Southwest: The swine market is entering a destocking cycle, while the beef cattle market is experiencing a rebound in prosperity.

Southwest releases research report stating that the overall profitability of the pig farming industry in 2025 will be slight, with leading companies continuously strong, focusing on the profitability and cost control capabilities of enterprises. The beef industry is seeing a deep supply clearance phase leading to a major cycle. In November 2024, the loss per head reached over 1600 yuan, with over 8 consecutive months of losses exceeding a thousand yuan, leading to an accelerated elimination of cows and a reduction in replacement. The PSY of cows is only 1 (much lower than the PSY of sows), and it is expected that beef supply will significantly decrease by 2026. The report recommends companies such as Muyuan Foods (002714.SZ), Wens Foodstuff Group (300498.SZ), etc. Southwest's main points are as follows: Livestock sector Pigs: Entering a "new cost competition pattern," with weak policy control, strong differentiation, slight overall industry profitability, and leading companies continuously strong in 2025. Sow production capacity is in a reasonable high range, with visible policy guidance continuing to reduce and adjust, price fluctuations weakening, and cost leadership and biosafety capabilities becoming core variables for valuation and profitability. Focus on the profitability and cost control capabilities of enterprises. Recommendations include Muyuan Foods, Wens Foodstuff Group, Jiangsu Lihua Foods Group (300761.SZ). Beef industry Deep supply clearance is nurturing a major cycle. Domestic beef farming is highly fragmented (more than 90% of farms have less than 10 heads), similar to the pig industry before 2019, with significant risks of overcapacity under long-term deep losses. By 2024, beef prices had fallen to nearly a five-year low, with live cattle prices at nearly a ten-year low. In November 2024, losses per head reached over 1600 yuan, with over 8 consecutive months of losses exceeding a thousand yuan, leading to an accelerated elimination of cows and a reduction in replacements. The PSY of cows is only 1 (much lower than the PSY of sows), and it is expected that beef supply will significantly decrease by 2026. Recommendations include focusing on YOURAN DAIRY (09858) and related targets such as Fortune Ng Fung Food (600965.SH). Edible fungi Industry capacity is rationalizing, and the leading companies are solidifying their position. Artificial cultivation of winter cordyceps is entering a period of performance release, opening a second growth curve. Traditional single product capacities (such as enoki mushrooms) have eased, with CR5 stable; cordyceps investment is accelerating and projects have already verified high profitability. Risk warning: There is a risk of sudden epidemic outbreaks in the breeding sector, lower-than-expected consumer demand, market competition, accounts receivable management, project delivery, etc.