Core Viewpoint - COFCO Jiajia Kang (01610) reported a significant increase in revenue and profit for the first half of 2025, driven by stable production in its pig farming business and improved cost management [1] Financial Performance - The company achieved a revenue of RMB 8.963 billion, representing a year-on-year increase of 19.77% [1] - The profit attributable to shareholders was RMB 317 million, showing a slight increase of 0.2% year-on-year [1] - Basic earnings per share were RMB 0.0691 [1] Business Operations - The company has intensified its brand promotion and channel expansion efforts, with brand revenue proportion increasing by 4.5 percentage points year-on-year [1] - The stable production rhythm and enhanced production efficiency in the pig farming segment contributed to the revenue growth [1] - Before the fair value adjustment of biological assets, the profit attributable to shareholders was RMB 198 million, marking a turnaround from loss to profit, primarily due to stable production and cost improvements in the pig farming business [1] Biological Assets - After the fair value adjustment, the profit attributable to shareholders increased to RMB 317 million, with the adjustment based on pig prices as of June 30, 2025 [1]

Core Viewpoint - The central government emphasizes preventing "involution" in the pig industry, focusing on capacity control, weight reduction, and limiting secondary fattening to promote high-quality development in the sector [1][4][6]. Group 1: Involution and Market Dynamics - The concept of "involution" refers to a harmful competition where economic entities invest significant resources without overall profit growth, leading to a "zero-sum" situation [2]. - The pig industry faces a supply-demand mismatch, with rapid capacity expansion following the African swine fever outbreak, while demand growth lags behind, resulting in fierce competition and profit compression [2][3]. Group 2: Policy Measures and Industry Response - The Ministry of Agriculture and Rural Affairs has introduced a framework to reduce the national breeding sow population by 1 million to 39.5 million, optimize production, and lower market weights [4][5]. - Policies include strict monitoring of breeding practices and the introduction of a registration management system for livestock farms to ensure quality and stability in supply [4][6]. Group 3: Industry Trends and Statistics - The scale of pig farming has increased, with the proportion of large-scale operations rising from 53% in 2021 to 69% in 2024, indicating a trend towards industry consolidation [7]. - As of mid-2025, leading companies like Muyuan Foods have reduced their breeding sow inventory by 54,000 heads, reflecting a commitment to capacity control [7][8]. Group 4: Weight Reduction and Secondary Fattening - The average slaughter weight of pigs decreased to 90.3 kg in June, down 0.58% month-on-month and 2.11% year-on-year, indicating a clear trend towards weight reduction in response to policy guidance [8]. - The practice of secondary fattening, where pigs are purchased and fattened before sale, disrupts price stability and is being targeted by environmental policies aimed at upgrading or eliminating outdated production capacities [8].

Group 1: Macro Insights - The export performance remains strong, with August exports expected to exceed expectations, while second-hand housing sales show slight improvement but remain weak overall [5][6] - The Jackson Hole meeting indicated a dovish stance from Powell, with a high probability of interest rate cuts in September and two cuts expected within the year [6][7] - The food and beverage sector has finally seen a daily-level increase, while the oil and petrochemical sectors have also reversed previous downtrends [7][11] Group 2: Company-Specific Insights - Jackson Hole's policy framework revisions suggest a shift away from the "average inflation target," which may limit long-term rate cuts if inflation remains high [6] - Xiaomi Group reported record revenue and profit in Q2 2025, driven by high-end product offerings and growth in IoT and automotive sectors [32][33] - The construction company Lianjian Technology is expected to see significant growth due to successful mergers and acquisitions, with projected net profits increasing substantially from 0.70 billion to 1.66 billion from 2025 to 2027 [20] - Angel Yeast is anticipated to enter a multi-year upward cycle, with projected net profits of 16.4 billion to 21.9 billion from 2025 to 2027, reflecting a strong recovery [21] - Weilai Transmission, a leader in wind power precision transmission, is expected to turn profitable in 2025, with significant growth in net profits projected for the following years [22] - Muyu Group's pig production volume increased by 44.8% in H1 2025, with a focus on cost reduction, aiming to lower costs to 11 yuan/kg by year-end [41][42]

