Guolian Life Securities: It is expected that pig prices will be under pressure to operate in 2025, and the trend of capacity digestion may gradually strengthen.

Country League Minsheng Securities released a research report stating that the overall inventory of sows by the Ministry of Agriculture and Rural Affairs increased from April to December 2024, coupled with a gradual improvement in industry production efficiency. The bank expects that the number of slaughtered pigs will continue to increase until October 2025, and pig prices may come under pressure by 2025. As of January 2025, the Ministry of Agriculture's data on sow inventory began to decline, and pig prices and piglets continued to weaken after the Spring Festival, potentially leading to a decrease in industry profitability. The trend of capacity reduction may strengthen in the future. The bank recommends excellent breeding enterprises with clear cost advantages and high slaughter realization rates. Investment recommendations: Recommend Muyuan Foods (002714.SZ), Wens Foodstuff Group (300498.SZ), and also recommend post-cycle animal health and feed sectors such as Guangdong Haid Group (002311.SZ). The main points of Country League Minsheng Securities are as follows: - The sow inventory of the Ministry of Agriculture and Rural Affairs decreased month-on-month in January. - According to the Ministry of Agriculture and Rural Affairs data, at the end of January, the national sow inventory was 40.62 million, about to exceed the 105% green and reasonable capacity control range against the normal holding volume of 39 million. The inventory of medium and large pigs increased by 1.1% year-on-year in January, especially the inventory of large pigs in large pig farms increased by 4% year-on-year, and the pressure on pig slaughter in February and March was still significant. The bank believes that after the Spring Festival, with the onset of the off-season for pork consumption and sufficient pork supply, pig prices are expected to continue to decline in the next two months. - The month-on-month growth rate of the sow inventory of YNY Consulting in January narrowed. - According to YNY Consulting data, the month-on-month growth of the sample point 1 sow inventory in January 2025 was 0.63% (previously 1.27%); the sample point 2 sow inventory increased by 0.2% month-on-month (previously 0.86%). The average number of healthy piglets was 11.17 in January, a decrease of 0.03 from the previous month; the weaning survival rate was 89.17%, a decrease of 0.63% from the previous month; however, the fat pig survival rate did not show a downward trend. The increase in the number of new breeding sows in January was narrower than in the previous period, and the elimination end mainly followed the normal production elimination rhythm, corresponding to the narrowing growth rate of the sow inventory. The market has not yet experienced a phenomenon of capacity reduction due to pessimism about future expectations. - The sow inventory of Mysteel data decreased slightly month-on-month in December. - According to Mysteel data, the month-on-month change in the sow inventory of the full sample in January 2025 was -0.04% (previously +0.39%), with the inventory in large-scale farms decreasing by -0.038% (previously +0.36%) month-on-month and the inventory in small and scattered farms increasing by 0.07% month-on-month (previously +1.13%). According to Mysteel feedback, the profit space on the breeding side still exists in January, and the industry's overall willingness to proactively reduce capacity is relatively limited, mainly focusing on capacity optimization and replacement. Due to expected plan targets, a few enterprises still have minor increases, but due to the impact of cooling and rainy weather in the north and sporadic outbreaks of pig diseases, and some breeding households are slaughtering high-age sows before the Spring Festival, driving a slight decrease in upstream capacity. Risk factors: disease risk, long-term low livestock prices risk, raw material price fluctuation risk.