Core Viewpoint - TianKang Biological has officially completed the acquisition of 51% of Xinjiang Qiangdu Animal Husbandry Technology Co., Ltd. for 1.275 billion yuan, despite facing declining pig prices and significant financial pressure [1][2]. Financial Performance - TianKang Biological's net profit has significantly declined, with a 74.58% drop in the third quarter compared to the previous year, leading to lowered profit forecasts for 2025 and 2026 by several brokerages [5][7]. - The company's cash and short-term debt situation shows a cash ratio of 1.17, indicating potential financial strain from the acquisition [1][6]. Acquisition Details - The acquisition involves a total valuation of 3.511 billion yuan for Qiangdu Animal Husbandry, with a 69.54% premium over the assessed value [2]. - Qiangdu is expected to contribute approximately 136,000 pigs in 2024 and over 150,000 in 2025, which will increase TianKang's total output to 480,000 pigs [2][3]. Market Conditions - The pig farming industry is currently experiencing a downturn, with prices dropping below production costs, which poses risks to profitability for both TianKang and Qiangdu [4][6]. - The recent pig price fluctuations have shown a significant decline from a peak of over 20 yuan per kilogram to below 13 yuan, impacting the financial health of pig farming companies [3][4]. Strategic Implications - The acquisition is seen as a strategy to bypass current production capacity control policies by rapidly expanding scale [2][3]. - Despite the potential for increased revenue from the acquisition, the ongoing low prices in the pig market raise concerns about future profitability and operational stability for TianKang [7].

1. Report Industry Investment Rating - Not provided in the content 2. Core Views of the Report - Looking ahead to 2026, the steel sector still faces a significant oversupply situation. The downstream consumption structure of steel has changed significantly, with stable growth in manufacturing and exports offsetting the loss of steel used in real estate. Direct exports form the lower - edge support for black prices and also strongly suppress the upper price limit. Steel prices will fluctuate mainly in a low - level range. Whether policies such as crude steel production control can be implemented will be the most core factor affecting steel prices. Attention should be paid to steel cost support, tariff policies, and production control policies [1][7][11]. - In 2025, the price trend of black varieties showed a "V" shape. Coke and coking coal were weak, with a maximum mid - year decline of about 25%. By the end of the year, coking coal rose 10% and coke returned to the年初 price level. Rebar and iron ore were relatively strong, with a maximum mid - year decline of only about 8%. By the end of the year, rebar prices fell about 5% compared to the beginning of the year, and iron ore prices rose about 3% [8][17]. 3. Summary According to the Directory 3.1 2025 Steel Market Operation Review - The price trend of black varieties in 2025 showed a "V" shape. In the first stage, due to the relaxation of safety supervision in coal - producing areas, coal supply recovered rapidly, suppressing carbon element prices and driving down steel prices. In the second stage, macro - policy expectations improved, coal supply contracted, and black commodities rose. Steel prices were restricted by export profits during the rebound [17][20][26]. 3.2 2026 Supply Analysis 3.2.1 Capacity Replacement Suspended, Policy Disturbance Limited - Since August 23, 2024, the Ministry of Industry and Information Technology has suspended the publicity and announcement of new steel capacity replacement plans. In 2025, there was no new capacity replacement publicity. The steel industry maintained good production profits in 2025, and steel mills lacked the willingness to cut production actively. Local governments faced strong employment and fiscal pressure, so the policy - driven force for mandatory production cuts was insufficient. It is expected that the impact of policy on steel production capacity changes in 2026 will still be limited [29][30]. 