Investment Rating - The report maintains a "Positive" outlook on the agricultural, forestry, animal husbandry, and fishery industry for the third quarter of 2025 [2] Core Insights - The agricultural, forestry, animal husbandry, and fishery sector's net profit increased by 11% year-on-year in the first three quarters of 2025, with five sub-industries showing profit growth [16][17] - The overall performance of the sector declined in Q3 2025, with a 58% year-on-year drop in net profit, primarily due to significant losses in the breeding industry [18][19] - The pig farming sector faced a downturn with falling prices and a return to industry-wide losses, while the poultry sector showed mixed results with white feathered chickens stabilizing and yellow feathered chickens experiencing a significant decline [22][58] - The pet food segment continues to thrive domestically, although exports have been negatively impacted by increased tariffs [22][58] - The animal health sector benefited from high livestock inventory levels, leading to substantial revenue growth for companies in this space [22][58] Summary by Sections 1. Overview of Agricultural, Forestry, Animal Husbandry, and Fishery Sector - The sector's net profit for Q1-Q3 2025 reached 369.4 billion, marking an 11% increase year-on-year [16] - In Q3 2025, the sector's net profit was 95.9 billion, reflecting a 58% decrease year-on-year and a 27% decrease quarter-on-quarter [18] 2. Key Sub-Industry Performance 2.1 Pig Farming - The pig farming sector's revenue for Q1-Q3 2025 was 3036.4 billion, with a 9.9% year-on-year increase, but Q3 saw a significant profit drop of 68.4% [22] - The average profit per head for self-bred pigs was approximately 60 yuan, with significant variations among companies [36][38] 2.2 Poultry Farming - White feathered chicken companies reported a revenue of 243.4 billion in the first three quarters of 2025, with a net profit increase of 104.6% [64] - Yellow feathered chicken prices declined significantly, leading to a challenging market environment [58] 2.3 Pet Food - The pet food sector achieved a revenue of 103.0 billion in the first three quarters of 2025, with a year-on-year growth of 17.7% [22] - Domestic brands are gaining market share, while exports to the U.S. have decreased by 25.6% due to tariffs [22] 2.4 Animal Health - The animal health sector's revenue reached 132.7 billion in Q1-Q3 2025, with a 70.2% increase in net profit [22] - New product launches have contributed to above-average growth for some companies in this sector [22]

Core Insights - The animal health sector experienced a 1.24% increase on November 10, with *ST Lvkang leading the gains [1] - The Shanghai Composite Index closed at 4018.6, up 0.53%, while the Shenzhen Component Index closed at 13427.61, up 0.18% [1] Stock Performance Summary - *ST Lvkang (002868) closed at 33.35, up 5.01% with a trading volume of 5205 lots and a transaction value of 17.34 million yuan [1] - Huisheng Biological (300871) closed at 22.06, up 2.41% with a trading volume of 66,200 lots and a transaction value of 145 million yuan [1] - Zhongmu Co., Ltd. (600195) closed at 7.91, up 2.06% with a trading volume of 163,100 lots and a transaction value of 129 million yuan [1] - Kexin Biological (688526) closed at 16.31, up 1.56% with a trading volume of 40,300 lots and a transaction value of 6.54 million yuan [1] - Xianfeng Holdings (002141) closed at 3.86, up 1.31% with a trading volume of 171,800 lots and a transaction value of 65.85 million yuan [1] - Jinhai Biological (002688) closed at 6.34, up 1.12% with a trading volume of 153,600 lots and a transaction value of 96.73 million yuan [1] - Ruipu Biological (300119) closed at 20.75, up 1.07% with a trading volume of 58,800 lots and a transaction value of 121 million yuan [1] - Haili Biological (603718) closed at 7.03, up 1.01% with a trading volume of 92,300 lots and a transaction value of 64.67 million yuan [1] - Pulaike (603566) closed at 14.25, up 0.78% with a trading volume of 38,100 lots and a transaction value of 54.15 million yuan [1] - Yongshun Biological (920729) closed at 9.76, up 0.41% with a trading volume of 15,000 lots and a transaction value of 1.46 million yuan [1] Capital Flow Analysis - The animal health sector saw a net outflow of 9.96 million yuan from institutional investors, while retail investors experienced a net outflow of 29.65 million yuan [2] - Speculative funds recorded a net inflow of 39.62 million yuan into the sector [2]

