China Galaxy Securities: Industry concentration is accelerating, and pig prices continue to hit annual lows

According to the report from China Galaxy Securities, in the first half of 2025, 15 listed pig farming companies collectively sold 96.62 million pigs, a year-on-year increase of 32.4%; the market share reached 26.4% (up 6.3 percentage points year-on-year), setting a historical high. Since 2025, the industry has entered a second wave of accelerated market share increase, with excellent pig farming companies maintaining leading profits and widening the gap despite pressure on pig prices, benefiting from continuous cost optimization. Since 2025, the monthly pig prices of listed pig farming companies have continued to decline and are significantly lower than the industry average; in terms of average weight, there has been a general downward trend since June. Regarding the pig price trend in the fourth quarter of 2025, overall demand is in a continuously expanding range, but the supply side has shown accelerated growth since August, which may lead to fluctuations in pig prices.

The main viewpoints of China Galaxy Securities are as follows:

Excess returns in agriculture, forestry, animal husbandry, and fishery, with strong performance in the breeding industry

From the beginning of 2025 to September 17, the animal health and breeding industries have performed well, with price changes of 32.1% and 25.5%, respectively, among which pig farming increased by 28.5%. Most pig farming companies have turned losses into profits since the second quarter of 2024 and have continued to maintain profitability in 2025 due to ongoing cost optimization. For the pig cycle allocation in 2025, the annual strategy report of 2024 has already emphasized a balanced offensive and defensive logic, and with the current policy support, it is essential to focus on the overall sector sustainably.

Accelerated concentration, with profits stemming from continuous cost optimization

In the first half of 2025, 15 listed pig farming companies collectively sold 96.62 million pigs, a year-on-year increase of 32.4%; the market share reached 26.4% (up 6.3 percentage points year-on-year), setting a historical high. Since 2025, the industry has entered a second wave of accelerated market share increase, with excellent pig farming companies maintaining leading profits and widening the gap despite pressure on pig prices, benefiting from continuous cost optimization. From the feed perspective, in the first half of 2025, the overall average price of corn in China continued to decline, but there is a trend of stabilization and improvement between quarters, currently fluctuating upward at a low level. In the second quarter, listed pig farming companies maintained profitability, mainly due to a significant decline in pig prices year-on-year, with only Muyuan, NWF, and Huatong Meat showing both year-on-year and quarter-on-quarter increases.

Pig prices continue to hit annual lows, self-breeding and self-raising reach breakeven

In August, the total sales of 15 listed pig farming companies reached 15.58 million pigs, a month-on-month increase of 7.2% and a year-on-year increase of 22.9%; among them, leading companies Muyuan and WENS had month-on-month increases of 10.2% and 2.6%, respectively; among small and medium-sized pig farming companies, Lihua showed significant month-on-month increases. From the price perspective, since 2025, the monthly pig prices of listed pig farming companies have continued to decline and are significantly lower than the industry average; in terms of average weight, there has been a general downward trend since June. In terms of profits, the pressure on pig prices in August has led to profit shrinkage and increased losses across the entire pig farming industry; leading pig farming companies have superior cost control, and it is estimated that at the current pig price level, they can still maintain profitability. However, other large-scale farming companies with poor cost control may face breakeven or loss situations.

Based on capacity & efficiency framework, combined with policies, outlook on pig price trends The volume of live pig sales is mainly determined by production capacity and farming efficiency. The average number of breeding sows in 2025 is estimated to be 40.42 million, a year-on-year decrease of 1.68 million, with a significant expansion in the decline, reaching a five-year high. Considering the winter epidemic situation in 2024 and the farming conditions of pig enterprises, the MSY (Maximum Sustainable Yield) in 2025 is expected to show a significant upward trend; if the MSY rises to over 18 heads, the annual average price of live pigs may fall below 15.3 yuan/kg. Regarding the price trend of pigs in Q4 2025, overall demand is in a continuously expanding range, but the supply side has shown an accelerated increase since August, which may lead to fluctuations in pig prices. The situation of breeding sows in 2026 still needs to be continuously monitored for changes in production capacity throughout the year, while also paying attention to the epidemic status this winter to observe changes in farming efficiency for the new year.

Investment Recommendations

China Galaxy Securities believes that based on the production capacity and efficiency research framework, the pressure on breeding sows in 2025 has eased somewhat, but there is a possibility of rapid improvement in farming efficiency, which is likely to lead to a year-on-year increase in live pig sales in 2025, indicating a year-on-year decline in the average price of live pigs during the same period. However, supported by low average prices of feed raw materials and improvements in farming efficiency, excellent pig enterprises are expected to enhance their cost optimization speed, resulting in considerable profits for outstanding pig enterprises in 2025. On this basis, combined with policy effects, there may be new changes in industry production capacity and sales in 2026.

The current industry competition has entered a stage of refined management competition, and considering the relatively low valuation of the pig farming industry, we strongly recommend "large pig enterprises" WENS (300498.SZ) and MUYUAN (002714.SZ), as well as "medium and small pig enterprises" Tiankang Biological (002100.SZ), and pay attention to Shennong Group (605296.SH), Dekang Agriculture and Animal Husbandry (02419), and related pig enterprises within the sector.

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