3.2.2 Overseas Steel Supply Situation - It is estimated that the global crude steel output in 2025 will be 1.97 billion tons, a cumulative year - on - year increase of 2.0%, and overseas crude steel output will be 836 million tons, a cumulative year - on - year slight increase of 0.4%. In 2026, global crude steel output is expected to be 1.995 billion tons, a cumulative year - on - year increase of 1.2%, and overseas global crude steel output will be 845 million tons, a cumulative year - on - year increase of 1.0% [9][33][34]. 3.3 2026 Demand Analysis 3.3.1 Supported by "Trading Price for Volume", Exports Remain High - Since 2011, when domestic steel enterprises' profits are under pressure, they have relieved domestic supply pressure through exports. In 2025, domestic steel prices were low but still maintained good production profits. Exports effectively resolved the domestic oversupply pressure through the "trading price for volume" effect. In 2026, although exports face anti - dumping pressure, domestic steel has strong price competitiveness. It is expected that domestic steel net exports will increase by about 10 million tons, but attention should be paid to the impact of intensified trade protectionism [41][44][52]. 3.3.2 Driven by Macroeconomic Policies, Manufacturing Demand Increases Steadily - Since the decline of the real estate industry, the steel demand structure has changed significantly. Manufacturing steel demand and exports have increased rapidly, offsetting the loss of steel used in real estate. In 2025, the manufacturing industry was generally weak. However, the automotive manufacturing industry maintained positive year - on - year growth. It is expected that in 2026, manufacturing demand will remain high with the support of policies to boost consumption and trade - in programs [53][55][61]. 3.3.3 Infrastructure Demand Remains Stable, Pay Attention to Fiscal Situation - In 2025, infrastructure investment growth declined. The power sector led by central funds was relatively strong, while sectors related to local funds were weak. To ensure a good economic situation in the beginning year of the "15th Five - Year Plan", it is expected that fiscal policies in 2026 will be stable and progressive, and the quota of new special bonds may be further increased, but the increase in steel used in infrastructure may be limited [63][65][66]. 3.3.4 The Real Estate Industry Has Little Increment, Building Materials Remain Weak and Stable - In 2025, real estate development investment and new construction area decreased significantly year - on - year. The real estate industry's driving effect on steel consumption continued to decline. It is expected that in 2026, the weak demand pattern of building materials will be difficult to reverse, which will continue to drag down steel demand [76][77][87]. 3.4 2026 Steel Supply - Demand Deduction and Market Outlook - Supply: It is expected that the overall supply in 2026 will be abundant, with an estimated increase of 1.4% in crude steel output, about 16 million tons. The impact of policies on steel production capacity changes will still be limited [84]. - Demand: It is expected that manufacturing demand will remain high, infrastructure may have an increase but with limited space, and the real estate sector will remain weak. It is estimated that domestic crude steel consumption will increase by 0.1% year - on - year in 2026, an increase of 650,000 tons [84]. - Net Exports: It is expected that domestic steel and billet net exports will increase by about 10 million tons in 2026, but attention should be paid to the impact of trade protectionism [85]. 3.5 Summary - The price trend of black varieties in 2025 showed a "V" shape. Coke and coking coal were weak, while rebar and iron ore were relatively strong [8][17][86]. - The supply - demand contradiction of domestic steel is not prominent. It is expected that the impact of policies on steel production capacity changes in 2026 will still be limited [9][30][86]. - In 2026, exports may increase, manufacturing demand will remain high, infrastructure investment may increase, and the real estate sector will remain weak. The steel sector still faces an oversupply situation, and steel prices will fluctuate in a low - level range [11][87][88].

