Guosheng Securities: Supply and demand are booming, optimistic about the rising prices of yellow chickens.

Guosheng Securities research report stated that the price of yellow chickens continues to rise. According to Xinmu Net, in the third week of August, the average prices of fast-growing, medium-growing, and slow-growing yellow feather broiler chickens were 10.84 yuan/kg, 12.68 yuan/kg, and 15.24 yuan/kg respectively, with year-on-year growth rates of +5.9%, 5.0%, and 5.0% respectively. Yellow chicken prices have been rising continuously for 5 weeks. Based on the cost of 11 yuan/kg for Lihua Share, assuming the weight of a single yellow feather broiler chicken is 2.2kg, the profit per chicken has been restored to 3.7 yuan. We believe that the previous low prices may stimulate some sectors of the industry to reduce production, and the strengthening trend of price increases is further driven by seasonal demand. According to the new poultry situation forecast, 1) on the supply side, the supply of medium and fast-growing breeds has significantly decreased in the periphery, resulting in shortages in the market, while high-quality breeds are selling well, non-standard products are still being processed, but the price increase sentiment is very high; 2) on the demand side, back-to-school banquets are driving consumption, the market demand is improving, and preparations for the Mid-Autumn Festival and National Day holidays are also increasing, industry restocking is gradually starting, boosting overall sales volume. We believe that even considering the industry restocking cycle, this round of prosperity cycle may last for about one quarter, and the sector or synchronously fundamental improvement, we recommend paying attention to the leading yellow chicken companies Wen's Shares and Lihua Shares.