HK Stock Market Move | Muyuan Foods Group (02714) fell more than 3% in the afternoon session, as the deep decline in hog prices weighed on its first-half performance, with the market focused on the effectiveness of sow herd reduction.

Muyuan Foods Group (02714) fell more than 3% in the afternoon session. As of press time, it was down 3.33% at HK$37.12, with a turnover of HK$77.4488 million. On the news front, data from the National Bureau of Statistics showed that as of the end of the second quarter of 2026, the national breeding sow herd stood at 37.8 million head, down 3.2% quarter-on-quarter and 6.5% year-on-year, with the decline notably widening from the first quarter. The herd has been destocking month-on-month for several consecutive months, and the pace of capacity reduction has accelerated. However, given the roughly 10-month breeding and growth cycle for hogs, the sow destocking effect from late 2025 to early 2026 will gradually transmit to the commercial hog slaughter end after September 2026, and current slaughter volumes remain at relatively high levels. Huatai pointed out that Muyuan Foods Group's first-half performance came under pressure mainly due to the accelerated decline in hog prices since March, with per-head industry losses exceeding the bottom seen at the end of 2023. Although the company maintained its industry-leading cost advantage, it was still unable to withstand the deep downturn in hog prices. We believe the company's cost leadership strategy remains solid, and as hog prices recover in 2027, its profitability advantage is expected to strong earnings elasticity. We maintain our "Buy" rating.