Core Viewpoint - The Chinese government is implementing measures to prevent "involution" in the pig farming industry, focusing on capacity control, weight reduction, and limiting secondary fattening to promote high-quality development in the sector [1][5]. Group 1: Policy Measures - The Ministry of Agriculture and Rural Affairs has proposed a framework to reduce the national breeding sow population by 1 million to 39.5 million, slightly above the basic capacity [2]. - Policies include optimizing pig production, increasing the elimination of weak piglets, and lowering the weight requirement for state reserves to 115 kg [2]. - The Ministry will enhance monitoring and require local authorities to report on breeding sows, inventory, average weight, and secondary fattening monthly [2][3]. Group 2: Industry Trends - The pig farming industry is experiencing a shift towards increased concentration, with the scale of pig farming rising from 53% in 2021 to 69% in 2024 [5]. - The top ten listed pig farming companies accounted for 23.7% of the slaughter volume in the first half of 2025, indicating a further increase in industry concentration [5]. - Major companies like Muyuan and Wen's have reduced their breeding sow inventory, with Muyuan's inventory decreasing by 54,000 heads to 3.43 million [5]. Group 3: Weight Reduction - The average slaughter weight of pigs in June was 90.3 kg, down 0.58% month-on-month and 2.11% year-on-year, reflecting a clear trend towards weight reduction [6]. - Major companies reported varying average weights, with Muyuan at 108.64 kg, Wen's at 113.69 kg, and New Hope at 99.21 kg, showing a significant decline in average weights across the industry [6]. Group 4: Secondary Fattening Practices - The practice of secondary fattening, where farmers purchase pigs at normal slaughter weight and further fatten them, has become common post-African swine fever, disrupting price stability [7]. - Environmental policies are expected to promote the upgrade or elimination of outdated production capacities, which will help stabilize the industry and curb secondary fattening practices [7].

Group 1 - The national average pig-to-grain price has fallen below 6:1, entering the third warning zone, prompting the National Development and Reform Commission (NDRC) to initiate central frozen pork reserve storage [1] - The imbalance between supply and demand is the primary reason for the decline in pig-to-grain prices, with increased supply due to concentrated pig slaughtering and heightened disease risks in southern regions, while demand remains weak during the summer season [1] - The central reserve's storage of 10,000 tons of frozen pork, although limited in scale, is expected to alleviate supply pressure and positively influence market sentiment [1] Group 2 - The industry is transitioning to a high-quality development phase after a period of rapid scale-up and excess profits, characterized by extended profit cycles and reduced volatility [2] - The "anti-involution" process in the pig farming industry is expected to lead to stable and high-quality development, with ongoing cost optimization and industry consolidation providing opportunities for profit growth [2] - Companies with cost advantages in pig farming are likely to achieve long-term profitability as the industry matures [2]

Core Insights - In July 2025, the total sales volume of major listed pig farming companies reached 14.36 million heads, marking a year-on-year increase of 14.82% but a month-on-month decrease of 4.9% [1][5] - The total revenue for these companies in July was 23.32 billion yuan, reflecting a year-on-year decline of 11.18% and a month-on-month decrease of 6.44% [1][11] Sales Volume Summary - Major companies like Muyuan Foods led the sales with 6.36 million heads, followed by Wens Foodstuffs and New Hope with sales exceeding 1.3 million heads each [1][6] - Companies such as Zhenghong Technology and Zhengbang Technology reported sales growth exceeding 200% year-on-year [1][6] - Over half of the companies experienced a sales growth rate in July that was lower than in June, with some companies like Zhenghong Technology and Jingji Zhino showing significant increases compared to the previous month [6][10] Revenue Summary - The top three companies by revenue in July were Muyuan Foods, Wens Foodstuffs, and New Hope, while companies like Dabeinong and Zhengbang Technology ranked fourth and fifth respectively [11][12] - Zhenghong Technology reported a remarkable revenue growth of 148.12% year-on-year, while Zhengbang Technology also showed strong growth exceeding 90% [11][14] - Several companies, including Huazhong and Jinxinnong, saw their revenue decline by over 20% year-on-year [11][14]

