Investment Rating - The report maintains a positive outlook on the agricultural sector, specifically highlighting investment opportunities in the pig farming and pet food industries [3][4]. Core Insights - The report emphasizes the strong performance of the pet food sector during the "618" shopping festival, with leading brands showing significant sales growth. It also notes the potential for re-evaluation of pig prices due to changing market conditions [4][5]. - The agricultural index increased by 1.8%, contrasting with a 1.1% decline in the Shanghai and Shenzhen 300 index, indicating a favorable market environment for agricultural stocks [5]. Summary by Sections Agricultural Stock Market Performance - The agricultural index rose by 1.8%, while the Shanghai and Shenzhen 300 index fell by 1.1%. The top five gainers included ST Tianshan (13.6%), Juxing Agriculture (13.2%), and Xiwang Food (12.4%) [5][12]. - The report suggests focusing on the sales performance of pet food during the "618" shopping festival and the re-evaluation of pig prices, particularly for undervalued leading pig farming companies [4][5]. Pig Farming - Pig prices continue to show strong fluctuations, with a national average selling price of 14.42 CNY/kg as of June 2, reflecting a week-on-week increase of 0.8%. The report indicates that the overall industry remains profitable, with a profit of 125.3 CNY per head for large-scale farms [4][5]. - The report highlights the expectation of a re-evaluation of pig prices in the second half of the year, driven by strong market realities and declining breeding costs [4][5]. Pet Food - The "618" shopping festival saw explosive sales in the pet food sector, with major brands performing exceptionally well. The festival's duration was extended, leading to increased sales [4][14]. - Key brands such as Guai Bao Pet and Zhongchong Co. showed significant improvements in their rankings on e-commerce platforms, indicating a strong market presence [21][23][28]. Animal Health - The report notes that the re-evaluation of pig prices may drive demand for animal health products, particularly vaccines. The first quarter of 2025 saw a 23.02% year-on-year increase in vaccine approvals [4][5]. - Companies focusing on pet health products are expected to benefit from the growing demand in the market [4][5].

Summary of Conference Call Records Industry Overview - The records focus on the pig farming industry in China, specifically the market dynamics of pork prices and related agricultural products [1][5]. Key Points and Arguments - **Pork Prices**: As of the fourth week of May, the price of white strip pork was 14.7 yuan/kg, a decrease of 12.6% month-on-month. The average slaughter weight was 91.9 kg, down by 0.2 kg [1]. - **Poultry Prices**: Chick prices rose to 2.9 yuan each, while the price of broiler chickens increased to 7.4 yuan/kg. However, chicken meat prices fell to 8.85 yuan/kg [1][3]. - **Grain Market**: Corn prices increased by 0.2% to 2,380 yuan/ton, while wheat prices decreased by 0.4% to 2,453 yuan/ton. The price of japonica rice remained stable at 2,864 yuan/ton [1][3]. - **Soybean Market**: The soybean market showed weakness, with the CBOT soybean closing down by 2.4 points, and soybean meal prices fell by 1.7% to 2,975 yuan/ton [1][3]. - **Palm Oil and Sugar**: Domestic palm oil prices rose by 0.3% to 8,628 yuan/ton, while Malaysian palm oil increased by 1.3% to 3,878 ringgit/ton. Domestic sugar prices remained stable at 6,160 yuan/ton, while international sugar prices fell by 1.2% to 17.1 cents/pound [1][4]. Market Outlook - The pig market in 2025 is expected to differ from previous downturn cycles, with stable prices and ongoing profitability. The self-breeding and self-raising model remains profitable, albeit at lower levels [5]. - The actual downward pressure on prices is less severe than anticipated, although the futures market remains pessimistic due to expected increases in production capacity and weight [5]. - The breeding sow population shows little fluctuation, indicating rational management in response to future uncertainties and the effects of scale [5]. Investment Recommendations - Despite overall weak profitability in the industry, leading companies such as Muyuan, Wens Foodstuffs, and Shennong have significant cost advantages, with costs just above 12 yuan/kg, below the industry average of approximately 14.5 yuan/kg [3][6]. - It is suggested to focus on stocks of these leading companies during the off-season, as they present potential for valuation reassessment and good cost-performance ratios [7]. Additional Insights - The trend of increasing weight since 2023 has constrained price expectations, but a decline in weight is anticipated as summer approaches, which could positively impact future prices [2][5]. - Enhanced regulation on secondary fattening practices may also help improve supply-demand relationships in the market [2][5].