Core Viewpoint - The outbreak of highly pathogenic avian influenza in France has disrupted the supply of breeding chickens to China's white feather broiler industry, prompting a renewed focus on the need for domestic breeding autonomy [2][3]. Group 1: Impact of Avian Influenza - The avian influenza outbreak in France has led to the suspension of breeding chicken imports, affecting companies like Yisheng [3]. - Yisheng's planned importation of breeding chickens in late January 2026 has been halted, with no clear timeline for resumption [3]. - The poultry industry has faced multiple interruptions in breeding imports due to avian influenza in recent years, highlighting the vulnerability of the supply chain [3]. Group 2: Company Response and Strategy - Yisheng has proactively built reserves, having imported 266,000 sets of breeding chickens in 2025, accounting for over 40% of the national total [4]. - The company expects an increase in the supply of parent breeding chickens in 2026 compared to 2025, mitigating short-term impacts from the import suspension [4]. - Yisheng plans to increase its parent breeding stock to 10 million sets and expand its chick production capacity to 1 billion over the next four years [7]. Group 3: Market Dynamics and Price Trends - The price of parent breeding chickens has risen continuously since September 2025, reaching over 53 yuan per set, driven by reduced imports and expected future price increases [5]. - The domestic self-breeding ratio has exceeded 59%, with self-breeding chickens accounting for a significant portion of the total breeding stock, providing a buffer against external supply disruptions [6]. - The impact of the breeding interruption is expected to manifest gradually, potentially leading to a decrease in market supply and an increase in prices for broiler chickens by the second quarter of 2027 [6]. Group 4: Long-term Industry Considerations - The industry is being compelled to confront the fundamental issue of breeding autonomy, as domestic breeding strains still lag behind imported varieties in key performance metrics [6]. - Experts suggest that integrating domestic breeding resources and increasing R&D investment are essential for overcoming current limitations and enhancing competitiveness [6].

Summary of the Conference Call for Yisheng Co., Ltd. Industry Overview - The poultry industry is currently facing challenges due to high pathogenic avian influenza, particularly affecting the importation of grandparent breeding chickens from France, which has been suspended since late January 2026. [2][4] - The impact of avian influenza has led to a reduction in the import volume of grandparent chickens by 10%, which may influence market supply and pricing dynamics for chicken and meat products. [3][19] Key Points and Arguments - **Supply and Pricing Dynamics**: - The price of parent breeding chickens has increased since September 2025, currently around 50 yuan, due to a significant import volume in 2025. [2][4] - In Q4 2025, Yisheng sold over 3.5 million sets of parent breeding chickens at an average price of over 33 yuan, and 162 million commercial chicks at an average price of 3.4 yuan. [9] - The price of commercial broilers reached a peak of 3.85 yuan per jin in December 2025, supported by rising meat prices and reduced supply. [11] - **Impact of Diseases**: - Seasonal diseases, particularly tumors and stress-related issues, are expected to affect breeding efficiency in 2026, especially in Shandong province, a major breeding area. [12] - **Future Outlook**: - The company anticipates focusing on parent breeding in the first half of 2026 and on commercial breeding in the second half, with expectations of improved market conditions compared to 2024. [13] - The recovery of pork prices is expected to drive up chicken and broiler prices in the latter half of 2026. [13] Additional Important Information - **Capital Expenditure Plans**: - Yisheng plans to increase parent breeding output from 7 million to 10 million sets and expand commercial chick exports from 600 million to 1 billion. The company also plans to invest approximately 500 million yuan in a residential project in Shanxi. [5][15] - **Challenges in Importing**: - The approval process for importing from other regions has become more stringent, with timelines extending to two to three months. Currently, there are no confirmed alternative sources for rapid imports. [6][7] - **Dividend Expectations**: - The company aims to provide returns to shareholders through dividends when conditions allow, though specific timing and amounts remain uncertain due to compliance issues. [16] - **New Product Development**: - Yisheng is actively developing its own egg-laying chicken breeds, with plans to promote a new American breed expected to receive certification in the first half of 2026. [18] - **Market Position**: - Yisheng was previously the largest grandparent breeding chicken company in China, with a strong market share. The introduction of new domestic breeds is expected to enhance competitiveness. [18][21] - **Investment Recommendations**: - Given the current valuation and growth potential, investors are encouraged to pay attention to the white chicken sector, particularly Yisheng, due to its profit elasticity and favorable market conditions. [20]

