Core Viewpoint - The traditional peak season for pork consumption, "Golden September and Silver October," is experiencing an unusual downturn in prices, attributed to oversupply, weak demand, and misaligned market expectations [5]. Price Trends - As of September 16, the average price of live pigs in China dropped to 13.20 yuan per kilogram, a significant year-on-year decline of 31.61%, with some regions seeing prices fall below 6 yuan per pound [1]. - Prices for pork cuts in Jinan supermarkets showed a notable decrease, with front leg meat dropping from 12.5 yuan to 7.9 yuan per pound [3]. Supply Dynamics - The slaughter capacity has decreased by approximately 15% compared to last year, with current procurement prices for live pigs falling to between 6.5 and 6.8 yuan per pound, down from 7.5 yuan last year [4]. - The number of breeding sows in China reached 40.43 million, exceeding the normal holding capacity by 3.7%, leading to increased production efficiency and higher pig stocks [8]. Demand Factors - Demand for pork has weakened, with reduced purchasing from the catering industry and lower consumer spending during holidays compared to previous years [5]. - Competition from alternative meats such as chicken, beef, and seafood has intensified, further squeezing the pork market [5]. Policy and Market Response - The Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission have initiated measures to reduce breeding sows by 1 million across 25 major enterprises by January 2026, aiming to address oversupply [9]. - Major pig farming companies are adjusting their strategies by optimizing breeding sow numbers and controlling piglet replenishment to reduce production capacity [9].

Group 1 - The Chinese government has imposed a preliminary anti-dumping tax of 62.4% on European pork imports, significantly impacting the European pork industry [1][3] - The tax rates vary by country, with Spain at 15.6%, Denmark at 31.3%, and the Netherlands at 32.7%, while non-compliant companies face the full 62.4% [3] - The restriction on pork imports from China, which accounts for a quarter of the EU's pork export market, has led to a surplus of pork in Europe, signaling a potential industry downturn [3][6] Group 2 - European by-products such as pig ears, noses, and offal, which have low local demand, are highly sought after in China, creating a significant market dependency [6] - The increase in tariffs has resulted in a loss of the primary buyer for these by-products, leading to a cash flow crisis for European producers as both primary and secondary products become unsellable [6] - The European stance towards China is characterized by a conflict between following U.S. pressure and the necessity of maintaining access to the Chinese market [8][11] Group 3 - Europe is heavily reliant on China as a major trade partner, particularly in sectors like automotive, machinery, and luxury goods, making the current situation critical for its economy [8] - The U.S. is pressuring Europe to align with its policies against China, which could exacerbate Europe's economic challenges while benefiting U.S. interests [9][11] - The European dilemma involves balancing the need to maintain economic ties with China while managing the geopolitical pressures from the U.S. [11]

Core Viewpoint - The upcoming 52nd Swine Industry Conference in Guangzhou aims to explore new opportunities and challenges in the pig farming industry, emphasizing the transition from scale expansion to quality improvement driven by market demand and competition [6][10][30]. Group 1: Industry Trends - The pig farming sector is undergoing a significant transformation, shifting focus from "scale expansion" to "quality enhancement" due to evolving market demands and increased competition [9][10]. - The "Media+" initiative is seen as a crucial driver for enhancing core competitiveness in the pig industry, providing support for businesses to navigate this transformative phase [13][30]. Group 2: Conference Details - The 52nd Swine Industry Conference will take place from December 11-13, 2025, at the Agricultural and Rural Affairs Ministry's Pig Quality Inspection and Testing Center in Guangzhou [40]. - The conference will cover key topics such as smart farming and green agriculture, bringing together experts from various sectors including pig breeding, veterinary medicine, and feed production [17][18][26]. Group 3: Expected Outcomes - The event aims to facilitate discussions on current industry challenges and innovations, providing actionable solutions for participants [28][29]. - The integration of "Media+" with the pig industry is expected to enhance information flow, brand influence, and collaborative capabilities within the industry, contributing to higher quality standards [31][32].

