Dynamics**: The slight increase in the number of breeding sows aligns with market trends, and the sector's performance is influenced by policy and environmental factors rather than solely by breeding dynamics [21]. Company-Specific Insights - **DeKang's Growth Potential**: DeKang is projected to have a market potential exceeding 1,000 billion RMB, with significant growth in output expected in the coming years [26][29]. - **Muyuan's Profitability**: Muyuan's strong profitability and dividend potential make it a suitable candidate for investment, especially as the industry consolidates [20]. - **Bangji's Strategic Development**: Bangji is focused on establishing a complete industry chain, with significant growth potential in both feed and pig farming sectors [14][15][22]. This summary encapsulates the critical insights and developments within the pig farming industry as discussed in the conference call, highlighting the interplay between policy, environmental factors, and company performance.

Group 1 - COFCO Jiajia Kang (01610.HK) was fined 120,900 yuan for transporting unquarantined pigs, raising concerns about supply chain management and food safety [3] - The company has not issued cash dividends for three consecutive years, with the last payout in 2021, despite cumulative net profits exceeding 4.4 billion yuan from 2020 to 2024 [3] - As of 2024, COFCO Jiajia Kang's cash on hand is only 1.064 billion yuan, nearly halved from the previous year, while short-term debts due within a year amount to 2.6 billion yuan, resulting in a cash-to-short-debt ratio of 0.41 [3] Group 2 - The company has increasingly relied on external financing to manage liquidity risks, with significant fluctuations in financing cash flow from 2022 to 2024, indicating a fragile cash flow situation [4] - The pig farming industry is significantly affected by the "pig cycle," requiring companies to have strong risk resilience; COFCO Jiajia Kang must improve cash flow management and compliance to avoid a passive position under competitive and debt pressures [4] - Investors are concerned whether the company will prioritize debt repayment over shareholder returns given its high debt levels [4]

Investment Rating - Investment rating for the agriculture, forestry, animal husbandry, and fishery industry is "Positive" (maintained) [1] Core Viewpoints - The industry is experiencing a supply contraction due to overselling of live pigs since June, leading to a potential increase in pig prices in Q3 2025. The average selling price of live pigs in June 2025 was 14.28 yuan/kg, down 2.28% month-on-month and down 21.99% year-on-year [4][15] - The supply-demand dynamics are improving, with the gross white price difference strengthening month-on-month. As of July 17, 2025, the gross white price difference was 4.71 yuan/kg, an increase of 0.45 yuan/kg compared to June, although lower than the same period in 2024 [5][27] - The industry is entering a critical supply contraction phase, with expectations for the price center of live pigs to rise monthly [4][15] Summary by Sections Industry Overview - Since June, the overselling of live pigs has intensified, leading to a supply contraction. The average price of live pigs in June 2025 was 14.28 yuan/kg, reflecting a month-on-month decrease of 2.28% and a year-on-year decrease of 21.99% [4][15] - The monitoring sample indicated a slaughter volume of 4.3168 million heads in June 2025, down 6.20% month-on-month but up 12.22% year-on-year [4][15] Supply and Demand Dynamics - The gross white price difference has improved, indicating a stronger supply-demand balance. The national frozen product storage rate was 16.85%, down 0.03 percentage points year-on-year [5][27] - The industry is currently in a supply contraction phase, with expectations for the price center of live pigs to rise gradually [4][15] Company Performance - As of July 10, 2025, 12 listed pig farming companies reported a total of 16.1481 million heads sold in June, a year-on-year increase of 45.98% [6][34] - The average selling prices for major listed pig companies decreased month-on-month, with specific companies reporting the following prices: Muyuan Foods at 14.08 yuan/kg, Wens Foodstuff Group at 14.39 yuan/kg, and New Hope Liuhe at 14.18 yuan/kg [7][41]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Long - term: Supply increases, demand peaks, and it's an era of small profits. A profit of 200 yuan per pig may be the price ceiling. Macroscopically, the government promotes a reasonable recovery of prices and uses reserve purchases to support the market. In terms of supply and demand, supply is expected to increase continuously after July (except for a slight decline in July), and the supply growth rate is faster than the demand growth rate before November. The supply - demand gap is expected to narrow at the end of the year. Pig prices are expected to be strong from July to August, then gradually decline under pressure, and have a seasonal rebound at the end of the year. Spot prices are expected to range from 13 - 16 yuan/kg, and futures prices from 12.5 - 15 yuan/kg. Opportunities to short at high prices can be considered from July to August, and industrial clients can consider selling hedging for far - month contracts after the high in the third quarter [58]. 