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]

智通财经APP获悉，国泰海通发布研报称，8-9月青贮采购季牧场收储资金压力较大，社会存栏有望加 速去化。25H2受益于供给端热应激下减产与前期后备牛去化效果显现，需求旺季下行业有望进入供需 平衡通道。受进口牛肉量缩减影响(25H1同比-9.5%)，25年以来牛肉/活牛价格低位反转，较前期低点上 涨约10%/20%，供给去化下牛价有望进一步增长。肉奶周期共振下牧业企业盈利弹性较强。建议增持牧 业龙头优然牧业(09858)、现代牧业(01117)，关注中国圣牧(01432)、澳亚集团(02425)。 风险提示 近年来牛肉价格历经三轮周期：1)2010-17年：人均可支配收入提升推动高档牛肉需求增长，供不应求 下牛肉价格快速上涨；2)2018-22年，非洲猪瘟影响下猪肉、禽肉价格飙升，需求增长下牛肉价格快速 上行；3)2023年至今：23年牛肉价格持续下行，主要受累于供给端进口低价牛肉挤压需求与上行期存栏 增长产能释放，以及替代性猪肉、禽肉等价格低位。 25年牛价进入上行周期，受益供给去化与进口影响减弱 牧场亏损下供给端能繁母牛存栏持续去化，超量屠宰下供给缺口有望进一步扩大，近年来行业亏损面继 续加大，24年1-1 ...

Group 1: Military Industry - The military sector is experiencing an upward trend, driven by the intensifying geopolitical competition among major powers, with a long-term positive outlook for military investments [4][5][6] - The recent commemorative events for the 80th anniversary of the victory in the Anti-Japanese War have highlighted the importance of national defense, leading to increased military spending [5] - Key companies to focus on include major manufacturers and component suppliers such as AVIC Shenyang Aircraft Corporation, AVIC South Lake, and AVIC Xi'an Aircraft Industry [4] Group 2: Non-Metallic Building Materials - The implementation of new national standards for refrigerators is expected to accelerate the demand for VIP boards, with the company Reascent Technology poised for significant growth following its acquisition of Maikelong [8][9] - The company has integrated its supply chain from fiberglass cotton to VIP core materials and VIP boards, which is anticipated to enhance its competitive edge and profitability [9] Group 3: Dairy Industry - The price of raw milk continues to decline, and a supply-demand balance is expected in the second half of 2025, benefiting from reduced production and improved demand [11][19] - Beef prices are entering an upward cycle due to supply reduction and decreased import pressures, with a projected increase in profitability for livestock companies [12][20] - The cyclical resonance between meat and milk production is expected to enhance the profitability of leading livestock companies [11][21]

Core Viewpoint - The article highlights the ongoing decline in raw milk prices and anticipates a faster reduction in livestock inventory in 25H2, which is expected to benefit beef and live cattle prices due to supply reduction and diminished import impacts, indicating strong profit elasticity for livestock companies amid the resonance of meat and dairy cycles [1][2]. Summary by Sections Raw Milk Prices and Supply-Demand Balance - Raw milk prices continue to decline, with expectations for supply-demand balance in 25H2. The financial pressure on farms during the silage procurement season in August-September is likely to accelerate the reduction of social inventory. The industry is expected to enter a supply-demand balance channel due to reduced production from heat stress and the effects of previous heifer inventory reductions, alongside a seasonal demand increase [2][3]. Beef and Live Cattle Price Trends - Beef prices are expected to enter an upward cycle in 25, following a low point in 2023. The decline in beef prices from 2023 was primarily due to low-priced imported beef squeezing demand and increased domestic production capacity. In 25, the reduction in supply and diminished import impacts are anticipated to lead to a price rebound, with beef and live cattle prices rising approximately 10% and 20% from previous lows, respectively [3][4]. Profit Elasticity in Livestock Companies - The resonance of meat and dairy cycles is expected to enhance profit elasticity for livestock companies. The gross profit margin is projected to improve significantly due to rising milk prices and reduced unit costs. If sales milk prices increase by 10% or 20%, leading dairy companies could see gross margin improvements of over 6 percentage points or 10 percentage points, respectively. Additionally, the fair value of breeding cows is expected to benefit from the rebound in milk prices and lower feeding costs [4].