Cost Management - The total cost of pig farming in October 2025 is approximately 11.3 CNY/kg, showing a decrease of nearly 0.3 CNY/kg from the previous month, primarily due to reduced period expenses and improved production metrics [4] - About one-third of the company's production lines have costs below 11 CNY/kg, indicating a feasible path to further cost reduction [5] - The company aims to replicate successful management practices across different production lines to minimize cost variance and enhance overall efficiency [5] Slaughtering and Meat Processing - The company slaughtered over 22 million pigs from January to October 2025, with an expected year-on-year doubling of slaughter volume [6] - The meat processing segment is experiencing increased customer loyalty and service capability, contributing to stable product pricing [6] - Future plans include expanding slaughter capacity, optimizing customer structure, and enhancing operational efficiency through digital management [6] Disease Prevention - A comprehensive disease prevention system has been established, including physical barriers and smart monitoring technologies to ensure pig health [7][8] - The company emphasizes standardized processes and staff training to enhance disease control measures [8] Market and Pricing Outlook - Government policies and market adjustments are improving the supply-demand situation in the pig market, promoting stable and reasonable pricing in the long term [9] - The company focuses on cost leadership to maintain positive cash flow during potential low-price periods, ensuring long-term operational stability [9] Piglet Sales and Costs - The cost of weaned piglets has decreased from approximately 270 CNY/head at the beginning of the year to around 230-240 CNY/head recently [10] - The company plans to innovate piglet sales strategies based on market demand and customer needs, aiming for stable supply and competitive pricing [11]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The lithium salt market is experiencing strong supply and demand. After the holiday, the enthusiasm for downstream replenishment has exceeded market expectations, and the market volatility has increased. From a seasonal perspective, downstream demand may experience a seasonal decline around the Spring Festival. Both upstream and downstream enterprises should seize the opportunity to conduct futures and options hedging according to their risk management needs [4][5]. - For industrial silicon, the supply is expected to remain at a high level. Although the short - term demand is fair during the traditional peak season in October, the supply pressure in the polysilicon industry is significant, and future production reduction is expected. The futures price of industrial silicon is expected to fluctuate within a range [6]. - In the polysilicon market, the high profit has driven high production enthusiasm, but the terminal demand is weak, leading to obvious inventory accumulation. With the possible implementation of photovoltaic capacity control policies, the market shows a situation of strong expectation and weak reality, and the futures price is expected to oscillate at a high level [8][9]. 3. Summary by Relevant Catalogs 3.1 First Part: Spot Price 3.1.1 Plate Strategy Recommendation - **Carbonate Lithium**: The market is characterized by strong supply and demand but a weakening atmosphere. The support level is 68,000 - 70,000, and the pressure level is 78,000 - 80,000. It is expected to decline in an oscillatory manner. Upstream enterprises should seize the opportunity to conduct selling hedging when the price rises, and downstream cathode material enterprises should pay attention to stocking up at low prices or conducting buying hedging [15]. - **Industrial Silicon**: The supply - demand pressure is increasing, and the price is under pressure. However, there is certain policy support at the lower price. The support level is 8,200 - 8,300, and the pressure level is 9,200 - 9,300. It is expected to oscillate within a range. Currently, an interval long - position strategy can be considered [15]. - **Polysilicon**: The fundamental pressure has led to a significant decline in the futures price. Before the implementation of capacity control policies, the market may fluctuate. The support level is 47,000 - 48,000, and the pressure level is 52,000 - 53,000. It is expected to oscillate at a high level. Previous long positions are recommended to be closed, and short - selling opportunities on rebounds can be considered in the future [15]. - **Arbitrage Recommendation**: There are currently no good arbitrage opportunities [16]. 3.1.2 Futures and Spot Price Changes | Variety | Closing Price | Increase/Decrease Rate | Trading Volume | Open Interest | Open Interest Change | Warehouse Receipts | | --- | --- | --- | --- | --- | --- | --- | | Carbonate Lithium | 75,700 | 0.00% | 169,108 | 138,434 | - 20,566 | 30,705 | | Industrial Silicon | 8,565 | 1.60% | 190,332 | 114,236 | - 17,557 | 49,303 | | Polysilicon | 50,340 | - 3.66% | 150,772 | 56,806 | - 11,421 | 9,150 | [16] 3.2 Second Part: Fundamental Situation 3.2.1 Carbonate Lithium Fundamental Data - **Production and Inventory**: Last week, the production of carbonate lithium reached 21,066 tons, a 431 - ton increase from the previous week, hitting a new weekly high. All lithium - extraction processes showed an upward trend. The total sample inventory was 132,658 tons, a 2,143 - ton decrease from the previous week, with an accelerating de - stocking speed, but the inventory remained at a high level. The downstream inventory decreased slightly [4]. - **Downstream Situation**: The weekly apparent demand for lithium salts reached 23,209 tons, hitting a new weekly high [4]. 3.2.2 Industrial Silicon Fundamental Data - **Production and Inventory**: With the arrival of the flat - water period, electricity prices in some south - western regions have increased, and some factories have shut down furnaces. There are signs of复产 in the north - western region, and the overall supply is expected to remain high [6]. - **Downstream Situation**: During the traditional peak season in October, the short - term demand is fair. However, the polysilicon industry is facing significant supply pressure, and future production reduction is expected [6]. 3.2.3 Polysilicon Fundamental Data - **Production and Inventory**: Driven by high profits, enterprises are highly motivated to produce, and the production in October is expected to exceed expectations. However, the terminal demand is weak, and the inventory has been accumulating significantly [8]. - **Downstream Situation**: The National Energy Administration announced that the new photovoltaic installed capacity in August was only 7.36GW, a new low for the year. Downstream production cuts are being gradually implemented [8].