Core Viewpoint - Chinese pig farming companies are increasingly expanding overseas, particularly in Southeast Asia, focusing on technology transfer and collaboration in disease prevention and management [1][6][8]. Group 1: Strategic Collaborations - Muyuan Group and Charoen Pokphand Group signed a strategic cooperation agreement in Bangkok, Thailand, focusing on global business integration and collaboration in various sectors including feed, pig farming, and food processing [1]. - A partnership was established between Guangxi University and the Vietnam Livestock Research Institute to create a smart pig farming joint laboratory, emphasizing technology cooperation in pig breeding and disease control [1][6]. Group 2: Technology Transfer - The current trend of Chinese pig companies going abroad is centered on technology output, particularly in African swine fever (ASF) prevention techniques [1][5]. - Yangxiang Co. has gained attention in Southeast Asia for its "Iron Barrel Pig Farm" model, which enhances biosecurity through a multi-layered protection system [1][4]. Group 3: Market Potential in Southeast Asia - Vietnam has a pig inventory of approximately 28 million heads and a pork production of 4.9 million tons, accounting for 4.3% of global production, indicating significant market potential for Chinese companies [6]. - The local pig farming industry in Vietnam faces challenges from ASF, creating opportunities for Chinese companies to provide expertise and technology [2][5]. Group 4: Industry Trends and Challenges - The emergence of new variants of ASF in Southeast Asia poses challenges for local pig farming companies, necessitating the adaptation of Chinese companies' domestic experiences to local conditions [5]. - The industry is transitioning into a low-profit era, prompting companies to seek cost reduction and efficiency improvements through technology and management innovations [9]. Group 5: Global Expansion Strategies - New Hope Group has established feed factories in multiple Southeast Asian countries, leveraging local agricultural resources to reduce costs and enhance operational efficiency [7]. - Chinese pig companies are increasingly viewing international markets as a new growth avenue, with plans to establish localized R&D centers and production bases in high-potential markets [9].

