2025-11-18 01:15Summary of the Agricultural Sector Conference Call Industry Overview - The conference call focuses on the Agricultural Sector, specifically the Pig Farming and Poultry Farming industries, along with Feed and Animal Health sub-sectors [1][2][3]. Key Points and Arguments Pig Farming Sector - In Q3 2025, the profitability of the pig farming sector declined significantly, with a 71% year-on-year and 38% quarter-on-quarter drop in profits, totaling CNY 5.54 billion for 18 listed pig farming companies [2][3][9]. - The average price of live pigs was CNY 13.8/kg, while the average cost for most listed companies was between CNY 13-14/kg, indicating a challenging margin environment [9][12]. - Major players like Muyuan and Wens reported combined profits of approximately CNY 6 billion, while the remaining 16 companies were in a loss position [9]. - The industry is expected to accelerate the reduction of sow capacity, which may elevate the price center for pigs in 2026 [2][12][13]. - The cash flow situation remains positive, with CNY 18.1 billion in operating cash flow for Q3, marking the tenth consecutive quarter of net inflow [10]. Poultry Farming Sector - The poultry farming sector is experiencing a tightening supply of parent stock, particularly for white feathered chickens, which is expected to support price increases in 2026 [5][14]. - The yellow feathered chicken sector is facing historical lows in parent stock, compounded by ongoing industry losses, setting the stage for potential price increases [5][14]. - The overall revenue for the poultry sector increased by 11% year-on-year, but net profit fell by 45% due to low chicken prices [14]. Feed and Animal Health Sub-Sectors - The feed and animal health sectors are showing signs of recovery, with demand improving as livestock numbers stabilize [6][7][17]. - Leading feed companies are expanding overseas, which is expected to create new growth opportunities [6][18]. - The animal health sector reported a 19% year-on-year revenue increase, with profits rising 76% due to a low base from the previous year [19]. Additional Important Insights - The average cost of pig farming is projected to be between CNY 13-14/kg for 2025, with expectations for 2026 to rise to CNY 14-16/kg [12][13]. - The Haida Group plans to IPO its overseas assets, which may dilute short-term earnings but is expected to enhance long-term growth potential [18]. - Investment recommendations focus on low-cost leading companies in pig farming like Muyuan and Wens, as well as smaller quality firms such as Shennong and Dekang [8][20]. Investment Recommendations - Emphasis on companies with strong cost control and cash flow improvement in the pig farming sector [8][20]. - In the poultry sector, recommendations include Shennong for white feathered chickens and Lihua for yellow feathered chickens [8][20]. - For feed and animal health, focus on leading companies like Haida Group and Kefei, as well as those with product advantages in the animal health sector [8][20].