Hong Kong stock concept tracking | Positive "signal" released by the pig industry, pig prices are expected to rise monthly under supply contraction (attached concept stocks)

On July 23, the Ministry of Agriculture and Rural Affairs held a symposium to promote the high-quality development of the pig industry. The meeting pointed out that currently, the pig industry is facing problems such as high production capacity, large fluctuations in production and prices, etc. It is necessary to strictly implement production capacity control measures, reasonably eliminate sows that can breed, appropriately reduce the number of sows in stock, reduce secondary fattening, control the slaughter weight of fat pigs, and strictly control the increase in production capacity. Guosen Securities pointed out that with the contraction of pig supply in Q3 2025, the center of the pig price is expected to rise month by month. The meeting mentioned that in recent years, China's pig industry has continuously enhanced its ability to ensure stable production and supply, significantly improved its supply capacity, effectively implemented biosecurity measures, and continuously improved production efficiency and industry quality. Since the second half of last year, timely counter-cyclical adjustments have been carried out, guiding the orderly reduction of pig production capacity, which has achieved significant results. It is required to further improve relevant policies and measures to resolutely prevent large fluctuations in production and prices. On July 23, the domestic futures market pig main contract 2509 once surged to 15,150 yuan/ton, hitting a new high for the year. Against the backdrop of anti-"involution," the National Development and Reform Commission recently convened two meetings with the top thirty pig companies in the industry to discuss anti-"involution" in the pig industry, focusing on stopping the increase in the number of sows in stock, controlling the slaughter weight to be under 120kg, and not encouraging the sale of second-generation pig sources. CMSC believes that based on anti-"involution" and the goal of stabilizing CPI, the policy will regulate the production capacity of sows, and may further raise the center of pig prices in 2025-2026, thereby fully unleashing the profit elasticity of "low-cost+" pig companies. According to the sales data of 12 listed pig companies in June. By July 10, 2025, the 12 listed pig farming companies had a total of 16.1481 million pigs slaughtered in June, a year-on-year increase of 45.98%. The profit margin of pig farming in June narrowed month-on-month, and the number of sows in stock increased slightly month-on-month. Affected by the decline in pig prices, the average profit per self-bred pig in the industry in June was 25.15 yuan/head (down 62.35% from the previous month). According to the National Bureau of Statistics, as of June 2025, China's sow inventory was 40.43 million, an increase of 0.12% year-on-year and 0.02% month-on-month. By July 17, 2025, the price of 15kg piglets at large farms had increased slightly to 542 yuan/head, down 103 yuan/head year-on-year and up 91 yuan/head from the same period in 2023. From June to mid-July, the pig industry experienced two rounds of overselling, the first round being from early June to mid-June, with group overselling and lowering the slaughter weight; the second round from early July to mid-July, with individual farmers overselling large pigs and attempting to buy small weight pigs at low prices in the summer. Guosen Securities released a research report stating that July is already in the core period of supply reduction window, and after individual farmers oversell large pigs, the attempt to buy pigs at low prices in the future may fail, becoming a force to further push up pig prices. Sinolink released a research report stating that at present, the performance of pig prices is lower than the cost of leading pig farming enterprises by over 200 yuan/head, and it is expected that leading enterprises will achieve good profits in the first half of the year, while in the background of continuous supply pressure, pig prices may face certain pressure in the second half of the year. If the industry can regulate production capacity in an orderly manner, the medium-term profit margin of the industry is expected to improve. Related concept stocks: DEKON AGR (02419): DEKON AGR's operating report for June 2025 showed that the sales of pigs reached 820.23 thousand heads, with 792.53 thousand heads of commodity pigs, achieving sales revenue of RMB 1.565 billion. The average selling price of commodity pigs was RMB 14.31 per kilogram, a decrease of 2.25% month-on-month. As of the end of June 2025, the company had sold a total of 5.1174 million pigs in the first half of the year, with total sales revenue reaching RMB 10.023 billion, an increase of approximately 34.55% year-on-year. COFCO JOYCOME (01610): COFCO JOYCOME announced that in June 2025, the company slaughtered 427,000 pigs, with a total of 2.898 million pigs slaughtered this year. The sales volume of fresh pork was 24,500 tons, of which 33.56% of brand income was from the sale of large pigs at an average price of RMB 14.08 per kilogram. WH GROUP (00288): Zhongjin Securities released a research report stating that WH GROUP's core net profit attributable to mothers in 2025 and 2026 is estimated to be USD 1.614 billion and USD 1.683 billion, respectively. The company's trading multiples are 8.1/7.8 times 2025/2026 P/E; maintaining a target price of HKD 8.56 per share, corresponding to 8.7/8.4 times 2025/2026 P/E and a downside risk of nearly 7.8%, maintaining an outperform rating. The bank predicts that the operating profit of WH GROUP's comparable caliber in the second quarter of 2024 is expected to grow at a low double-digit rate year-on-year (excluding the impact of government subsidies in the company's US business in the second quarter of 2024), meeting market expectations.