China Galaxy Securities: Pet food export volume resumes growth, with a focus on the rhythm of production capacity changes in pig farming enterprises

According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that based on the value of breeding sows and breeding efficiency, pig prices in 2025 may show a downward trend year-on-year, with relatively stable operation throughout the year. The pet food industry is in a growth phase, with the market share of quality enterprises showing an upward trend. As domestic pet owners' acceptance of domestic brands continues to increase, leading domestic enterprises are expected to maintain rapid growth, thereby driving industry concentration. Recommended stocks include WENS (300498.SZ), MUYUAN (002714.SZ), CHINA PET FOODS (002891.SZ), and Ruipuhua (300119.SZ).

The main points of China Galaxy Securities are as follows:

July CPI year-on-year remained flat, agricultural product trade cumulative deficit decreased by 16%.

In July, China's CPI year-on-year was +0.0%, with food items down by 1.6%, and pork down by 9.5% year-on-year. The CPI in July increased by 0.4% month-on-month, with food items down by 0.2%, and pork up by 0.9% month-on-month. In July, China's agricultural product import value was USD 18.678 billion, up by 5.14% year-on-year, while export value was USD 8.385 billion, up by 1.59% year-on-year, resulting in a trade deficit of USD 10.293 billion, up by 8.21% year-on-year.

August agricultural index performed weaker than CSI 300.

From early August to the 22nd, the agriculture, forestry, animal husbandry, and fishery index increased by 6.02%, while the CSI 300 rose by 7.42%, indicating weaker performance in agriculture, forestry, animal husbandry, and fishery compared to the CSI 300. Among the sub-industry indices, agricultural product processing (+13.17%) and animal health (+8.72%) had relatively high increases, while fishery (+4.53%) and planting industry (+4.45%) performed relatively poorly.

August pig prices fluctuated downward, self-breeding and self-raising fell to breakeven.

Pig prices rebounded from the low point of 24.1.17, reaching a year-high of 21.06 yuan/kg in mid-August, and then fluctuated downward. On August 13, 2025, the pig price was 14.25 yuan/kg, down 12% from the end of 2024. On August 13, the profit from self-breeding and self-raising was 33.95 yuan/head, while the profit from purchasing piglets was -151.8 yuan/head. By the end of Q2, the number of breeding sows in China was 40.43 million, up by 0.1% month-on-month. Regarding the trend of pig prices in 2025, the average price for the year is expected to remain relatively stable, with differences arising from the continuous optimization of the total costs of excellent pig enterprises, leading to profits exceeding expectations. Additionally, changes in production capacity, industry breeding conditions, and slaughter weights may lead to unexpected changes that are worth paying close attention to.

July pet food export volume recovered growth, cumulative export value slightly declined.

Since September 2023, China's pet food exports have significantly rebounded, maintaining a high growth rate until Q1 2025, mainly driven by the increase in export volume. In July, China's pet food export value was 931 million yuan, down by 3.08% year-on-year. The export volume was 33,100 tons, up by 11.67% year-on-year; the average export price was 28.15 yuan/kg, down by 13.21% year-on-year. From January to July 2025, the cumulative export value was 5.930 billion yuan, down by 0.16% year-on-year. In terms of volume and price, the export volume was 201,000 tons, up by 6.64% year-on-year; the average export price was 29.51 yuan/kg, down by 6.38% year-on-year The concentration of China's pet food market is relatively low. As domestic pet owners' acceptance of domestic brands continues to increase, leading domestic enterprises are expected to maintain rapid growth, thereby driving the industry's concentration upward.

Investment Recommendations

1. Continuously emphasize the balanced layout opportunities in the pig farming industry. Based on the value of breeding sows and farming efficiency, pig prices in 2025 may show a downward trend year-on-year, with relatively stable operation throughout the year. Coupled with profits exceeding expectations due to declining costs, focus on high-quality pig companies with significant marginal cost changes and good funding conditions, recommending WENS, MUYUAN, Shennong Group, and Tiankang Biological, while paying attention to Dekang Agriculture and Animal Husbandry.

2. The pet food industry is in a growth phase, with the market share of quality enterprises showing an upward trend. Recommend CHINA PET FOODS, GAMBOL PET, and Petty Holdings, while paying attention to Yuanfei Pet.

3. Attention can be paid to the later cycle of the breeding chain, recommending feed leader Haida Group and animal vaccine-related companies, recommending Reap Bio and Kexin Bio, etc.

4. The price of yellow chickens has a certain correlation with pig prices, and considering the low supply side, there is potential for price increases in the future. Pay attention to Lihua Shares.

Risk Warning: Risks of livestock and poultry prices not meeting expectations, risks of animal epidemics, risks of raw material price fluctuations, policy risks, risks of natural disasters, etc