Quantitative Models and Construction Methods 1. Model Name: Pring Cycle - **Model Construction Idea**: The Pring Cycle is an upgraded version of the Merrill Clock, incorporating financial data to enhance the predictive accuracy of asset allocation recommendations. It defines financial indicators as leading indicators, real economy indicators as coincident indicators, and price indicators as lagging indicators. These three groups of indicators form six economic states, each corresponding to specific asset allocation strategies [9][10][11] - **Model Construction Process**: 1. Leading indicators include M2 growth and new social financing, filtered for cyclical factors to observe trend components [14] 2. Coincident indicators include real estate investment and export growth, also filtered for cyclical factors [14][22] 3. Lagging indicators include CPI and PPI growth, filtered similarly [14][28] 4. The model identifies the current economic state based on the trends of these indicators. For example, the "Recovery" state is characterized by rising leading indicators, stable coincident indicators, and declining lagging indicators [10][11] - **Model Evaluation**: The model improves upon the Merrill Clock by incorporating financial data, but it cannot fully capture real economic states during extraordinary events [13] 2. A-Share Pricing Framework - **Model Construction Idea**: The pricing framework integrates short-term fundamentals, long-term confidence, and required return rates to determine the reasonable valuation range of A-shares. It emphasizes the PB-ROE relationship for valuation assessment [52][56] - **Model Construction Process**: 1. Decompose stock returns into components: dividend yield, net asset growth, and valuation changes [56] 2. Use a two-stage DDM model to calculate reasonable PB values: $$PB_{current} = ROE_1 \times d_1 \times \sum_{t=1}^{T} \frac{(1+g_1)^{t-1}}{(1+R_f+R_p)^t}$$ $$PB_{stable} = \frac{ROE_2 \times d_2}{1+R_f+R_p-g_2} \times \frac{(1+g_1)^T}{(1+R_f+R_p)^T}$$ where \(ROE_1\) and \(ROE_2\) are the return on equity for the current and stable growth phases, \(d_1\) and \(d_2\) are dividend payout ratios, \(g_1\) and \(g_2\) are growth rates, and \(R_f+R_p\) is the required return rate [56][57] 3. Historical calibration suggests an 11-year duration for the first growth phase, with ROE assumptions adjusted for optimistic, neutral, and pessimistic scenarios [58] - **Model Evaluation**: The framework effectively captures valuation dynamics, but short-term ROE fluctuations introduce uncertainty [56][58] 3. Interest Rate Pricing Framework - **Model Construction Idea**: A three-factor model for long-term government bond yields, incorporating policy rates, inflation expectations, and growth expectations [59] - **Model Construction Process**: 1. Represent policy rates using one-year interbank CD rates, inflation expectations using CPI growth, and growth expectations using PMI levels [59] 2. Regression analysis reveals the relative importance of these factors: monetary policy > inflation expectations > growth expectations [62][63] 3. Additional analysis links bond yields to housing prices, reflecting cyclical economic drivers [67][69] - **Model Evaluation**: The model highlights the dominant role of monetary policy but acknowledges limitations in capturing short-term market dynamics [63][67] 4. Gold Pricing Framework - **Model Construction Idea**: Gold pricing is influenced by its commodity, financial, and monetary attributes, with monetary factors being the most consistent driver [74][75] - **Model Construction Process**: 1. Historical analysis identifies three gold bull markets driven by different factors: inflation and oil prices (1971-1980), financial crises and low real rates (2001-2011), and de-globalization and central bank purchases (2019-present) [74] 2. Introduce a valuation metric: - Pre-2022: Global gold reserves × gold price / US M2 - Post-2023: Global gold reserves × gold price / weighted M2 of reserve currency countries (USD, EUR, GBP, JPY, RMB) [80] - **Model Evaluation**: The framework effectively captures long-term trends but faces challenges in predicting short-term price movements [78][80] --- Model Backtesting Results 1. Pring Cycle - Current state: Recovery phase, favoring equity assets [35] 2. A-Share Pricing Framework - Reasonable PB range for CSI 800: 1.36-1.55 - Expected annual return: 5%-9% [58][59] 3. Interest Rate Pricing Framework - Predicted 10-year government bond yield: 1.36%-1.51% - Yield corridor: ±1.5 standard deviations around the central estimate [72][73] 4. Gold Pricing Framework - Current valuation percentile: 39% (10% below the median) - Long-term upward potential remains [80][82] --- Quantitative Factors and Construction Methods 1. Style Factors - **Value Style**: - ROE: 9.14% - PB range: 0.9-0.95 - Expected return: 6%-8% [96][100] - **Growth Style**: - ROE: 12.48% - PB range: 1.69-3.24 - Expected return: -7%-13% [103][108] - **Small-Cap Style**: - ROE: 5.99% - PB range: 0.65-1.82 - Expected return: Low [111][116] - **Large-Cap Style**: - ROE: 10.21% - PB range: 0.92-1 - Expected return: 0%-2% [119][123] - **Quality Style**: - ROE: 14.23% - PB range: 2.34-5.35 - Expected return: 8%-39% [128][131] - **Dividend Style**: - ROE: 9.09% - PB range: 0.83-0.87 - Expected return: 11%-12% [134][138] --- Factor Backtesting Results 1. Value Style - Historical PB-ROE alignment indicates moderate valuation [100][102] 2. Growth Style - High ROE volatility leads to wide valuation ranges [108][110] 3. Small-Cap Style - Valuation driven more by liquidity than fundamentals [113][117] 4. Large-Cap Style - Valuation closely tied to fundamentals, with limited upside [123][127] 5. Quality Style - Significant valuation recovery potential [131][133] 6. Dividend Style - Stable valuation with moderate upside [138][140]