3. Summary by Relevant Catalogs 3.1 Long - term: Stable Supply, Peak Demand, and Era of Small Profits 3.1.1 Supply Dimension - **Concentration Increase and Stable Capacity**: Currently, the proportion of small - scale farmers' pig sales is 31.9% (91.3% in 2000), and that of large - scale enterprises is 68.1% (8.7% in 2000). Group farms are expanding rapidly, and small - scale farmers are exiting. With the increase in the concentration of large - scale breeding enterprises, their influence on pig prices has increased. The production capacity will be relatively stable as large - scale enterprises have stronger anti - risk capabilities [7]. - **Improvement in Production Efficiency**: There is still much room for improvement in China's pig production efficiency compared with foreign countries. For example, Denmark's PSY is as high as 34.14, while the UK's is 26.64. In 2022, the daily weight gain in Denmark and Sweden exceeded 1000 grams. With stable and slightly increasing capacity, higher large - scale proportion, and improved production efficiency, the supply from leading enterprises will continue to increase [10]. 3.1.2 Consumption Dimension - **Peak in Pork Consumption**: In 2014 and 2023, pig prices were low and there were breeding losses, indicating oversupply. The similar pork production in 2014 and 2023 shows that domestic demand may have saturated at around 58 million tons, suggesting that China's pork consumption may have peaked in 2014 [13]. 3.1.3 Supply - Demand and Profit - **Gradually Loosening Supply - Demand and Small Profits**: China's population decline is faster than expected, which will lead to a decrease in pork consumption in the long run. The total pork consumption is the product of the total population and per - capita consumption. With a negative population growth and a possible peak in per - capita pork consumption, the total demand is weakening. A profit of about 200 yuan per pig corresponds to a cost increase of 2 yuan/kg [17][18]. 3.2 Medium - and Short - Term: Sufficient Supply and Lower Price Center 3.2.1 Supply Side - **Adequate Capacity**: As of the end of May 2025, the national inventory of breeding sows was 40.42 million, 103.64% of the normal inventory of 39 million, with a month - on - month increase of 0.1% and a year - on - year decrease of 1.2%, indicating sufficient breeding sow capacity [21]. - **Weak Will to Reduce Capacity**: There is a lack of strong motivation among producers to reduce production capacity as shown by relevant profit and sow culling data [23][24][25]. - **Continuous Improvement in Production Efficiency**: Indicators such as the breeding - farrowing rate, piglet survival rate, litter size of healthy piglets, and fattening pig survival rate have shown an upward trend, indicating continuous improvement in production efficiency [29]. - **Increasing Slaughter**: In the first half of the year, the national pig slaughter was 366.19 million, a year - on - year increase of 0.6%. Except for a slight decline in July, the slaughter volume is expected to increase continuously, and the pig price center is expected to decline accordingly [36]. - **Increasing Second - Fattening Pressure**: The enthusiasm for second - fattening was similar to last year from February to April this year, reaching a peak in mid - April and then declining rapidly. However, the utilization rate of second - fattening pens has recently increased rapidly, indicating that the supply pressure is postponed, and the subsequent second - fattening slaughter pressure will increase [39]. - **Increasing Slaughter Weight**: This year's pig slaughter weight is at a four - year high, with an average increase of 3 kg compared to last year. Due to low feed costs, enterprise breed improvement, and favorable standard - fat price spreads, large - scale enterprises have generally increased the slaughter weight. The game between large - scale enterprises and small - scale farmers makes weight reduction uncertain [43]. 3.2.2 Demand Side - **Seasonal Weakening of Slaughter Volume**: The pig slaughter volume shows a seasonal weakening trend [44]. 3.2.3 Price - **Widening Standard - Fat Price Spread and Rebounding Piglet Price**: The standard - fat price spread has widened, and the piglet price has rebounded [46]. 3.2.4 Policy - **CPI and Policy Actions**: The government aims to promote a reasonable recovery of prices. Relevant policies include large - scale enterprises not increasing the number of breeding sows, reducing the slaughter weight to 120 kg, and banning the second - fattening of the head part [51]. - **Pork Reserve Early - Warning and Adjustment Mechanism**: The mechanism has different early - warning levels and corresponding reserve adjustment measures for both excessive price drops and rises. As of June 11, the official pig - grain ratio was 6.12, in the third - level early - warning, and frozen meat reserve purchases were initiated in advance [52][54].