Investment Rating - The report recommends focusing on the cyclical turning points in the pig and beef farming sectors, highlighting companies like Muyuan Foods and WH Group as potential investments. The pet industry shows clear growth potential, with companies that integrate production, sales, and research expected to succeed, such as Zhongchong Co., Guibao Pet, and Petty Co. The planting sector also has significant growth potential, with recommendations for companies like Morning Light Bio and Noposion [11]. Core Insights - The pig farming sector is expected to face continued low prices in the first half of 2026, driven by both policy and cyclical factors, with a focus on cost improvement and growth potential in pig farming enterprises [2][15]. - The poultry sector is experiencing a recovery phase, with white chicken prices remaining low and yellow chicken demand potentially increasing due to promotional activities [3][37]. - The beef farming sector is characterized by a long production cycle, with supply-side contractions likely to drive prices upward, particularly from 2025 onwards [4][46]. - The feed and animal health sectors are expected to see growth in sales, with a focus on the competitive landscape and the impact of low profits on animal health demand [5][63]. - The planting sector is projected to see stable grain prices, driven by domestic control and innovation, with a focus on specialty crops and plant extracts [6][69]. Summary by Sections Pig Farming - Prices are expected to remain low in the first half of 2026, with a gradual increase in supply due to rising breeding sow inventories [15]. - Capacity policies and cyclical adjustments are leading to a continued reduction in production capacity, with a focus on cost reduction and debt management among pig farming companies [23][27]. - Companies like Muyuan Foods are highlighted for their cost improvements, with expectations of further reductions in production costs [29]. Poultry Farming - The white chicken industry is in a deep price slump, with recovery expected to take time, while yellow chicken prices may see slight recovery due to promotional efforts [32][37]. - Leading companies are improving their operational efficiencies to cope with low prices, which may enhance their performance when prices recover [33]. Beef Farming - The long production cycle and fragmented market structure of beef farming in China are significant factors, with supply reductions expected to lead to price increases starting in 2025 [41][46]. - The beef supply is projected to decrease in the latter half of 2025, with expectations of continued price increases through 2027 [47]. Feed and Animal Health - The feed sector is expected to see a recovery in sales, with high inventory levels in the livestock sector supporting growth [52]. - The animal health sector may face pressure due to low profits in the livestock sector, but there are opportunities for breakthroughs in key products [63][65]. Planting - Grain prices are expected to stabilize and rise, with a focus on domestic production and innovation in seed varieties [69][75]. - The planting sector is seeing a shift towards high-quality, innovative seed varieties, with companies like Kangnong Seed showing strong growth potential [87].

Core Viewpoint - The ongoing trade war between the US and China is causing anxiety among Chinese consumers regarding pet food prices, but the actual impact on the domestic pet food market may be less severe than anticipated [1][4][17]. Group 1: Impact of Tariffs - The US has imposed significant tariffs on Chinese imports, with rates reaching up to 145%, which could lead to price increases for pet food and pharmaceuticals [4][7]. - Despite the tariff announcements, there has been no significant price increase observed in US pet food brands in China as of late April [4][6]. - The pet food industry in China heavily relies on US imports for key ingredients, particularly chicken meal, with over 98% of chicken meal imports coming from the US [12][13]. Group 2: Market Dynamics - The market share of US pet food brands in China is relatively low, with only about 4% of the total market and 13% in the high-end segment [17][19]. - Domestic brands are rapidly gaining market share, with companies like Zhongchong and Guobao reporting significant revenue growth in 2024, indicating a shift towards local products [19][21]. - The competition between domestic and imported brands is intensifying, with domestic brands increasingly focusing on product innovation and marketing strategies [24][27]. Group 3: Future Trends - The trade war may lead to a reduction in US pet food imports, but the overall impact on the Chinese pet food market is expected to be minimal due to the growing strength of domestic brands [17][18]. - The cost structure of pet food production in China is less favorable for foreign brands, as local raw material prices are rising, making it challenging for them to compete [15][16]. - The long-term outlook suggests that domestic brands will continue to thrive, while imported brands, particularly from the US, may struggle to maintain their market presence [28].