Core Viewpoint - The report from GF Securities indicates that China's total beef import quota for 2026 will be 2.688 million tons, with Brazil accounting for 1.106 million tons, Argentina for 0.511 million tons, Uruguay for 0.324 million tons, and Australia for 0.205 million tons. The implementation of the import quota system is expected to alleviate supply pressure on imported beef and support a price increase in domestic beef, enhancing the performance of livestock companies [1][2]. Group 1: Import Quota and Market Impact - The Ministry of Commerce announced that starting January 1, 2026, a safeguard measure will be implemented for imported beef, which includes country-specific quotas and an additional 55% tariff on imports exceeding the quota. This measure is set to last for three years [1][2]. - In 2024, beef imports are projected to account for 27% of total supply, with a total import volume of 2.87 million tons, reflecting a 5% year-on-year increase. The import volumes from Brazil, Argentina, Uruguay, and Australia are 1.34 million tons, 0.59 million tons, 0.24 million tons, and 0.21 million tons, respectively [2]. Group 2: Price Trends and Industry Outlook - The beef price cycle is on the rise due to previous losses in cattle farming leading to reduced supply. As of Q3 2025, the national cattle inventory was 99.32 million heads, showing a 0.6% quarter-on-quarter decline and a 2.4% year-on-year decline. It is expected that beef prices will continue to rise in 2026, providing significant profit elasticity for livestock companies [3]. - The report suggests focusing on investment opportunities linked to both beef and dairy cattle, highlighting companies such as Yuran Agriculture (09858) and Modern Farming (01117) as key targets [4].

Investment Rating - The industry investment rating is "Buy" [2] Core Insights - The report highlights the implementation of a quota system and additional tariffs on beef imports, which is expected to support the upward price cycle of beef cattle [6] - The total beef import quota for 2026 is set at 2.688 million tons, with specific allocations for Brazil (1.106 million tons), Argentina (0.511 million tons), Uruguay (0.324 million tons), and Australia (0.205 million tons) [6] - The report anticipates that domestic beef prices will continue to rise in 2026 due to reduced supply from previous losses in cattle farming, which enhances profit elasticity for livestock companies [6] - The report suggests investment opportunities in both beef and dairy cattle sectors, particularly focusing on companies like Yurun Agriculture and Modern Farming [6] Summary by Sections Industry Overview - The report discusses the impact of the quota system on beef imports, which is expected to alleviate supply pressure on the domestic market [6] - In 2024, beef imports are projected to account for 27% of total supply, with a 5% year-on-year increase in import volume [6] Price Trends - The beef cattle price cycle is expected to rebound due to previous capacity reductions, with a projected increase in beef prices for 2026 [6] - As of the end of Q3 2025, the national cattle inventory was 99.32 million heads, showing a 0.6% quarter-on-quarter and 2.4% year-on-year decline [6] Investment Recommendations - The report recommends focusing on investment opportunities in the beef and dairy sectors, particularly highlighting the potential for profit growth in livestock companies due to the expected price increases [6] - Key companies to watch include Yurun Agriculture and Modern Farming, which are positioned to benefit from the favorable market conditions [6]