Investment Rating - The report maintains a "Positive" outlook on the agricultural sector, particularly in the pig farming industry, emphasizing the importance of tracking industry regulatory measures [2][4]. Core Insights - The report highlights the recent recovery in pig prices and the resumption of pork reserves, suggesting a potential increase in profitability for leading pig enterprises. It emphasizes the need to focus on high-quality pig companies and their performance [3][4]. - The report notes that the agricultural sector index rose by 3.7%, with specific companies like Muyuan Foods showing significant revenue growth and shareholder returns [3][4]. - The report also discusses the pet food industry, indicating a mixed performance due to U.S.-China trade tensions but suggests long-term growth potential in domestic markets [3][4]. Summary by Sections Agricultural Stock Market Performance - The agricultural sector index increased by 3.7%, while the Shanghai and Shenzhen 300 index rose by 4.2%. The top five gainers included Shenyang Biological (19.2%) and Guotou Zhonglu (18.0%), while the biggest losers were ST Tianshan (-19.3%) and Xiaoming Co. (-5.3%) [3][4]. Pig Farming - The average price of external three yuan pigs was 13.77 yuan/kg, with a week-on-week increase of 0.7%. The report indicates a slight recovery in prices after a period of decline due to increased selling sentiment among farmers [3][4]. - The report mentions that the Ministry of Agriculture has restarted pork reserves to stabilize the market, with the average pig-to-grain price ratio falling below 6:1, entering a warning zone [3][4]. - Muyuan Foods reported a significant increase in revenue and net profit for the first half of 2025, with a revenue of 76.463 billion yuan, up 34.46% year-on-year, and a net profit of 10.530 billion yuan, up 1169.77% year-on-year [3][4]. Poultry Farming - The report notes a seasonal rebound in white feather broiler chick prices, with an average selling price of 3.53 yuan/chick, reflecting a positive outlook for the upcoming consumption season [3][4]. - Yellow feather broiler prices have shown signs of recovery, with expectations of profitability as the traditional consumption peak approaches [3][4]. Animal Health - The report emphasizes the recovery of animal health companies due to improved profitability in pig farming, with companies like Jinhai Biological reporting significant revenue growth [3][4]. - The demand for vaccines and other health products is expected to rise as the profitability of downstream farming enterprises stabilizes [3][4].

Investment Rating - Industry rating: Outperform the market (maintained rating) [9] Core Insights - The pet industry is experiencing significant growth, with the Asia Pet Expo showcasing over 2,600 exhibitors and 20,000 brands, indicating a thriving market driven by globalization and innovation [2][13] - China's pet food exports have shown continuous growth, with 201,000 tons exported from January to July 2025, reflecting a year-on-year increase of 6.64% [14] - The pig farming sector is facing challenges, with the average pig price at 13.82 yuan/kg, a decrease of 3.63% from the previous week, and the average weight of pigs reaching a historical high [15][16] - The dairy sector is poised for a recovery, with the original milk price expected to rebound as production capacity decreases after a prolonged period of losses [17][18] - The poultry sector is focusing on breeding gaps, with a significant decline in the import of breeding chickens due to avian influenza concerns, which may impact future supply [19][20] - The planting sector emphasizes food security and the importance of biotechnology, with a focus on high-yield and resilient crop varieties [25] - The feed sector is recommended for investment, particularly in companies like Haida Group, which is expected to benefit from market recovery and increased market share [26] Summary by Sections Pet Sector - The Asia Pet Expo has reached a record scale of 310,000 square meters, highlighting the industry's vitality and innovation potential [2][13] - Pet food exports from China have increased, with a total of 201,000 tons exported in the first seven months of 2025, showing a year-on-year growth of 6.64% [14] - Recommended companies include pet food brands like Guibao Pet, Zhongchong Co., and Petty Co. [14] Pig Sector - The average pig price is currently at 13.82 yuan/kg, with a year-to-date low in profitability for pig farming [15][16] - The average weight of pigs is at a historical high, indicating supply pressures [15] - Recommended companies include leading pig farming firms such as Wens Foodstuffs Group and Muyuan Foods [16] Dairy Sector - Yuran Dairy reported stable performance with a revenue of 10.3 billion yuan, showing a year-on-year growth of 2.3% [17] - The dairy industry is expected to see a recovery as production capacity decreases [18] - Recommended companies include Yuran Dairy and China Shengmu Organic Milk [18] Poultry Sector - The poultry sector is facing challenges with breeding imports, particularly for white chickens, due to avian influenza [19][20] - Recommended companies include Shennong Development and Yisheng Livestock [20] Planting Sector - The focus is on food security and biotechnology, with an emphasis on high-yield and resilient crop varieties [25] - Recommended companies include Longping High-Tech and Dabeinong Technology Group [25] Feed Sector - Haida Group is highlighted as a key investment opportunity due to its increasing market share and performance [26] - The animal health sector is also recommended, particularly companies like Kexin Biological [27]

