Core Viewpoint - China Galaxy Securities emphasizes the dual strategy opportunities in the pig farming industry, highlighting the potential for price rebounds in 2026 despite a year-on-year decline in pig prices due to production capacity adjustments and industry losses [1] Group 1: CPI and Pork Prices - In December, China's CPI increased by 0.8% year-on-year, with food prices rising by 1.1%, while pork prices fell by 14.6% year-on-year [1] - The month-on-month CPI rose by 0.2%, with food prices increasing by 0.3%, but pork prices decreased by 1.7% [1] Group 2: Fruit and Vegetable Prices - Seasonal increases in fresh fruit prices are the main driver of the current food CPI, while vegetable price growth has slowed [2] - January vegetable prices averaged 5.59 yuan/kg, up 6.37% year-on-year, with expectations for continued price increases in Q1 due to the later timing of the Spring Festival and weather impacts [2] - January fruit prices averaged approximately 7.88 yuan/kg, up 8.87% year-on-year, marking the highest level for the same period since 2020 [2] Group 3: Feed Raw Material Prices - In January, the average price of corn was 2364.6 yuan/ton, up 0.69% month-on-month and 10.55% year-on-year, with expectations for a stable price range in 2026 [3] - The average price of soybean meal was 3198.97 yuan/ton, up 1.94% month-on-month and 3.82% year-on-year, with a forecast of slight upward movement in 2026 [3] - Overall, the prices of feed raw materials are expected to remain stable, indicating no significant increase in breeding cost pressures [3] Group 4: Pig Farming Outlook - Following a price increase in late December 2025, pork prices are expected to face downward pressure after the Spring Festival due to seasonal consumption patterns [4] - The annual average price of pigs is projected to decline year-on-year, although there may be temporary rebounds influenced by seasonal disease impacts [4]

Investment Rating - The report maintains an investment rating of "Outperform" for the agriculture, forestry, animal husbandry, and fishery industry [8] Core Insights - The report highlights the stabilization and rebound of pig prices, with the January average price for external three yuan pigs at 12.68 yuan/kg, reflecting a month-on-month increase of 9.58% but a year-on-year decrease of 19.52% [8][21] - The "No. 1 Document" emphasizes the promotion of biological breeding industrialization, which is crucial for achieving self-sufficiency in seed sources and enhancing grain production capacity [19][20] - The pet food sector shows a positive trend, with December 2025 pet food exports reaching 37,700 tons, a year-on-year increase of 15.49% [35] Summary by Sections Market Review - In January 2026, the agriculture, forestry, animal husbandry, and fishery index rose by 1.63%, ranking 23rd among 30 sectors, while the Shanghai and Shenzhen 300 index increased by 1.65% [11] - The animal health sector performed well, while the forestry processing sector saw declines [11] Biological Breeding - The "No. 1 Document" calls for the implementation of actions to revitalize the seed industry and accelerate the breeding and promotion of breakthrough varieties [19][20] - The focus is on stabilizing grain and oil production and enhancing yield levels [19] Livestock and Poultry Data Tracking - Pig prices showed a rebound in January, with a tight supply supporting price increases [21] - The average price of white feather chickens rose to 3.73 yuan/jin, with a month-on-month increase of 1.36% [28] Pet Food Exports - Pet food exports maintained a year-on-year growth, with total exports for 2025 reaching 361,300 tons, a 7.78% increase [35] Investment Recommendations - The report suggests focusing on companies such as Muyuan Foods, Pulaike, Qiule Seed Industry, Guobao Pet, Zhongchong Co., and Petty Holdings, as the industry’s price-to-earnings and price-to-book ratios are below historical averages, indicating potential for valuation recovery [8]

Core Viewpoint - The company, Muyuan Foods, faces significant financial challenges, including high debt levels, liquidity risks, and reliance on volatile pig prices, which could jeopardize its future performance and investor confidence [3][6][12]. Debt and Financial Structure - As of the end of 2024, the company's total liabilities reached 110.1 billion yuan, a decrease from the peak of 121.3 billion yuan in 2023, but short-term repayment pressures have increased [3]. - The company has 60.27 billion yuan in interest-bearing debt due within one year, marking a four-year high, with short-term loans amounting to 45.3 billion yuan and cash equivalents of only 12.8 billion yuan, resulting in a short-term repayment gap exceeding 32.5 billion yuan [3]. - The debt structure is characterized by a mismatch in maturity, with 70.3% of short-term loans, leading to a net current liability of 17.1 billion yuan [3][5]. Profitability and Cash Flow - In 2024, the company reported a net profit of 18.925 billion yuan, a 519% increase year-on-year, largely driven by a recovery in pig prices; however, a decline in average pig prices by 16.8% is expected in 2025, leading to a projected net profit drop to at least 15.1 billion yuan [6][8]. - The operating cash flow for 2024 was 37.5 billion yuan, but significant outflows from investment activities caused cash and cash equivalents to decrease from 19.4 billion yuan at the beginning of the year to 12.8 billion yuan by year-end [8]. - Concerns have been raised regarding the quality of earnings, with regulatory scrutiny highlighting discrepancies in cash management and insufficient provisions for inventory depreciation [8]. Market Position and Strategic Moves - The company's IPO on the Hong Kong Stock Exchange raised over 10 billion Hong Kong dollars, but the share price was set at 39 HKD, approximately 23.9% lower than its A-share price, reflecting market caution [9][11]. - The allocation of IPO proceeds includes 60% for overseas expansion, 30% for research and development, and 10% for working capital, raising concerns about the sustainability of this strategy given the existing debt burden [11]. - The company's international operations are still in the early stages, primarily involving technology transfer, and face various risks, including local policy challenges and disease control [11][12].