Group 1 - The core viewpoint is that raw milk prices continue to decline, and there is potential for supply-demand balance in H2 2025 due to accelerated herd reduction and improved demand during peak seasons [2][3] - The report suggests that the dairy industry is likely to see a price increase in 2026, driven by reduced dairy cow replenishment and a recovery in demand, supported by new policies aimed at boosting dairy consumption [2][3] - The beef market is expected to enter an upward cycle in 2025, as low beef prices have started to reverse, benefiting from reduced supply and diminished import pressures [3][4] Group 2 - The report highlights strong profit elasticity for livestock companies due to the resonance of meat and milk cycles, with potential improvements in gross margins driven by rising milk prices and cost reductions [4] - The valuation of breeding cows and income from culling are expected to increase with rising beef prices, which could enhance total revenue for leading livestock companies [4] - Companies like YouRan Dairy and Modern Farming are recommended for investment, while China Shengmu and Aoyuan Group are noted as companies to watch due to their involvement in the livestock sector [1][4]

Investment Rating - The report does not explicitly state an investment rating for the agricultural sector, but it suggests a cautious outlook with potential for recovery in specific segments [7]. Core Insights - The agricultural sector index underperformed compared to major indices, indicating a challenging environment for the industry [13]. - The report highlights that while short-term pressures exist, there are signs of stabilization in various segments, particularly in pig farming and planting chains [19][38]. Summary by Sections 1. Market Review - The agricultural index closed at 2835.81 points, down 0.14% week-on-week, while major indices like the Shanghai Composite and Shenzhen Composite saw gains of 1.70% and 3.63% respectively [13][14]. 2. Key Data Tracking 2.1 Pig Farming - The average price of commodity pigs was 13.76 yuan/kg, up 0.36% week-on-week, while the average weight of pigs at slaughter was 127.82 kg, a slight increase [19][20]. - The report indicates that the industry is facing pressure with weak demand leading to increased slaughtering activity, and some producers are beginning to cut back on production due to losses [20]. 2.2 Poultry Farming - The average price of white feather chickens was 7.20 yuan/kg, up 0.84% week-on-week, while the price of broiler chickens was 14.10 yuan/kg, up 1.44% [30]. - The report notes that while prices are under pressure, there is potential for recovery if consumer demand improves [30]. 2.3 Livestock - The price of live cattle in Shandong was 26.80 yuan/kg, up 0.37% week-on-week, indicating a gradual recovery in the beef market [35]. - The report anticipates that the dairy sector may stabilize in the second half of 2025 as supply constraints begin to ease [35]. 2.4 Planting Chain - Domestic corn prices were stable at 2,318.57 yuan/ton, while soybean prices increased by 0.67% to 3,952.63 yuan/ton [38]. - The report suggests that if there are significant reductions in grain production, the planting sector could see improved conditions [39]. 2.5 Feed & Aquaculture - Feed prices remained stable, with pig feed at 3.34 yuan/kg and poultry feed at 3.45 yuan/kg, reflecting a stable cost environment [55]. - Aquaculture prices showed stability, with various fish prices remaining unchanged, indicating a steady market [55].

Investment Rating - The report maintains an "Outperform" rating for the agricultural sector [6] Core Insights - The agricultural sector is expected to experience upward trends in beef prices due to a reduction in U.S. beef production forecasts for 2026 [4] - The report highlights a tightening supply-demand balance for corn, with prices expected to maintain a moderate upward trend [2] - The soybean market is influenced by U.S. trade policies and weather conditions, with a positive long-term outlook [2] - Wheat supply remains ample, with prices expected to stabilize at lower levels [3] - Sugar prices are anticipated to fluctuate due to increased imports and oil price volatility [3] - Cotton prices are expected to remain weak until demand shows positive changes [3] - The dairy sector is projected to see a rebound in raw milk prices driven by a reduction in supply and increased demand [5] Summary by Sections Corn - The USDA report indicates a global corn production increase of 24.92 million tons (approximately +1.97%) for the 2025/26 season, with a slight increase in global ending stocks [17] - China's corn ending stocks are projected to decrease by 0.31 percentage points to 55.50% [19] - Domestic corn prices are currently at a historical low, with a strong support expected for future price recovery [20] Soybeans - The USDA report forecasts a reduction in global soybean production by 1.29 million tons for the 2025/26 season, with ending stocks decreasing by 1.17 million tons [32] - The soybean market is sensitive to U.S. trade policies and weather, with a strong price support expected in Q4 2025 [34] Wheat - The USDA report predicts a decrease in global wheat production by 1.65 million tons for the 2025/26 season, with a slight reduction in the ending stocks-to-use ratio [49] - Overall supply remains sufficient, with prices expected to stabilize [3] Sugar - The market anticipates a good harvest for the 2025/26 season, but prices may remain weak due to increased imports and fluctuating oil prices [3] Cotton - The USDA report indicates a reduction in global cotton production forecasts, with a stable supply-demand balance expected [3] Beef - The USDA has lowered its forecast for U.S. beef production in 2026, leading to an expected increase in beef prices [4] - The domestic beef market is showing resilience, with prices expected to trend upwards in 2025 [4] Dairy - The USDA forecasts an increase in U.S. milk production and consumption for 2026, with a slight increase in ending stocks [5] - Domestic raw milk prices are expected to rebound in the second half of 2025 due to supply reductions and increased demand [5] Pork - The USDA projects a slight increase in U.S. pork consumption in 2026, with domestic production expected to remain stable [8] Poultry - The U.S. poultry market is expected to recover, with increased consumption predicted for 2026 [8]