Group 1 - The North Exchange 50 Index and the Specialized and Innovative Index will undergo adjustments on December 15, 2025, with the North Exchange 50 Index experiencing its fourth adjustment and the Specialized and Innovative Index its first adjustment [10][12][15] - The North Exchange 50 Index closed at 1,522.73 points, reflecting a weekly decline of 3.79%, while the Specialized and Innovative Index closed at 2,532.06 points, down 5.43% [31][32] - The report emphasizes the importance of focusing on high-quality stocks and technology growth within the North Exchange 50 components, particularly those that have undergone significant price adjustments [3][42] Group 2 - The report identifies potential new additions to the North Exchange 50 Index, including companies such as Kaifa Technology, Gobika, and Wantong Hydraulic, with a focus on their average market capitalization and trading volume [12][13] - The North Exchange Specialized and Innovative Index is expected to include companies like Star Map Measurement and Senxuan Pharmaceutical, highlighting their market performance and growth potential [15][16] - The report suggests that the North Exchange's valuation structure shows a significant number of companies with high P/E ratios, indicating a potential investment opportunity in undervalued stocks [21][36][41] Group 3 - The report indicates that the average P/E ratio for key sectors such as high-end equipment, information technology, and chemical new materials are 42.83X, 91.31X, and 48.18X respectively, suggesting varying levels of valuation across industries [36][41] - The North Exchange's market performance shows a decline in trading volume, with an average daily turnover of 230.88 billion yuan, down 20.36% from the previous week [26][30] - The report highlights the importance of monitoring companies with strong quarterly performance and reasonable valuations as the North Exchange approaches its index adjustments [42][43]

Core Insights - Merck Animal Health showcased its integrated solutions for animal health at the 2025 China International Import Expo, emphasizing the "One Health" concept [2] - The company aims to enhance local R&D and production capabilities in China, with approximately 50 vaccines and chemical products already launched in the market [2] - The recent launch of two new vaccines for swine, aimed at addressing significant economic diseases in China's pig farming industry, is expected to improve herd health and farming efficiency [3] Group 1 - Merck Animal Health presented a comprehensive portfolio covering companion animals, aquaculture, pigs, poultry, and ruminants, integrating vaccines, pharmaceuticals, and technological solutions [2] - The company operates its China headquarters in Shanghai, with production bases in Ningbo and Tianjin, and a research center in Ningbo [2] - The newly approved vaccines, including the first needle-free intradermal vaccine for porcine circovirus, provide innovative solutions for common diseases affecting the swine industry [2][3] Group 2 - The introduction of the new vaccines is expected to help reduce the high costs associated with pig farming in China, which is the world's largest pork market [3] - The company believes that these solutions will contribute to the stability of pork supply and improve the quality of products available to consumers [3]