Group 1: Performance of Henan A-Share Listed Companies - In the first half of 2025, 111 Henan A-share listed companies reported that nearly 80% achieved profitability, with overall revenue and net profit reaching new highs [2] - The number of companies with revenue exceeding 10 billion yuan increased to 13, indicating strong growth in the region [2] - Among these, Muyuan Foods achieved a revenue of 76.463 billion yuan, a year-on-year increase of 34.46%, and a net profit of 10.53 billion yuan, up 1169.77% [4] Group 2: Innovations in Traditional Industries - Muyuan Foods has transformed traditional pig farming through technology, leading to significant improvements in efficiency and productivity [4] - The company has developed smart pig farming facilities that maintain optimal conditions for pig health, contributing to its market leadership [4] - Other companies in Henan are also focusing on enhancing traditional industries, gaining attention from capital markets [4] Group 3: Growth in Green Industries - The green industry in Henan has seen significant growth, with sales revenue in ecological protection and environmental governance increasing by 16.1% [11] - The sales revenue of the energy-saving and environmental protection industry grew by 21.9%, indicating a shift towards sustainable practices [11] - Jin Dan Technology is leveraging modern biotechnology to convert corn into high-value biodegradable materials, showcasing innovation in the green sector [8][10] Group 4: New Quality Industries - Companies like Zhongchuang Zhiling are advancing in new quality industries, with a revenue of 19.982 billion yuan, a year-on-year increase of 5.42% [12] - The company is investing in AI chip technology to enhance its capabilities in smart mining and digital factories [12] - The focus on R&D is evident, with Henan A-share companies collectively spending 10.861 billion yuan on research and development in the first half of 2025 [13] Group 5: Mergers and Acquisitions Policy - The Henan provincial government has introduced policies to support mergers and acquisitions among listed companies, aiming to optimize resource allocation and promote high-quality development [14] - This initiative is expected to facilitate the transformation and upgrading of traditional industries while fostering the growth of emerging sectors [14] - The emphasis on mergers and acquisitions aligns with the strategic goals of economic transformation in Henan [14]

Group 1 - On August 28, Muyuan Group and Charoen Pokphand Group signed a strategic cooperation agreement in Bangkok, Thailand, focusing on strategic planning, business integration, and global layout [2][3] - The partnership aims to achieve resource sharing and complementary advantages in areas such as feed, pig farming, slaughtering, food processing, talent, and capital [2][5] - Charoen Pokphand Group ranks third globally in terms of breeding sows with 1.115 million heads, while Muyuan Group has 3.43 million heads, resulting in a combined total of 4.545 million heads, making it the largest collaboration between the first and third largest pig farming giants [5] Group 2 - Muyuan Group is actively advancing its international layout, particularly in Southeast Asia, where there is a high demand for pork, with Vietnam's pork production accounting for 60% of total livestock meat production [6] - The region is currently facing challenges due to African swine fever, leading to high pork prices and a pressing need for external intervention [6] - Muyuan Group has begun its international expansion by providing technical services to local companies, such as pig farm design and biosecurity, and has established a wholly-owned subsidiary in Ho Chi Minh City, Vietnam [6][7] Group 3 - The collaboration with Charoen Pokphand Group is expected to enhance Muyuan Group's market presence in Southeast Asia, leveraging Charoen Pokphand's influence in the region [7] - The partnership reflects a strategic response to the Chinese government's encouragement for companies to "go global" and utilize both domestic and international resources [6] - Muyuan Group's advanced technologies, such as multi-story pig farming techniques and smart inspection robots, are anticipated to improve local farming standards and stabilize pork prices [6]

Core Viewpoint - The meeting held in Guangdong focused on the analysis of the pig production and sales situation, aiming to promote stable and high-quality development of the pig industry in the province through collaborative efforts among various stakeholders [7][12][24]. Group 1: Meeting Objectives and Outcomes - The meeting gathered representatives from leading pig farming enterprises, slaughterhouses, pig farming associations, and experts from research institutions to discuss key issues in the industry [7][8]. - It emphasized the need to appropriately reduce pig production capacity to address the current industry development situation and lay a foundation for long-term stability [14]. - Participants analyzed the production and sales situation for the second half of the year, expressing concerns about the potential decline in pig prices due to overcapacity and decreased pork consumption [16][17]. Group 2: Media Empowerment and Marketing Strategies - The discussion highlighted the role of "media+" in empowering the high-quality development of the livestock industry, with media seen as a crucial tool for expanding sales channels and boosting consumption [19][20]. - Several suggestions were made, including using media platforms to disseminate advanced breeding techniques and industry standards, maintaining market order, and promoting a positive industry image [21][22]. - Innovative marketing strategies such as live streaming, e-commerce, and short videos were proposed to enhance product promotion and consumer engagement [22][23]. Group 3: Future Directions - The meeting concluded with a consensus on the need for collaborative efforts to implement production capacity adjustments and market responses, leveraging media to connect production and consumption [25]. - Participants expressed commitment to enhancing the brand strength of Guangdong's pig products and promoting a more stable, healthy, and high-quality industry development [26].

