Founder: The market is expecting a more pessimistic trend in pig prices in the future, but companies with advantages still have excess performance.

Founder published a research report, stating that from a cyclical perspective, the current market has a pessimistic outlook on future pig prices based on the prices of live pig futures. From a stock price perspective, the livestock sector has gone through an earlier adjustment, and the pessimistic expectations for pig prices have been adequately released; however, current valuations are still low, and it is expected that the impact of future pig prices on stock prices will be weakened. The bank believes that companies with good future performance realization, low breeding costs, and high growth potential for future sales of livestock will outperform. Key points from Founder are as follows: Pig farming: Supply and demand dynamics leading to price fluctuations Price side: Both live pig and piglet prices are declining simultaneously. According to Boya Hexun monitoring, this week the average price of live pigs was 14.57 yuan/kg, down 0.27% week-on-week and 0.75% bi-weekly; piglet average price was 38.55 yuan/kg, down 4.63% week-on-week and 5.28% bi-weekly. According to Wind data, this week's wholesale pork price was 20.88 yuan/kg, up 0.80% week-on-week and down 0.64% bi-weekly; the profit for self-bred pig farming was 33.56 yuan/head, and the profit for externally purchased piglet farming was -12.52 yuan/head. Weekly view: Average weight at slaughter has increased to a high level, and short-term price fluctuations will continue. This week, the overall performance of live pig prices was weak, with the average weight at slaughter continuing to rise to 127.06 kg, up 0.43% week-on-week. The bank believes that there is still incremental space on the supply side and demand side post-March, and live pig prices may remain volatile in the short term. Poultry farming: Broiler prices rebound significantly Price side: Prices of live chickens and broiler chicks continue to rise. This week, the average price of live chickens in the main producing areas was 6.59 yuan/kg, up 8.03% week-on-week and 5.96% bi-weekly; the average price of broiler chicks was 2.54 yuan/chick, up 10.92% week-on-week and 9.98% bi-weekly; the profit for parent chicken breeding was -0.21 yuan/chick, up 54.35% week-on-week and 45.23% bi-weekly; the profit for live chicken breeding was -1.90 yuan/chick, up 42.07% week-on-week and 31.25% bi-weekly; chicken product prices were 8.97 yuan/kg, down 0.33% week-on-week and 0.17% bi-weekly. Weekly view: Broiler prices continued to rebound this week, with a slight shortage on the supply side, and a slightly scarce supply of chickens, leading to a phenomenon of farmers holding back sales. The bank believes that in the short term, supply and demand dynamics will be pulling back and forth, and prices of live chickens and broiler chicks may remain volatile. In the long term, attention should be paid to the impact of the recovery of restaurant consumption and the disruption of breeding due to overseas avian influenza on industry supply and demand adjustment. Risk warning: Disease risks in the livestock industry; Market fluctuations in Shenzhen Agricultural Power Group; Natural disaster risks; Pig price increases below expectations; Recovery in demand below expectations.