Central China Securities: Low Valuation Presents Opportunities in Hog Farming, Animal Health, Seed Industry, and Pet Food Sectors

Stock News11-28

Central China Securities Co., Ltd. released a research report stating that the current price-to-earnings and price-to-book ratios of the agriculture, forestry, livestock, and fishing sectors are below historical valuation averages, presenting a relatively low valuation level with potential for future recovery. Hog farming costs are expected to continue optimizing, benefiting industry leaders first. The increasing scale of downstream livestock and poultry farming will drive sustained growth in demand for animal health products. Given the potential market space for biotech breeding, the seed industry currently offers significant investment value. Meanwhile, listed companies in the pet food sector stand to gain from deepening domestic substitution trends, with substantial room for market share expansion. The firm maintains an "outperform" rating for the sector.

**Key Highlights:** 1. **Hog Farming:** - Breeding sow inventories declined gradually in H2 2025, likely impacting market hog supply by mid-2026. - Stable demand and supply contraction may support hog price stabilization and recovery in 2026. - The sector remains undervalued historically, with industry leaders poised to benefit as capacity rationalizes.

2. **Animal Health:** - Short-term demand remains robust due to high livestock production levels. - Medium-term growth hinges on the commercialization of African swine fever vaccines. - Long-term expansion will be driven by scaling in downstream farming.

3. **Seed Industry:** - Regulatory clarity and policy support for biotech breeding commercialization enhance investment appeal. - Valuations are historically low, with approved seed companies set to gain from rising industry concentration and margins.

4. **Pet Food:** - Market growth potential remains significant amid demographic shifts and rising living standards. - Domestic brands are gaining traction online, mirroring trends in mature overseas markets.

**Investment Strategy:** Recommended stocks include Muyuan Foods (002714.SZ), Pulike Biological Engineering (603566.SH), Qiule Seed Industry (920087.BJ), Wanpy (301498.SZ), Zhongpet (002891.SZ), and Pet’s Love (300673.SZ).

**Risks:** Fluctuations in raw material and livestock prices, animal diseases, food safety issues, and delays in biotech breeding policies.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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