Core Viewpoint - The recent decline in pig prices has been observed, with live pig and pork prices dropping for six consecutive weeks, while piglet prices have decreased for 15 weeks. Despite this, pig farming has remained profitable due to lower breeding costs [1][6]. Price Trends - From January to August, live pig prices shifted from an upward trend to a downward trend, with a significant year-on-year decline of 31.4% by the second week of August, reaching 14.35 yuan/kg [1][2]. - Pork prices also experienced a decline, falling to 24.93 yuan/kg by the third week of August, reflecting a year-on-year decrease of 22% [2]. - Piglet prices rose from 32.77 yuan/kg to 39.57 yuan/kg from January to April, but have since dropped to 33.25 yuan/kg by August, marking a year-on-year decline of 25.4% [2]. Supply and Demand Analysis - The recent drop in pig prices is attributed to a normal correction following a temporary price surge in June, driven by seasonal demand and reduced slaughter volumes [3]. - The supply of live pigs has increased, with a 14.5% year-on-year rise in slaughter volumes from January to June [3]. - Despite some recovery in pork consumption due to seasonal factors, overall demand remains weak, limiting support for pig prices [5]. Cost and Profitability - Breeding costs have decreased, allowing pig farming to remain profitable for 15 consecutive months, although profit margins are expected to narrow starting from the fourth quarter of 2024 [6][7]. - The average profit per head of live pig from January to July was approximately 110 yuan, dropping below 100 yuan in July [7]. Future Outlook - The supply of live pigs is expected to continue growing into the third quarter and early next year, with a potential seasonal increase in demand starting in September [8]. - The government plans to initiate a new round of frozen pork storage by the end of August, which may boost market confidence [8]. - The pig farming industry is anticipated to maintain profitability, but farmers are advised to manage production capacity and risks effectively [8].

Core Viewpoint - The recent central government initiative to store pork has significantly boosted the A-share pork sector, leading to a strong market performance, particularly for companies like Aonong Biological, which reported a turnaround in profits [1][11]. Market Performance - Aonong Biological's stock surged to the daily limit, closing at 4.15, with a rise of 10.08% [2] - Other notable performers included Muyuan Foods, which saw a rise of over 7%, and several other companies like Jingji Zhino and Bangji Technology also experienced gains [2]. Price Trends and Market Conditions - The average price of live pigs has dropped from 16.04 yuan/kg at the beginning of the year to 13.75 yuan/kg as of August 26, reflecting a significant decline of 14.25% [3][4]. - The pig-to-grain price ratio has fallen below 6:1, indicating a challenging profitability environment for pig farming, with the current ratio at 5.78:1 [6][7]. Policy Actions - In response to the declining prices, the National Development and Reform Commission announced plans for central frozen pork storage, with a total of 1.9 million tons to be stored [10]. - Previous measures included limiting the number of breeding sows and reducing the average weight of pigs at slaughter to stabilize the market [10]. Company Performance - Aonong Biological reported a net profit of 361 million yuan for the first half of the year, marking a significant recovery from losses [11]. - Other companies like New Hope and Zhengbang Technology also reported substantial profit increases, with New Hope's net profit expected to rise by 155.85%-164.07% [12]. - Muyuan Foods reported a remarkable net profit increase of 1169.77%, with a revenue of 764.63 billion yuan for the first half of 2025 [12]. Future Outlook - Analysts suggest that the pork industry is likely to enter a phase of stable and high-quality development, with a focus on eliminating inefficient production capacity and improving cost structures [13]. - The emphasis on quality improvement and efficiency in the industry is expected to enhance the market share of financially stable and low-cost producers [13].