Core Insights - The concentrated feed industry in China is experiencing a decline in production, with a projected output of 12.94 million tons in 2024, representing an 8.8% year-on-year decrease, primarily due to reduced demand from the livestock sector and rising raw material costs [1][11][19] - The average prices of concentrated feed are also on a downward trend, with specific prices for fattening pig feed at 5 CNY/kg (down 4.4%), layer chicken feed at 3.54 CNY/kg (down 4.4%), and broiler feed at 4.13 CNY/kg (down 5.5%) in the first half of 2025 [13][19] Industry Overview - Concentrated feed, also known as protein supplement feed, is a processed feed with moisture content below 12%, providing essential nutrients like proteins, minerals, and vitamins, and is characterized by high nutritional density and energy content [1][3] - The industry is currently in an adjustment phase, influenced by a decrease in livestock farming demand and increased raw material prices, leading to a shift towards mixed feed [1][11] Industry Policies - The Chinese government has introduced several policies to promote the development of the concentrated feed industry, including initiatives for healthy farming practices and the comprehensive utilization of agricultural by-products [5][6][22] - Key policies include the promotion of low-protein diets and support for the exploration and efficient use of new feed resources [6][22] Industry Chain - The concentrated feed industry chain consists of upstream raw materials (corn, sorghum, fish meal, etc.), midstream production processes, and downstream applications in livestock farming [7][11] Competitive Landscape - Large feed companies dominate the market due to their advantages in brand, scale, and technology, while small and medium enterprises face challenges in technology and market share [15][19] - Major players in the industry include New Hope Liuhe, Haida Group, and Beijing Dabeinong Technology Group [15][19] Development Trends - The industry is expected to see advancements in technology and product innovation, with a focus on personalized and high-end market demands [21] - There is a push for green development in response to stricter environmental regulations, encouraging companies to reduce pollution and improve resource efficiency [22] - The internationalization of the concentrated feed industry is accelerating, with opportunities for growth in export markets driven by initiatives like the Belt and Road [24]

Group 1 - The article discusses the range of feed products that are exempt from value-added tax (VAT), including single bulk feed, mixed feed, compound feed, and concentrated feed [3][4]. - Specific products that qualify for VAT exemption include bran, distiller's grains, fish meal, various types of meal (excluding soybean meal), grass feed, feed-grade phosphorus, and others [3][4]. - Mineral trace element lick bricks and fish oil used in aquaculture and poultry feeding are also categorized as single bulk feed and are exempt from VAT [4]. Group 2 - Taxpayers engaged in both exempt and taxable feed sales must separately account for the sales of exempt and reduced tax items [5]. - If a taxpayer issues a special VAT invoice for exempt feed products, they will not be eligible for the VAT exemption and must pay the full VAT [5]. - The exemption code for feed products is 0001092202, which must be used in the VAT declaration forms for both general and small-scale taxpayers [5].

Core Insights - In April 2025, the national industrial feed production in China reached 27.53 million tons, showing a month-on-month increase of 4.2% and a year-on-year increase of 9.0% [1] Production Breakdown - The production of compound feed, concentrated feed, and additive premix feed increased year-on-year by 9.1%, 6.5%, and 9.7% respectively [1] Price Trends - The ex-factory prices of feed products have significantly decreased year-on-year, while the ex-factory prices of compound feed and concentrated feed showed slight month-on-month growth. In contrast, the ex-factory prices of additive premix feed primarily experienced a decline month-on-month [1]

Core Viewpoint - Shennong Group has shown significant financial recovery and growth in 2024, with a revenue of 5.584 billion yuan, a 43.51% increase year-on-year, and a net profit of 687 million yuan, compared to a loss of 401 million yuan in the previous year [1] Group 1: Financial Performance - In Q1 2025, Shennong Group achieved a net profit of 229 million yuan, marking a continued turnaround from previous losses [1] - The company has reported five consecutive quarters of substantial improvement in net profit since Q1 2024 [1] Group 2: Feed Business Expansion - Shennong Group operates six feed production bases in Yunnan and Guangxi, with a total annual production capacity exceeding 1.5 million tons [2] - In 2024, the company sold 600,500 tons of feed, with 689,000 tons for export and 531,600 tons sold to its internal breeding enterprises [2] Group 3: New Production Facilities - The newly completed Shilin feed production base has a designed annual capacity of 180,000 tons, making it the largest premix feed and teaching feed production facility in Yunnan [3] - The integration of complex feed production into this facility allows other plants to focus on simpler feed types, enhancing overall production efficiency [3] Group 4: Digital Transformation - Shennong Group has implemented an SAP system to improve internal operational efficiency in the feed business, enhancing planning and execution across various stages of production [4] Group 5: Livestock Breeding Profitability - The livestock breeding segment generated 3.798 billion yuan in revenue in 2024, a year-on-year increase of 81.34%, accounting for 68.02% of total revenue [5] - The company sold 2.2715 million pigs in 2024, a 49.40% increase from 2023 [5] Group 6: Cost Management - The complete cost of breeding in March 2024 was approximately 12 yuan per kilogram, lower than many comparable listed companies [6] - The company plans to expand its breeding scale to 3.2 to 3.5 million pigs by 2025, with expectations of further cost reductions [7] Group 7: Slaughtering and Food Processing - Shennong Group has established a full industry chain from feed production to slaughtering and food processing, which helps mitigate the impact of the "pig cycle" on operations [8] - In 2024, the slaughtering and food processing segment generated 1.473 billion yuan in revenue, a 19.6% increase, representing 26.38% of total revenue [8]