Northeast: The introduction of new varieties accelerates economic growth, while protein substitutes expand long-term potential.

Northeast published a research report stating that pork remains the largest source of meat consumption in China. However, the growth rate of per capita consumption has slowed, and the proportion of consumption has been declining year by year, while the proportion of poultry consumption has rapidly increased. White feather broilers, thanks to their exceptional farming efficiency, have become the core variety for domestic poultry supply. The white feather broiler industry has clear characteristics of cyclical operation along its industrial chain, with cyclical core drives stemming from fluctuations in upstream grandparent stock supply. The long-term growth logic of the white feather chicken industry is clear, with a focus on the continued incremental space brought by downstream deep processing in the long term. Northeast's main viewpoints are as follows: Consumer upgrading drives protein structure optimization, and the growth of the chicken sector is highly certain. The dietary structure of residents continues to transition towards high-quality animal protein, with the long-term growth logic for low-fat poultry meat being clear. Since 2013, disposable income per capita for domestic residents has steadily increased, leading to an upgrade in food consumption. The proportion of staple grain consumption has been gradually declining, while the demand for meat poultry and aquatic products has been expanding year by year. By category, pork remains the largest source of meat consumption in China, but the growth rate of per capita consumption has slowed and the consumption share has continued to decline, whereas the proportion of poultry consumption has quickly risen. As national health literacy improves annually, high-quality protein markets like meal replacements and protein powders are rapidly expanding. Skinless chicken offers high protein and low fat which closely matches the dietary needs of modern fitness enthusiasts, young professionals, and middle-aged and elderly groups. Additionally, the expansion of various avenues such as Western fast food, prepared dishes, and casual snacks has aligned with the adaptability of white feather broiler cut products for all consumption scenarios. Coupled with the significant gap in per capita chicken consumption and meat consumption structure between China and developed countries such as the U.S. and Japan, there is still considerable potential for growth in chicken consumption in China, ensuring the industry's long-term expansion is highly certain. White feather broilers, with their extreme farming efficiency, have become the core variety for domestic poultry supply. Genetic introduction interruption drives a supply contraction cycle, highlighting profit certainty in upstream sectors. White feather broilers excel in production efficiency, with advantages in feed-to-meat ratio and delivery cycles, making them naturally suited for intensive and large-scale farming, thus solidifying their long-term supply advantage. The white feather broiler industry has clear characteristics of cyclical operation along its industrial chain, with cyclical core drivers originating from fluctuations in upstream grandparent stock supply. The entire breeding transmission cycle exceeds one year, and changes in grandparent stock will gradually affect the breeding chain, influencing supply and price dynamics of parent stock chicks and market broilers from top to bottom. In the upstream breeding and reproduction stage, a dual track pattern has formed with both imported and domestically bred stock. Overseas avian influenza outbreaks often cause temporary stoppages in genetic introductions, and subsequent production capacity contraction will translate down the chain, with upstream breeding stock and chick prices experiencing the greatest fluctuations, increasing profit elasticity. In the midstream fattening and breeding stages, the price of market-weight chickens is generally determined by the supply and demand of the market, while feeding costs are influenced by fluctuations in the prices of bulk commodities like corn and soybean meal. This price-cost mismatch can lead to natural profit volatility. However, as leading enterprises in the industry continuously enhance their market share, improve integrated layouts along the industrial chain, and popularize raw material price-locking and slaughter capacity adjustment mechanisms, the amplitude of industry profit fluctuations has narrowed year by year. The downstream terminal consumption segment covers diverse channels such as catering, households, prepared meals, and snacks. The solid foundation of demand based on necessity, along with the comparative stability and substitutability of chicken over pork, results in significantly smaller price fluctuations. Overall operations remain stable. Upstream price increase expectations are strong, and deep processing opens long-term growth opportunities. At the beginning of the year, interruptions in the genetic introduction of grandparent stock compressed medium- to long-term breeding capacity. Based on breeding cycles, capacity gaps may first propagate to parent stock in July this year, and 14 months later further impact the price increases of market chicks. Upstream breeding stock and chick prices are poised for significant upward momentum, and the market outlook is expected to extend into the first half of next year, with a short-term positive expectation for the upstream breeding segment. In the first half of 2026, the influence of the grandparent stock genetic interruption is likely to trigger a proactive price surge in chick prices, significantly enhancing current profits of leading breeding enterprises such as Shandong Yisheng Livestock & Poultry Breeding compared to the previous year. From a long-term perspective, segments like fried chicken and boneless chicken feet in deep processing continue to unlock industry growth ceilings. Even if macroeconomic conditions and resident consumption rhythms bring short-term demand fluctuations, the expansion of the deep processing market remains a consistent trend year by year. With the industrialization of prepared dishes taking off, rapid expansion of chain dining, and continuously released convenient dietary demands from younger groups, white feather broilers leverage their core advantages of cost-effectiveness and highly adaptable cut products to penetrate diversified consumption scenarios such as light meals, fast food, casual snacks, and family dishes, continuously capturing market share from other livestock and poultry consumption. The long-term growth logic of the industry is clear, with a long-term focus on the sustainable increment space brought by downstream deep processing. Risk warnings: Fluctuations in feed raw material prices, risks from livestock and poultry diseases, price volatility of products.