Group 1 - Dairy stocks continue to show strong performance, with China Shengmu (01432) up 9.09% to HKD 0.48, Yurun Dairy (09858) up 3.53% to HKD 4.4, Mengniu Dairy (02319) up 1.46% to HKD 16.67, and Ausnutria (01717) up 1.19% to HKD 2.55 [1] - The implementation plan for the childcare subsidy system was released on July 28, which will provide a subsidy of HKD 3,600 per child per year for children under three years old starting from January 1, 2025, benefiting over 20 million families [1] - The policy is expected to directly boost the consumption of dairy products, particularly infant formula [1] Group 2 - Guosen Securities is optimistic about the reversal of the beef cycle in 2025, predicting that meat prices will continue to rise until 2027 [1] - The domestic raw milk supply and demand situation is expected to improve in the second half of 2025, leading to a potential price recovery [1] - The improvement in raw milk prices is favorable for the profitability of dairy farming, and the upward trend in the beef cycle is expected to significantly enhance the income from culling dairy cows and selling calves, recommending Yurun Dairy, Modern Dairy, and China Shengmu for their high performance recovery potential [1]

Summary of Livestock Industry Conference Call Industry Overview - The livestock industry is experiencing a cyclical opportunity due to the resonance between beef and milk markets, with domestic beef supply expected to remain tight for the next two to three years, leading to continuous price increases [1][2][7]. Key Points Beef Market Dynamics - Domestic beef supply is in a tight state, primarily due to tightened import policies and a reduction in livestock numbers, with a projected price increase of approximately 35% from current levels to reach previous highs [1][3][9]. - The number of domestic beef cattle has decreased to approximately 99.92 million heads by the end of Q2 2025, influenced by ongoing losses among farmers [3][8]. - The beef price increase is supported by a 10% reduction in imports during the first half of the year, which has significantly impacted prices [3]. Milk Market Dynamics - The raw milk cycle is at the tail end of a downward trend, with prices having dropped by about 30% from the previous peak in late 2021, stabilizing around 3 RMB per kilogram in the first half of 2025 [10][12]. - The supply of raw milk is expected to decline year-on-year, with a 2.8% decrease in production noted, marking the end of six consecutive years of growth [12]. Investment Opportunities - Investment opportunities are concentrated in the beef cycle and the raw milk cycle, with significant resonance effects expected as both markets evolve [2][5][7]. - Hong Kong-listed livestock companies are seen as advantageous investment targets due to their exposure to both rising beef prices and the impending turning point in the raw milk cycle [5]. Challenges for Small and Medium-sized Farms - Small and medium-sized farms face multiple challenges, including high cash costs, reduced financial support, and rising feed prices, which exacerbate operational pressures [13]. - The majority of beef producers are small-scale, with over 90% of farms having fewer than 10 heads, making them highly sensitive to price fluctuations [8]. Future Projections - The expectation is for continued tight supply in the domestic beef market, which will exacerbate supply-demand imbalances and drive prices higher over the next two to three years [7]. - The raw milk cycle is anticipated to reach a turning point soon, further enhancing investment opportunities in the sector [7]. Deep Processing and Product Development - The Chinese dairy industry has historically focused on liquid milk, but there is a growing trend towards deep processing, with major dairy companies beginning to invest in this area [4][15][16]. - The current surplus of raw milk presents a window for developing deep processing capabilities, which could reduce reliance on imports and enhance domestic production efficiency [15][16]. Company Valuations - Current valuations for Hong Kong-listed livestock companies show potential for significant upside, with price-to-book (PB) ratios around 1.3 for YouRan and 1 for Modern, compared to previous peaks of 2-2.5 [4][18]. - The optimistic profit expectations for YouRan suggest a potential market capitalization of around 20 billion RMB based on peak net profit margins [18]. Recommended Companies - Key recommended companies include YouRan, ShengMu, and TianRun, each with unique strengths and market positions, making them suitable investment targets in the current market environment [5][19][20].

Group 1 - The stock prices of raw milk companies, particularly Aoyuan Group, have surged significantly, with Aoyuan Group's stock rising over 40% in a single day [1] - The increase in stock prices is attributed to a quiet growth in domestic raw milk demand, driven by multiple favorable factors and preparations by dairy companies for the Mid-Autumn Festival [1][2] - Other raw milk stocks also experienced substantial gains, with Modern Dairy's stock rising over 10% and Yuran Dairy's stock increasing by 7.44% [1] Group 2 - Despite the recent price surge, the average purchase price of fresh milk in major producing provinces remains stable at 3.03 yuan per kilogram, showing no significant rebound [1] - The rapid increase in raw milk stock prices is a result of the market recovery and the influence of several supportive policies [2]