Core Insights - The eighth China International Import Expo will be held in Shanghai from November 5 to 10, 2025, with Merck participating for the seventh consecutive time, showcasing its animal health business centered around the "One Health" concept [2] - Merck's animal health division emphasizes innovative products and technologies to enhance industry development and integrates social responsibility into its corporate DNA [2] - The company is presenting two new pig vaccines at the expo, aimed at addressing significant economic diseases in China's pig farming industry [4][5] Company Developments - Merck is showcasing the "Baozhuli® Yuan An Ke®" and "Baozhuli® Yuan Le Da®" vaccines, which are designed to provide new solutions for porcine circovirus and Mycoplasma pneumonia infections [2][4] - The introduction of these vaccines is expected to improve pig herd health and farming efficiency in China, the world's largest pig market [5] - In the companion animal sector, Merck is highlighting its "Chongbiwei®" vaccine series and Sure Petcare's smart pet products, aimed at providing efficient and safe solutions for pet healthcare [5] Industry Context - Porcine circovirus type 2 and Mycoplasma pneumonia are major economic diseases affecting China's pig farming, contributing to high breeding costs [4] - Merck's commitment to public health is demonstrated through its partnership with the China Small Animal Protection Association, having donated over 180,000 doses of rabies vaccines since 2016 [5] - The aquaculture segment is also featured at the expo, with Merck presenting a comprehensive product range following its acquisition of the Blue River Animal Health business, which includes vaccines, dewormers, and nutritional supplements [5]

Group 1 - The eighth China International Import Expo (CIIE) serves as a significant platform for global exchange and cooperation, showcasing innovative products and exploring collaboration opportunities [2][4]. - Hema signed a strategic cooperation agreement with Spanish olive oil brand, focusing on developing products tailored to Chinese cooking preferences, particularly for Jiangxi cuisine [1]. - Jiangxi's consumption of imported goods has seen a stable growth rate of over 30%, with seafood and fruits being particularly popular [1]. Group 2 - Boehringer Ingelheim's South China poultry vaccine production facility has exported over 2.3 billion doses since the launch of its export project in 2024, enhancing China's influence in the global animal health supply chain [4]. - The company plans to invest over 5 billion yuan in research and development in China over the next five years to improve product quality and ensure global supply [5]. - Jiangxi 3L Medical Products Group has increased its export revenue from $2.5 million to $15 million over eight years, leveraging the CIIE for business opportunities [3]. Group 3 - Nankang is emerging as a hub for low-altitude economy, with significant advancements in drone logistics and manufacturing, including the launch of the ARK 80 drone capable of carrying up to 30 kg [10][11]. - The region has established itself as a leader in low-altitude economy with multiple firsts, including the first drone logistics pilot and the largest contiguous airspace for drone operations in China [10]. - Nankang's low-altitude economy is attracting investment and collaboration from major companies, aiming to develop a comprehensive drone manufacturing and service network [12].

Investment Rating - The industry is rated as "Outperforming the Market" with an expected relative increase of over 10% in the industry index compared to the broader market within the next six months [5][41]. Core Insights - The overall performance of the agriculture, forestry, animal husbandry, and fishery sector showed steady growth in the first three quarters of 2025, with total revenue reaching 952.415 billion yuan, a year-on-year increase of 5.59%, ranking 10th among Shenwan's primary industries. The net profit attributable to shareholders totaled 36.747 billion yuan, up 11.81% year-on-year, ranking 11th [10][39]. - The return on equity (ROE) for the sector was 6.62%, an increase of 0.45 percentage points year-on-year, while the gross profit margin and net profit margin were 11.13% and 3.96%, respectively, reflecting increases of 0.41 and 0.33 percentage points year-on-year [16][39]. Summary by Relevant Sections Overall Industry Performance - The agriculture, forestry, animal husbandry, and fishery sector's revenue and profit growth rates are among the highest in the market, with a total revenue of 952.415 billion yuan and a net profit of 36.747 billion yuan for the first three quarters of 2025 [10][39]. Subsector Performance - **Planting Industry**: Revenue reached 70.967 billion yuan, up 4.74% year-on-year, with a net profit of 1.395 billion yuan, an increase of 4.06% [20]. - **Feed Industry**: Revenue was 215.297 billion yuan, a 12.04% increase year-on-year, with net profit rising 22.24% to 6.058 billion yuan [26]. - **Agricultural Products Processing**: Revenue slightly decreased by 0.31% to 259.411 billion yuan, but net profit surged by 52.36% to 5.188 billion yuan [32]. - **Breeding Industry**: Revenue was 366.406 billion yuan, up 6.97% year-on-year, with net profit increasing by 4.52% to 23.296 billion yuan [33]. - **Animal Health**: Revenue grew by 19.71% to 14.614 billion yuan, with net profit soaring by 97.92% to 1.551 billion yuan [36]. Investment Recommendations - The report suggests focusing on stable operations in leading pig farming enterprises and high-quality domestic brands in the pet food sector, which has significant growth potential due to low market concentration [3][39].

