Core Viewpoint - The pig slaughtering industry is experiencing a significant recovery in profitability after a prolonged period of losses and capacity reduction, driven by policies encouraging weight reduction and accelerated market demand for low-priced pork [1][2]. Group 1: Profit Recovery - The profitability of the slaughtering industry has increased significantly, with average gross profit reaching 31.99 yuan per head, a year-on-year increase of 341.85% as of October 31, 2025 [2]. - The acceleration of hog sales from the breeding sector has alleviated pressure on slaughtering companies, leading to a decrease in average slaughtering costs [2]. - The slaughtering volume in September 2025 reached 35.84 million heads, a year-on-year increase of 28.5%, marking the highest level for the same period in history [2]. Group 2: Capacity Utilization - Despite the profit recovery, structural issues remain, with overall slaughtering capacity being excessive and many companies operating below their designed capacity [3]. - Major companies like Muyuan Foods have reported improved slaughtering volumes, achieving a capacity utilization rate of 88% in the first three quarters of the year, with the third quarter reaching 100% [3]. - In contrast, New Hope's capacity utilization is around 50%, indicating that while profits have improved, the availability of hogs remains a challenge [3]. Group 3: Expansion Plans - Leading pig farming companies are increasing their slaughtering capacity, with Muyuan Foods planning to gradually implement previously planned but unbuilt slaughtering capacity [4]. - Muyuan Foods has surpassed WH Group in slaughtering volume, with current capacities of 29 million heads and 25 million heads, respectively [4]. - Other companies, such as New Hope and WH Group, are exploring alternative models for capacity expansion, with WH Group considering light asset operations for new facilities [4][5].