Hong Kong Market Movers: Pork Sector Rebounds in Early Trading as Hog Industry Chain Shows More Capacity Reduction Signals; Institutions Say Earnings Upside for Pig Farmers Is Within Reach

According to Zhitong Finance APP, pork concept stocks rebounded in early trading. As of press time, Dekon AGR (02419) rose 4.48% to HK$58.35; Muyuan (02714) gained 4.40% to HK$37.48; COFCO Joycome (01610) climbed 3.69% to HK$1.125.

On the news front, entering October, capacity reduction signals in the hog industry chain continue to increase: on one hand, leading pig enterprises are proactively cutting back sow production capacity, while piglet prices and breeding profits continue to hit bottom; on the other hand, breeding sow numbers were still declining in September, but the pace of reduction narrowed compared with August.

Data shows that in September, the breeding sow inventory tracked by Yongyi and Ganglian fell 0.52% and 0.86% month-on-month respectively. Combined with cumulative reduction of over 6.5% in July-August, full-year capacity reduction is expected to reach 10%.

Orient Securities pointed out that it is bullish on the hog breeding sector. The market has suffered deep losses for more than 8 months, capacity reduction is beginning to accelerate, and policy continues to strengthen restrictions on industry capacity. The medium-to-long-term price prosperity is expected to be sustainable, and earnings upside for pig enterprises is within reach.