Summary of Yisheng Co., Ltd. Conference Call Company Overview - Yisheng Co., Ltd. is a leading breeding company in Asia, specializing in high-quality poultry and swine genetics, with a significant market share in the domestic imported breeding stock market, accounting for approximately one-third of the market [3][6]. Financial Performance - In the first half of 2025, Yisheng reported a total profit of approximately 6 million yuan, with profits from parent stock chickens and breeding pigs at 40 million yuan each, while losses from commercial chicken chicks amounted to 50 million yuan [2][3]. - The company sold 4 million sets of parent stock chickens, generating a profit of 10 yuan per set, and sold 320 million commercial chicken chicks at a cost of less than 2.5 yuan each, resulting in a total loss of 50 million yuan [3]. Market Dynamics - The price of commercial chicken chicks began to rise rapidly in mid-July due to seasonal factors such as farming activities and school holidays, with current prices at 14.2 yuan per chick against a cost of 2.6-2.7 yuan [2][5]. - The ongoing U.S.-China trade war and avian influenza have contributed to increased prices for chicken wings and feet [2][5]. Import and Breeding Strategy - Following the suspension of imports from the U.S. and New Zealand, Yisheng has actively sourced breeding stock from France, importing 132,000 sets from March to July 2025, which represents nearly 60% of the national import volume [2][6]. - The company plans to import an additional 30,000 sets in August 2025, with a total expected import volume of around 300,000 sets in a normal year [11]. Pricing and Sales Outlook - Current prices for parent stock are over 50 yuan per set, while commercial chicken chicks are priced at 4.2 yuan each, with expectations for continued price adjustments [7][18]. - The company anticipates a positive outlook for profits in the second half of 2025, expecting commercial chick sales to reach 660 million and pig sales to exceed 100,000 heads [4][31]. Product Development - The company has received new breed recognition for its 817 series, which is more suitable for small-scale farming, complementing the existing 909 series [8]. - Yisheng has expanded its swine business significantly, with sales expected to exceed 100,000 heads in 2025 and a target of 200,000 heads by 2026 [9][10]. Industry Trends - The overall demand for white chicken is expected to increase, driven by rising domestic consumption and reduced imports from Thailand and other countries [19][20]. - The poultry industry is projected to see an increase in slaughter volume compared to the previous year, with expectations of a continued upward trend in prices [20][31]. Challenges and Risks - The company faces challenges from rising import costs and potential impacts from avian influenza on breeding stock availability [21][22]. - The profitability of Yisheng's investments in joint ventures and agricultural equipment companies has been affected, with reported losses of 20 million yuan [2][3]. Future Plans - Yisheng is constructing a new parent stock facility in Shanxi with a capacity of 1 million sets, which is expected to enhance production capabilities significantly [15][16]. - The company is exploring futures contracts to stabilize feed costs amid fluctuating prices for corn and soybean meal [15]. This summary encapsulates the key points from the conference call, highlighting Yisheng Co., Ltd.'s financial performance, market dynamics, strategic initiatives, and future outlook.

Group 1: Company Operations - The company is able to maintain stable production with normal procurement of parent stock chickens despite restrictions on the introduction of grandparent stock chickens [2] - The company currently has no plans for share repurchase, and any future plans will be disclosed publicly [2] Group 2: Employee Benefits - The company complies with regulations by providing employees with social insurance and housing fund contributions [2]