Zheshang Securities: Livestock Industry Upgrade Drives Value Reassessment Across Multiple Sectors

The livestock farming sector is expected to witness a dual opportunity of cyclical recovery and structural growth by 2026, according to a research report by Zheshang Securities. Key highlights include:

**Hog Sector**: After prolonged losses, the industry has reached a critical destocking phase. Leading players with cost advantages—such as Muyuan Foods, Wens Foodstuff Group, and Dekon Agriculture—are poised for value re-rating. Smaller firms like Tiankang Animal Husbandry and Lihua Animal Husbandry may offer growth elasticity.

**Cattle Sector**: The high-margin cycle is projected to extend through 2027, driven by slow supply recovery and record-high global beef prices. Companies like Youran Dairy and Modern Dairy stand to benefit from herd culling income elasticity.

**Poultry Sector**: - *Yellow Broilers*: Capacity reduction amid H1 2025 losses supports price recovery, though breeder inventory remains elevated. Lihua Animal Husbandry leads in cost control. - *White Broilers*: Low parent stock replacement due to breeding restrictions delays cyclical upturn. Monitor integrated leader Sunner Development and upstream player Yisheng Livestock & Poultry.

**Feed & Animal Health**: Focus on cost-efficient, globally scaled feed giants (Haid Group, Bangji Technology) and biotech firms with pet/export growth (Ripen Biology, Biology Company).

**Crops & Pets**: - *Grain*: Weather disruptions in 2025 may pressure prices despite high inventories. Seed industry growth hinges on GMO adoption (DBN Group, Longping High-Tech). - *Pet Economy*: Domestic brands (Guangbao Pet, Zhongchong Inc.) gain traction amid rising demand and exports.

*Risks*: Policy delays, disease outbreaks, commodity volatility, and natural disasters.