Sinolink Securities: Leading Pig Industry Companies seeing Growth and Value Rise, Chinese Agricultural Technology Welcomes New AI Empowered Storytelling

CICC released a research report stating that looking ahead to 2026, the industry shifts of the "new paradigm in the pig industry" and the "golden age of the pet economy" will continue. The leading companies in the pig industry are expected to see growth in both value and attributes. Leading companies in the pet industry are breaking through the middle game with a high-end brand matrix. In addition, China's agriculture and animal husbandry have entered a "great maritime era", and the new narrative of AI empowerment in Chinese agricultural technology, such as "machine replacing humans", has reached a turning point. Key points from CICC are as follows: Looking ahead to 2026, we believe that the industry shifts in the "new paradigm in the pig industry" and the "golden age of the pet economy" will continue. The leading companies in the pig industry are expected to see growth in both value and attributes. Leading companies in the pet industry are breaking through the middle game with a high-end brand matrix. In addition, China's agriculture and animal husbandry have entered a "great maritime era", and the new narrative of AI empowerment in Chinese agricultural technology, such as "machine replacing humans", has reached a turning point. In terms of cycles: the new paradigm in the pig industry is strengthening, and China's agriculture and animal husbandry have entered a great maritime era. We believe that 1) for pigs: the new paradigm characteristics remain consistent, with leading companies seeing growth in both value and attributes. In terms of prices, we estimate that pig prices in 2026 may continue to show a convergence of amplitudes and a decrease in volatility, with prices centrals falling back and a rhythm of first suppression and then rise. Efficient leading companies are expected to maintain annual profits. In terms of operations, pig enterprises are adopting a new paradigm of cost reduction, value addition, and overseas expansion, with the industry's output remaining stable. In terms of investment, core leading companies that balance growth and value are expected to continue to lead the way. 2) for broilers: with abundant supply, leading companies that grasp advantages in sources, channels, and brands are expected to increase operating premiums. 3) for feed: leading companies in aquaculture feed will continue to strengthen their domestic value and overseas growth logic. It is expected that in 2026, leading companies in the feed industry will increase their high-quality domestic market share, accelerating the start of a global maritime era. 4) for Shenzhen Agricultural Power Group: the supply and demand situation is marginally improving, and grain prices are expected to move away from the bottom. In terms of consumption: the pet economy is reaching a middle game, with product innovation and channel efficiency determining the winners and losers. We believe that 1) for pet food: the competition has reached a middle game, with high-end innovation breaking through. With the industry shifting to high-quality growth and increased investment from capital and the industry, competition is intensifying. Leading domestic companies, leveraging their historical accumulation in market scale, brand power, and integrated supply chain advantages, may accelerate their market share and brand matrix towards the high end, leading to short-term revenue growth and potential long-term profit margin improvement. 2) for pet medical care: following the growth of pet food, competitive capital competition is returning to operational competition. The industry is shifting from land grabbing to improving quality and efficiency, with chain store consolidation becoming the trend. Leading companies with reasonable business models are expected to lead the way. 3) for branded agriculture: channel efficiency is iteratively enhancing traditional kitchen food categories' profitability, helping to create new single products like fresh corn. In terms of technology: "machine replacing humans", Jiangsu Nonghua Intelligent Agriculture Technology, China's agricultural technology has ushered in a new narrative of AI empowerment. 1) for agricultural intelligent equipment: through the deep integration of drones, Siasun Robot & Automation, AI, and big data, the intelligent ecosystem covering the entire process of "plowing, planting, managing, and harvesting" in agriculture is forming. The turning point of "machine replacing humans" in agricultural production has arrived. 2) for seeds: expanding biological breeding combined with a reduced impact from grain prices, the sector's profit realization is expected. 3) for Jiangsu Nonghua Intelligent Agriculture Technology: AI empowers an important scene in agriculture, entering a rapid development stage.