Group 1: Swine Industry - The current average price of live pigs is 13.56 yuan/kg, which has decreased by 0.37 yuan/kg compared to the previous week, with the most significant declines observed in Guangdong and Guangxi, where prices dropped nearly 1 yuan/kg [2] - The decline in prices in Guangdong and Guangxi is attributed to changes in transportation policies, which have restricted external transfers and impacted local prices [2] - The proportion of pigs weighing less than 90kg being sold has slightly increased to 3.71%, indicating that both the epidemic situation and policy changes are affecting short-term prices [2] - Long-term capacity control policies will continue to influence industry supply and the long-term trend of pig prices, making it essential to monitor the determination and strength of these policies [3] - The recommendation to invest in the breeding sector remains strong [3] Group 2: Pet Industry - The top three brands in the pet category on Douyin this week are Maifudi, Weishi, and Frigat, with Zhongchong Co. and Wanpi ranking 27th and 35th respectively [4] - Maifudi has launched a new fresh meat pet food product emphasizing reduced oil content, while Wanpi has received the "Best Growth Award" from Meituan for being the only pet brand on its platform [4] - Overall, innovation in pet brands is shifting from merely pleasing pet owners to focusing on pet health, with domestic brands showing stronger innovation capabilities [4] Group 3: Agriculture - As September approaches, most agricultural products are entering the harvest season, with a recommendation to pay attention to this year's grain harvest situation [5] - Recent spot prices for corn and wheat have slightly increased, and the performance of corn seed varieties under extreme weather conditions in the Huang-Huai-Hai region is of particular interest [5] - The emergence of corn varieties with strong resistance to high temperatures and density is noteworthy [5]

Group 1 - The core viewpoint indicates that the aquaculture ETF (159865) has seen a significant inflow of 63 million units, suggesting strong investor interest in aquaculture assets [1] - According to Guotai Haitong Securities, the proportion of pigs under 90kg for slaughter has slightly increased to 3.71%, indicating a marginal impact of the epidemic and policies on short-term prices [1] - The long-term perspective suggests that capacity control policies will continue to affect industry supply and pork prices, highlighting the importance of monitoring the determination and strength of these policies [1] Group 2 - Relevant institutions suggest that the aquaculture sector may have gradually entered a configuration range, with a focus on the marginal changes in the aquaculture ETF (159865) [2] - For investors without stock accounts, Guotai Zhongzheng Livestock Breeding ETF Link A (012724) and Guotai Zhongzheng Livestock Breeding ETF Link C (012725) are recommended alternatives [2] - The aquaculture ETF has an approximate pig content of 60%, meaning that the weight of related stocks in the swine breeding, poultry feed, and animal health sectors is significant [2]

Investment Rating - The industry investment rating is "Overweight" [6] Core Insights - The report emphasizes the importance of monitoring short-term pig prices and long-term production capacity policies in the pig farming sector [3][12] - In the pet industry, attention is drawn to the top-ranked brands on platforms like Douyin, indicating a shift towards health-focused innovations [4] - The planting sector is highlighted with a focus on the upcoming harvest and the performance of corn varieties under extreme weather conditions [5] Summary by Sections Pig Farming - The report suggests paying attention to the fluctuations in pig prices and the impact of production capacity policies on the industry [3][12] - Recent data shows that the average pig price is 14.10 yuan/kg, reflecting a decrease of 1.25% week-on-week and a significant year-on-year decline of 28.16% [11] Pet Industry - The top three brands in the