Core Insights - The animal health sector experienced a slight increase of 0.55% on November 7, with *ST Lvkang leading the gains [1] - The Shanghai Composite Index closed at 3997.56, down 0.25%, while the Shenzhen Component Index closed at 13404.06, down 0.36% [1] Stock Performance - *ST Lvkang (002868) closed at 31.76, up 4.99% with a trading volume of 12,000 hands and a transaction value of 37.6483 million yuan [1] - Other notable stocks included: - Biological Shares (600201) at 10.52, up 1.64% with a trading volume of 234,300 hands [1] - Driving Force (920275) at 9.88, up 1.13% with a trading volume of 7,484 hands [1] - Zhongmu Shares (600195) at 7.75, up 0.65% with a trading volume of 77,200 hands [1] Capital Flow - The animal health sector saw a net outflow of 5.144 million yuan from institutional investors, while retail investors experienced a net outflow of 11.0652 million yuan [2] - Conversely, speculative funds recorded a net inflow of 16.2092 million yuan [2] Detailed Capital Flow Analysis - Major stocks and their capital flow included: - Biological Shares (600201) with a net inflow of 20.3753 million yuan from institutional investors [3] - *ST Lvkang (002868) had a net inflow of 2.9042 million yuan from institutional investors [3] - Huisheng Biological (300871) faced a significant net outflow of 18.6925 million yuan from institutional investors [3]

Core Insights - The animal health sector experienced a slight increase of 0.36% on November 6, with *ST Lvkang leading the gains [1] - The Shanghai Composite Index closed at 4007.76, up 0.97%, while the Shenzhen Component Index closed at 13452.42, up 1.73% [1] Stock Performance - *ST Lvkang (002868) closed at 30.25, with a rise of 5.00% and a trading volume of 32,200 hands, amounting to a transaction value of 96.94 million yuan [1] - Other notable stocks include: - KQ Bio (688526) at 16.07, up 0.69% [1] - Biological Shares (600201) at 10.35, up 0.68% with a transaction value of 153 million yuan [1] - Ruipu Biological (300119) at 20.46, up 0.20% [1] - Pulaike (603566) at 14.09, up 0.14% [1] Capital Flow - The animal health sector saw a net outflow of 17.47 million yuan from institutional investors, while retail investors contributed a net inflow of 8.89 million yuan [2] - The capital flow for individual stocks indicates: - *ST Lvkang had a net inflow of 7.56 million yuan from institutional investors [3] - KQ Bio experienced a net inflow of 4.84 million yuan [3] - Biological Shares had a net inflow of 2.64 million yuan [3]

Core Points - The company announced a joint investment with professional investment institutions to establish a partnership for investing in the pet industry chain [1] - The total subscribed capital of the partnership is RMB 406 million, with the company contributing RMB 154 million, accounting for 37.9310% of the total [1] - The partnership has been registered with the Asset Management Association of China and has obtained the Private Investment Fund Registration Certificate [1] Investment Details - The meeting to approve the investment was held on October 13, 2025 [1] - The partnership includes Tianjin Port Free Trade Zone Emerging Industry Development Fund Partnership, Tianjin Lingang Equity Investment Fund Management Co., Ltd., and Mingzhi Hexin (Tianjin) Equity Investment Fund Management Co., Ltd. [1] - The investment aims to target relevant projects within the pet industry [1]