Investment Rating - The report assigns an "Accumulate" rating for the industry [7] Core Insights - The report emphasizes the importance of supply-demand dynamics in the livestock sector following the drop in temperatures in northern regions. It highlights the potential for price recovery in the pork market as winter demand approaches [5] - The report notes that the central economic work conference has prioritized food security, leading to an optimistic outlook for the recovery of planting sector sentiment, particularly for corn prices [3] - In the pet food sector, the concentration of brands is high, with significant growth expected for leading domestic brands in the market [4] Summary by Sections Livestock Sector - The report discusses the ongoing supply-demand battle in the livestock sector, particularly in the context of lower pork prices. It notes that the average price of live pigs has been fluctuating at low levels, with a recent average price of 11.27 yuan/kg, reflecting a year-on-year decline of 26.79% [11][12] - The report indicates that the utilization rate of pig farms has returned to levels seen at the beginning of October, suggesting a potential increase in supply. However, demand has shown signs of recovery, which may lead to price stabilization [5] Planting Sector - The report highlights that corn prices have been on an upward trend, reaching 2357 yuan/ton, with a monthly increase of 4.5%. The central economic work conference's focus on maintaining reasonable prices for key agricultural products is expected to support corn price stability [3] Pet Sector - The report outlines that the sales proportions of pet food, supplies, and healthcare products are 43%, 28%, and 9% respectively. The concentration ratio for pet food has increased significantly, with the top 10 brands' market share rising from 30% to 40% within the year [4] Investment Recommendations - Recommended stocks in the livestock sector include Muyuan Foods and Wens Foodstuff Group. For the post-cycle sector, Kexin Biotechnology and Haida Group are suggested. In the agricultural products chain, stocks like Morning Light Bio and Noposion are recommended. In the pet sector, stocks such as Guibao Pet and Zhongchong Co. are highlighted [5]

Summary of Conference Call Industry Overview - The conference call focused on the pet food industry, specifically discussing the latest data and investment recommendations for the sector [1][2]. Key Points and Arguments - **June Sales Data**: In June, the growth rates for pet food across three major channels (Tmall, JD, and others) were reported as -3.2%, -26%, and +30% respectively, leading to an overall decline of 3.1% year-on-year [1]. - **618 Shopping Festival Performance**: The overall growth rate during the 618 shopping festival showed a slowdown, with combined growth rates for May and June 2023 at 25%, while the same period in 2024 was projected at 14%, and only 7.4% for the current year [2]. - **Brand Performance**: High-growth brands such as Friega and Chen Eleven continued to perform well, while most mid-to-low-end brands did not show similar growth, indicating a trend of brand differentiation within the industry [2][3]. - **Market Dynamics**: The overall market growth for the first half of the year remained strong, but significant disparities in brand performance were noted [4]. - **Cost Factors**: Increased costs due to new production capacity and depreciation expenses from new factories, such as the second factory in Thailand, were highlighted as short-term factors affecting profit growth [5]. - **Pricing Strategies**: During the 618 period, high-end brands offered significant discounts, which negatively impacted their gross margins, leading to lower-than-expected profit growth for the quarter [6]. - **Long-term Outlook**: Despite short-term fluctuations, the company is positioned as a leading player in the domestic pet food market, with expectations for brand growth to remain above 30% [6][7]. - **Investment Recommendation**: The current stock price presents a good buying opportunity, and the decline in reliance on major sales events is seen as a positive trend towards more rational consumer behavior [8]. Additional Important Insights - The overall decline in the industry's dependence on major sales events like 618 is viewed positively, reflecting a shift in consumer shopping habits towards more rational purchasing decisions [8].