Investment Rating - The industry is rated as "Maintain Increase" [4] Core Views - The price of yellow chickens continues to rise, with average prices for fast, medium, and slow-growing yellow feathered chickens at 10.84 CNY/kg, 12.68 CNY/kg, and 15.24 CNY/kg respectively, showing year-on-year increases of 5.9%, 5.0%, and 5.0% [13][14] - The supply side is experiencing a significant reduction in the supply of medium and fast-growing chickens, leading to market shortages, while high-end products are selling well [13] - Demand is being driven by seasonal factors such as graduation banquets and preparations for the Mid-Autumn Festival and National Day, which is boosting overall sales [13] - The current cycle of prosperity in the industry is expected to last about one quarter, with a recovery in the fundamentals of the sector [13] Summary by Sections Livestock Farming - The average price for lean pigs is 13.71 CNY/kg, down 0.2% from last week, indicating a relatively low valuation [14][16] - The average wholesale price of pork is 20.1 CNY/kg, up 0.2% from last week [16] - Self-breeding pigs show a profit of 33.95 CNY per head, while purchased piglets show a loss of 151.8 CNY per head [18][19] Poultry Farming - The average price for white feathered chickens is 7.33 CNY/kg, up 1.8% from last week, while the average price for chicken products is 8.75 CNY/kg, down 0.6% [30] - The price of meat chicken chicks remains stable at 3.58 CNY each [25] - The yellow chicken production capacity is being adjusted, with a focus on seasonal price elasticity opportunities [14] Planting and Agricultural Products - The approval of genetically modified varieties is expected to lead to commercial sales, with potential growth for industry companies [14] Supporting Industries - The volatility of agricultural product prices is increasing, and leading feed companies are expected to replace smaller companies due to their advantages in procurement, scale, and capital [14]

Investment Rating - The report indicates a neutral investment rating for the agricultural sector, with expectations of limited price fluctuations in the near term [82]. Core Insights - The agricultural sector index has shown a weekly increase of 3.72%, but it underperformed compared to the Shanghai Composite Index [13][14]. - The report highlights that the pig farming industry is under pressure with prices declining, but there is potential for a mid-term recovery if supply is effectively managed [3][25]. - Poultry farming is experiencing weak demand, leading to price adjustments, but there is optimism for recovery as consumer demand improves [4][40]. - The beef and dairy sectors are seeing a gradual increase in prices, with expectations of a new cycle in beef production [5][46]. - The planting industry is stabilizing, with potential improvements if there are significant reductions in grain production due to external factors [6][52]. - Feed prices are stabilizing, and the aquaculture sector is showing signs of recovery in pricing [68][73]. Summary by Sections 1. Market Review - The agricultural index closed at 2941.27 points, with a weekly increase of 3.72%, while the Shanghai Composite Index increased by 3.49% [13][14]. 2. Key Data Tracking 2.1 Pig Farming - The average price of commodity pigs is 13.73 yuan/kg, with a weekly decrease of 0.22%. The average weight of pigs at slaughter is 127.98 kg, showing a slight increase [23][24]. - The report anticipates continued pressure on pig prices in the short term, but potential for recovery if production capacity is managed [3][25]. 2.2 Poultry Farming - The average price of white feather chickens is 7.33 yuan/kg, with a weekly increase of 1.81%. The profitability of chicken farming is under pressure but may improve with better consumer demand [34][40]. 2.3 Livestock - The price of live cattle in Shandong is 26.96 yuan/kg, reflecting a 0.60% increase. The dairy sector is expected to stabilize as production capacity decreases [5][46]. 2.4 Planting Industry - Domestic corn prices are stable at 2311.43 yuan/ton, while soybean prices remain unchanged. The planting sector is stabilizing, with potential improvements if grain production decreases significantly [51][52]. 2.5 Feed and Aquaculture - Feed prices for fattening pigs are stable at 3.34 yuan/kg. Aquaculture prices are showing signs of recovery, with various fish prices remaining stable [68][73].