Guosheng: The overall loss of profits for live pigs, with the bulk of raw material costs steadily rising.

Guosheng has released a research report stating that the price trend of various products this month continues, with the price of live pigs reaching 9.46 yuan/kg. There is still significant short-term downward pressure, and considering the rising feed costs, the industry continues to face deep losses with high certainty, and the extent and duration of the losses are exceeding expectations. After market adjustments, a re-examination of the fundamentals shows that the logical direction is still to eliminate loss-making production capacity. It is almost certain that the industry will continue to incur losses in the next quarter, enhancing the logical certainty, and it is suggested to strengthen the allocation once again. In addition, there is a focus on opportunities related to Shenzhen Agricultural Power Group and edible mushrooms. Guosheng's main points are as follows: Pig farming By the end of the month, the national lean meat-type pig price had dropped below 10 yuan/kg, deepening the extent of losses. After a rebound in the stock market, there has been a significant pullback with low participation. It is expected that participants facing high costs for a long time will face pressure to reduce output, and changes in sow capacity data will continue to catalyze. Investors are advised to focus on opportunities for allocating resources during the loss phase. Current valuations are still relatively low, and there is focus on opportunities to invest in low-cost pig companies, including DEKON AGR, Wens Foodstuff Group, Muyuan Foods, Jiangsu Lihua Foods Group, Leshan Giantstar Farming & Husbandry Corporation, Tecon Biology Co. Ltd, Jiangxi Zhengbang Technology, among others. Shenzhen Agricultural Power Group Crude oil continues to operate at high levels, which is expected to drive up production costs and expand demand, with the impact ranked as follows: plant oils and rubber first, followed by sugar, corn, and grains like wheat and rice. Although the major Shenzhen Agricultural Power Group has experienced some increases, pricing is still not sufficient. The fundamentals are lagging behind but are expected to follow. Attention is focused on plant oils, rubber, sugar, corn, and other related corresponding assets. Mushrooms This month, the price of golden needle mushrooms has maintained unexpectedly good conditions, with sector performance exceeding expectations. The main products' prices continue to be strong, and with the approaching peak season for Cordyceps sinensis, there is high annual allocation value. It is recommended to focus on key assets in the sector, such as Tianshui Zhongxing Bio-technology, Shanghai Xuerong Bio-Technology, Jiangsu Chinagreen Biological Technology Group, among others. Livestock support Price fluctuations have intensified upstream and downstream for Shenzhen Agricultural Power Group, and livestock prices have not entered a stable prosperous cycle yet. Leading feed companies, relying on procurement, scale, capital, and industry chain advantages, are expected to replace small and medium-sized feed companies. Their overseas strategies are also promising. Attention is on Guangdong Haid Group. In terms of vaccines, attention is on the progress of subsequent clinical trials for non-plague vaccines. Poultry farming For yellow feather meat chickens, attention is on seasonal price elasticity opportunities, with a focus on Jiangsu Lihua Foods Group. For white feather chickens, attention is on the trend in parent generation production, and companies like Fujian Sunner Development, Shandong Yisheng Livestock & Poultry Breeding, Wellhope Foods are worth watching. Seed industry From an industry perspective, the trend of variety replacement within the sector is clear, with breakthroughs in medium-ear dense planting. Related assets are worth watching. In addition, genetically modified varieties have officially entered commercial sales. Industry growth and realization timing will gradually be confirmed with actual transaction prices, profit distribution, and new season breeding and seed production initiatives. The potential for investment in the sector is worth looking forward to. Attention is on KANGNONG SEED, Gansu Dunhuang Seed Group, Yuan Longping High-Tech Agriculture, among others. Pets The industry's growth trend remains unchanged. On a quarterly basis, attention is on the pace of growth recovery, while on a medium-term basis, focus is on new product launches and sales volume trends. The industry's domestic substitution and trend towards higher-end products are still promising even after a decline in valuation, and there is good value in allocation. Attention is on Gambol Pet Group, Yantai China Pet Foods. Risk warnings: Risks of price fluctuations for Shenzhen Agricultural Power Group, disease risks, policy risks, industry competition, and product risks.