pet category on Douyin are Maifudi, Weishi, and Frigat, with a notable focus on health-oriented product innovations [4] Planting Sector - As the harvest season approaches, the report advises monitoring the grain yield, particularly corn and wheat prices, which have seen slight increases [5] - Special crops like blueberries and peppers are also highlighted, with attention to the cost changes of raw materials for companies like Chenguang Biological [5] Investment Recommendations - Recommended stocks in the pig farming sector include Muyuan Foods and Wens Foodstuffs [5] - Other recommended stocks across various sectors include Morning Light Biological, Longping High-Tech, and Petty Holdings in the pet sector [5][41]

Summary of Conference Call on Swine Farming Industry Industry Overview - The conference call focuses on the swine farming industry, particularly the impact of production capacity regulation policies on the market dynamics and pricing trends of live pigs [1][3][16]. Key Points and Arguments 1. **Price Trends and Influencing Factors** - Pig prices have dropped below 14 yuan, primarily due to the realization of production capacity in Q1 and Q2, with an increase in the number of fattening pigs as a result of accelerated weight reduction and shortened age [2][5]. - The market is expected to see a slight decline in prices in August and September, followed by a potential increase driven by seasonal consumption [2]. 2. **Production Capacity Regulation** - National capacity regulation has significantly impacted the swine industry, especially for large farming companies, effectively controlling the average slaughter weight [3][16]. - Without such regulations, prices could fall due to high slaughter weights and low prices, leading to reduced profitability for farmers [17]. 3. **Weight Reduction Strategies** - Major farming groups, such as Muyuan, have successfully reduced average slaughter weights to around 121 kg, with a target of below 120 kg by the end of August [4]. - The overall weight reduction target completion is approximately 80%, indicating a concerted effort to manage supply levels [4]. 4. **Market Dynamics and Supply Issues** - The supply of fattening pigs has shifted from self-breeding to piglet fattening and secondary fattening, leading to a supply gap due to high costs and losses incurred by farmers [6][11]. - The price difference between standard and fattened pigs is higher than in previous years, attributed to a decrease in self-breeding farmers and insufficient continuous supply of fattened pigs [6]. 5. **Regional Disease Outbreaks** - The southern regions of China are experiencing multiple waves of disease outbreaks, affecting swine populations and contributing to market instability [7]. 6. **Government Policies and Market Confidence** - Recent government policies have positively influenced market confidence, prompting farmers to maintain higher utilization rates of their facilities and prepare for future demand [11]. - Local governments have implemented measures to support production cuts, such as stricter regulations on pig movements and inspections [12][14]. 7. **Future Price Outlook** - The price of live pigs is expected to stabilize and potentially rise in 2026, contingent on the continuation of production capacity reductions [15]. - The fourth quarter is anticipated to see a peak or near-peak price level similar to early July, with a price range between 13 yuan as the upper limit and 13 yuan as the lower limit [6]. Additional Important Insights - There is a notable trend of small and medium-sized farms attempting to expand production despite regulations, often through the rotation of breeding stock to enhance efficiency [12]. - The effectiveness of regulatory measures varies, with larger companies showing better compliance compared to smaller farms that may evade restrictions [16]. - The overall market is characterized by a complex interplay of supply, demand, and regulatory influences, necessitating close monitoring of industry trends and government actions [11][17].