Investment Rating - The investment rating for the company is "Buy" and is maintained [12]. Core Views - The report highlights that the pig farming industry has transitioned from rapid growth to a stable phase, with capacity regulation becoming a new norm, positively impacting the industry. The company is entering a new development stage, focusing on efficiency, cost reduction, and improving free cash flow [4][20]. - Future capital expenditures for the company are expected to decrease significantly, with domestic capacity expansion slowing down, leading to healthier high-quality development in domestic operations. The company is also poised for growth in overseas markets [4][20]. Summary by Relevant Sections Industry New Normal - The Chinese pig farming industry has entered a new normal characterized by reduced price volatility and an elevated profit center. The proportion of large-scale farming entities has increased significantly, with those producing over 500 pigs annually now accounting for 70% of total output. This shift has led to more stable production capacities and tighter financing conditions, limiting large-scale expansions [8][27][36]. - The industry is now subject to long-term capacity regulation, which is expected to stabilize production and enhance profitability for quality enterprises [8][27]. Company’s New Stage - The company has entered a new development phase, with capital expenditures projected to decline from a peak of 461 billion yuan in 2020 to 124 billion yuan by 2024, and further down to 50 billion yuan thereafter. Free cash flow is expected to improve significantly, reaching 179 billion yuan in 2024 [9][22]. - The company maintains a cost advantage, with a projected complete cost of 12.1 yuan/kg by June 2025, the lowest among listed companies. This cost efficiency, combined with stable profit growth, positions the company favorably for future cash flow generation [9][22]. Overseas Expansion - The company is well-positioned to compete globally, with plans to expand its operations in overseas markets, particularly in Vietnam, where there is significant growth potential. The company aims to establish a substantial presence in the Vietnamese market by 2030, targeting 450,000 breeding sows and 10 million market pigs [10][39]. - The global distribution of pig production indicates that while China leads with approximately 703 million pigs, there remains considerable room for growth in countries like Vietnam, where the scale of production is still developing [10][39].