Group 1 - The white chicken industry is expected to gradually improve in supply by 2026, driven by a rebound in prices and the impact of avian influenza on overseas breeding, which supports upstream breeding prices [1][3] - In 2025, the white chicken industry maintained a marginal profit, with a significant trend towards vertical integration across the entire industry chain, as evidenced by the top 10 slaughtering companies accounting for 46% of total slaughter volume [1][2] - Domestic breeding has accelerated due to the interruption of overseas breeding, with domestic breeds showing advantages in disease resistance and adaptability, leading to a 33.6% share of domestic breeds in the total breeding update [2] Group 2 - The inventory of parent stock is expected to decline gradually in 2026, with a projected decrease of approximately 3.3% and 12% year-on-year in March and April respectively, indicating a potential improvement in supply by the second half of 2026 [3] - The overall supply of the white chicken industry is anticipated to improve in 2026, with the breeding sector likely to achieve profitability, although capacity adjustments remain a significant factor affecting supply stability [3]

Investment Rating - The industry investment rating is "Buy" [2] Core Insights - The poultry industry is expected to see an improvement in the supply chain in 2026, driven by a rebound in prices and a gradual recovery in profitability for the breeding sector [5][91] - The integration trend within the industry is becoming more pronounced, with leading companies benefiting from their downstream channel advantages and collaborative efforts across the supply chain [5][24] - The domestic poultry sector is experiencing a shift towards self-breeding and the replacement of imported breeds due to disruptions caused by avian influenza outbreaks abroad [5][39] Summary by Sections 1. 2025 Poultry Industry Maintains Marginal Profitability, Clear Integration Trend - The poultry industry maintained marginal profitability in 2025, with upstream breeding segments performing better than downstream farming and processing sectors [5][14] - The average price of parent stock chicks in 2025 was 44.75 CNY/set, a slight decrease of 0.7% year-on-year, while the average price of commercial chicks was 2.51 CNY each, down 13% year-on-year [5][17] - The total slaughter volume of the top 10 companies reached 4.274 billion birds, accounting for 45.99% of the market, indicating a trend towards consolidation [5][24] 2. Avian Influenza Disrupts Imports, Accelerates Domestic Breed Replacement - In 2025, the cumulative update of grandparent stock chickens was 1.574 million sets, a year-on-year increase of 4.9%, with domestic breeds accounting for approximately 60% of the updates [5][39] - The outbreak of avian influenza in France in December 2025 led to a halt in overseas imports, increasing the uncertainty of supply from abroad [5][46] - Domestic breeds are showing improved performance, with the replacement rate of domestic breeds rising to 34% in 2025 [5][57] 3. 2026 Supply Chain Expected to Improve, Capacity Elasticity Remains a Concern - The inventory of grandparent stock chickens is expected to decline in early 2026, with estimates showing a year-on-year decrease of approximately 3.3% and 12% in March and April, respectively [5][69] - The overall supply of the poultry industry is anticipated to gradually improve in 2026, with profitability expected to return to the breeding sector [5][87] - The report emphasizes the importance of monitoring parent stock chick sales as a key indicator of supply trends [5][76] 4. Investment Recommendations - The report suggests focusing on companies such as Shengnong Development, Yisheng, Minhe, Xiantan, and Hefeng, which are well-positioned to benefit from the ongoing integration and recovery in the poultry industry [5][91]