Core Viewpoint - The company has shown strong revenue growth in the first three quarters of 2025, with a focus on brand transformation and product line expansion to enhance market share in the pet food industry [4][6]. Financial Performance - In the first three quarters of 2025, the company achieved revenue of 3.86 billion, a year-on-year increase of 21.1%, and a net profit attributable to shareholders of 330 million, up 18.2% year-on-year [4]. - For Q3 2025, the company reported revenue of 1.43 billion, a year-on-year increase of 15.9%, but a net profit of 130 million, down 6.6% year-on-year [4]. - The company's gross margin for the first three quarters was 30.54%, and for Q3 it was 29.11%, reflecting improvements in business and product structure [5]. Cost Structure - The sales expense ratio for the first three quarters was 11.97%, with an increase of 1.52 percentage points year-on-year, primarily due to increased marketing expenses for domestic and international brands [5]. - Management expense ratio increased to 5.49% in the first three quarters, attributed to employee stock plan costs and rising employee compensation [5]. Strategic Initiatives - The company is transitioning from an OEM leader to a brand-focused enterprise, emphasizing its own brands and core products [6]. - The core brand "Wanpi" is shifting from a multi-SKU model to a big product strategy, with a focus on the "Little Golden Shield" series to drive domestic business growth [6]. - The company plans to expand its product line around the "Little Golden Shield" series and introduce higher-end baked goods in 2025 [6]. Market Positioning - The company is well-positioned to increase market share in the pet food sector due to its strong manufacturing base and clear brand strategy, especially as the domestic market becomes more concentrated [6]. - The "Leading" brand is maintaining rapid growth by focusing on the baked goods segment and innovative marketing strategies [6]. International Expansion - The company has completed the construction of its factories in Mexico and the second phase in Canada, marking the initial completion of its capacity layout in the US-Mexico-Canada Free Trade Area [8]. - This international expansion helps mitigate tariff risks and ensures stable supply to the North American market, with further capacity expected to enhance profitability [8].

Investment Rating - The report maintains a "Buy" rating for the industry, particularly recommending stocks like Muyuan, Wens, and New Hope due to their competitive cost structures and potential for excess returns in the pig farming sector [1]. Core Insights - The report highlights a 2% week-on-week decline in live pig prices, with a significant year-on-year increase of 37.9% in the output of 20 listed pig companies in April [2]. - The report indicates that the breeding stock of sows has increased, suggesting a potential for normal profitability in pig farming in 2025, despite entering a downward price cycle [2]. - The report emphasizes the historical low valuations of leading pig farming companies, suggesting that they are well-positioned for recovery [2]. Summary by Sections 1. Market Overview - The agricultural sector index increased by 0.05% in the week of May 12-16, 2025, underperforming compared to the Shanghai Composite Index [14]. - The agricultural sector ranks 7th among 31 sub-industries in terms of performance since the beginning of 2025, with a year-to-date increase of 3.54% [14]. 2. Industry Data 2.1 Primary Agricultural Products - Corn prices are reported at 2374.90 CNY/ton, showing a week-on-week increase of 0.48% but a year-on-year decrease of 1.63% [35]. - Soybean prices remain stable at 3927.89 CNY/ton, with a year-on-year decline of 10.48% [35]. 2.2 Livestock - The average weight of pigs at slaughter remains stable at 129.71 kg, which is higher than the same period in 2023 and 2024 [2]. - The report notes that the output of listed pig companies reached 69.18 million heads in the first four months of 2025, marking a 30.1% year-on-year increase [2]. 3. Company Performance - The report lists the output of major listed pig companies, with Muyuan leading at 30.77 million heads, followed by Wens and New Hope [2]. - The report suggests that the introduction of new products in the pet food sector is driving rapid growth for domestic companies like Zhongchong and Guobao [5]. 4. Global Agricultural Trends - The global corn stock-to-use ratio for 2025/26 is projected to be the lowest since the 2015/16 season, indicating tightening supply conditions [3]. - The report forecasts a decrease in the global soybean stock-to-use ratio, reflecting similar trends in the corn market [3].