Core Viewpoint - Muyuan Foods Co., Ltd. (牧原股份) has submitted an application to list on the Hong Kong Stock Exchange, with Morgan Stanley, CITIC Securities, and Goldman Sachs as joint sponsors [1][27]. Company Overview - Muyuan Foods is a technology-driven leader in the pork industry, operating a vertically integrated business model that covers the entire pork production chain, including breeding, farming, feed production, and slaughtering [3]. - The company operates through two main business segments: pig farming (selling market pigs, piglets, and breeding pigs) and slaughtering (including the sale of carcasses, cuts, and by-products) [3]. - Major products include live pigs and fresh or frozen meat products, ensuring transparency, quality control, and traceability throughout the production process [3]. Financial Performance - Revenue for the years 2022, 2023, 2024, and the six months ending June 30, 2025, was recorded at RMB 124.83 billion, RMB 110.86 billion, RMB 137.95 billion, and RMB 76.46 billion, respectively [5]. - Net profit for the same periods was RMB 14.93 billion, a loss of RMB 4.17 billion, RMB 18.93 billion, and RMB 10.79 billion [6]. - Gross profit margins were 17.5%, 3.1%, 19.1%, and 19% for the respective years [8]. Market Position - According to Frost & Sullivan, Muyuan Foods is the largest pig farming enterprise globally by production capacity and output, with a market share increasing from 2.6% in 2021 to 5.6% in 2024 [4]. - The company entered the slaughtering business in 2019, and by 2024, it ranked fifth globally and first in China in terms of slaughter volume [4]. Industry Overview - Global pork consumption has been on the rise, with a compound annual growth rate (CAGR) of 4.9% from 2020 to 2024, reaching 115.3 million tons in 2024 [10]. - China's pork consumption is stabilizing, with an expected volume of 58.2 million tons in 2024, and is projected to fluctuate around 59 million tons from 2025 to 2029 [10]. - The number of breeding sows in China decreased from 41.6 million in 2020 to 40.8 million in 2024, while the output of pigs is expected to reach approximately 707.3 million by 2029 [13]. Pricing Trends - The average market price of pigs in China has shown significant fluctuations due to supply and demand dynamics, with prices peaking at RMB 33.9 per kilogram in 2020 and dropping to RMB 15.1 per kilogram in 2023 [19].

Core Insights - The pork stocks have shown strength, with notable increases in shares of companies like Luoniushan and Muyuan Foods, indicating a positive market sentiment in the pork industry [1] - The Livestock Breeding ETF (516670) has experienced significant net inflows, suggesting growing investor interest in the sector [1][4] Industry Summary - As of November 9, the average price of live pigs in China is 11.90 CNY/kg, reflecting a week-on-week decrease of 0.30 CNY/kg and a year-on-year decline of 4.80% [2][3] - Current breeding profits for self-bred pigs are at a loss of 89.21 CNY per head, while purchased piglets incur a loss of 175.54 CNY per head, indicating a challenging profitability landscape for pig farmers [3] - The industry is facing a potential capacity reduction due to weak prices and policy-driven initiatives, with the price of fat pigs dropping below 12 CNY/kg [3] - Short-term projections suggest an increase in piglet numbers from May to September 2025, which may lead to higher market supply and continued pressure on prices [3] - The Livestock Breeding ETF has the lowest management fee rate of 0.2% per year among ETFs tracking the livestock breeding index, making it an attractive option for investors [4]

Core Viewpoint - The livestock farming ETF (516670) has seen significant inflows, with nearly 22 million yuan on a single day and a total of 210 million yuan over the past 11 days, reaching a new high of 1.063 billion yuan since its listing [1] Group 1: Industry Performance - In September, the overall sales revenue of listed pig farming companies declined, with a total revenue of 21.647 billion yuan, representing a year-on-year decrease of 18.74% and a month-on-month decrease of 10.77% [3] - The decline in sales revenue is attributed to significantly lower pig prices compared to the same period last year, as well as a continuous drop in prices in September [3][4] - The total number of pigs sold by listed companies in September was 15.2934 million heads, marking a year-on-year increase of 27.11% but a month-on-month decrease of 5.92% [4] Group 2: Supply and Demand Dynamics - The price decline is influenced by both ample supply and weak demand, with a notable increase in the number of pigs being marketed due to the release of new production capacity from last year [4] - The number of breeding sows in September was 40.35 million heads, showing a year-on-year decrease of 280,000 heads (0.7%) and a slight month-on-month decrease of 90,000 heads (0.2%) [4] Group 3: Policy and Future Outlook - Since May, the industry has been focusing on "de-involution," with multiple meetings held by the Ministry of Agriculture, the National Development and Reform Commission, and industry associations to control production capacity and reduce weight [5] - With the increasing enforcement of policies and recent pig prices entering a loss zone, it is expected that the industry's capacity reduction will accelerate in the fourth quarter, with a potential upward trend in pig prices anticipated in the second half of next year [5] - The livestock farming ETF (516670) has a management fee rate of 0.2% per year, making it the lowest among ETFs tracking the livestock farming index [5]

Core Viewpoint - The livestock sector is experiencing a rally, driven by preliminary anti-dumping measures on EU pork imports, which may lead to an increase in domestic pork prices as supply tightens [3][5]. Group 1: Market Performance - On September 8, the livestock sector saw significant gains, with companies like Lihua Co. rising over 7%, and others such as Xiaoming Co., Jinxinnong, and Shennong Group increasing by more than 5% [1]. - The Livestock Breeding ETF (516670) rose by 3.10% [1]. Group 2: Regulatory Developments - The Ministry of Commerce's preliminary investigation into anti-dumping of EU pork and by-products confirmed dumping behavior and its harm to the domestic industry, leading to a decision to implement temporary anti-dumping measures by September 5, 2025 [3]. - Over 50% of China's imported pork and by-products come from the EU, and the imposition of anti-dumping duties is expected to raise domestic pork prices [3]. Group 3: Industry Trends - As of September 5, the average wholesale price of pork was 19.84 yuan/kg, indicating a low point in recent years, suggesting that current prices may be at a temporary bottom [3]. - The breeding stock of sows saw a slight decrease of 0.80% in August, indicating a tightening supply [5]. - The livestock sector's overall valuation remains low, with the CSI Livestock Breeding Index at 2.72 times PB, which is at the 16% historical percentile, indicating potential for upward valuation adjustments [5]. Group 4: Future Outlook - As temperatures cool, demand is expected to improve marginally, leading to tighter supply of market pigs and potentially increasing pork prices [7]. - The industry is transitioning from quantity expansion to quality improvement, with expectations of increased concentration and better supply-demand dynamics as policies take effect [7]. - The Livestock Breeding ETF closely tracks the CSI Livestock Breeding Index, with approximately 60% of its weight in pig farming-related stocks, indicating a strong focus on the sector [7].