Investment Rating - The report maintains an investment rating of "Outperform" for the agricultural, forestry, animal husbandry, and fishery industry [8] Core Insights - The report highlights the stabilization and rebound of pig prices, with the "No. 1 Document" reiterating the importance of biological breeding [8] - The report emphasizes the significance of the biological breeding industry for achieving self-sufficiency in seed sources and enhancing grain production capacity [19][20] - The report indicates that the industry is currently undervalued, with price-to-earnings (P/E) and price-to-book (P/B) ratios below historical averages, suggesting potential for valuation recovery [8] Summary by Sections Market Review - In January 2026, the agricultural, forestry, animal husbandry, and fishery index rose by 1.63%, underperforming the Shanghai and Shenzhen 300 index, which increased by 1.65% [11] - The animal health sector showed strong performance, while the timber processing sector lagged [11] Biological Breeding - The "No. 1 Document" emphasizes the need to promote the industrialization of biological breeding, which is crucial for achieving self-reliance in seed sources and enhancing grain production [19][20] Livestock Farming Data Tracking - In January 2026, the average price of pigs was 12.68 yuan/kg, reflecting a month-on-month increase of 9.58% but a year-on-year decrease of 19.52% [21] - The average price of white feather chickens rose to 3.73 yuan/jin, with a month-on-month increase of 1.36% and a year-on-year increase of 2.75% [28] Pet Food Exports - In December 2025, pet food exports reached 37,700 tons, a year-on-year increase of 15.49%, while the total export value for the year was 1.41 billion USD, a decrease of 4.62% [35] Investment Recommendations - The report suggests focusing on companies such as Muyuan Foods, Pulike, Qiule Seed Industry, Guobao Pet, Zhongchong Co., and Petty Co., as they are expected to benefit from the industry's recovery [8]

Group 1 - The consumer sector is experiencing a pullback, with the leading consumption ETF (159928) slightly down by 0.13% despite a trading volume exceeding 300 million yuan and a net inflow of 6 million units [1] - The upcoming 9-day Spring Festival holiday is expected to boost consumer spending, with government initiatives planned for 2026 to support the replacement of old consumer goods with new ones during this period [3] - The liquor sector, particularly Moutai, is showing strong sales performance as the peak season approaches, with prices for Moutai products increasing significantly compared to the previous month [5] Group 2 - Financial Street Securities highlights that the food and beverage sector is crucial for domestic demand, with policies aimed at boosting consumption expected to help the sector recover from its current low [6] - The service consumption sector is anticipated to see price increases driven by policy support and changing consumer behavior, with a focus on emotional value and health-oriented products [8] - The travel service sector is projected to experience strong demand growth, with hotel prices expected to rise as supply and demand dynamics improve [9]

Group 1 - The 800 Cash Flow ETF managed by Huatai-PineBridge opened at 1.317 yuan, experiencing a decline of 1.42% [1] - Major holdings in the ETF include China National Offshore Oil Corporation (CNOOC) down 2.93%, SAIC Motor Corporation down 0.14%, and China Aluminum Corporation down 1.82% [1] - The ETF's performance benchmark is the CSI 800 Free Cash Flow Index, with a return of 33.50% since its inception on April 30, 2025, and a return of 5.17% over the past month [1]

Core Insights - The report indicates a cautiously optimistic outlook for February, with the index expected to remain stable and oscillate around the high and low points of January, suggesting a controlled approach to position management during the holiday season [3][8] - The mid-cap blue-chip style is expected to continue, with a focus on adjusting positions rather than passive defense, particularly in the livestock and chemical sectors [3][8] Market Strategy - The index is showing a slightly strong oscillation, with market sentiment indicating a lower risk appetite compared to the previous week, leading to rapid sector rotations [3][8] - Recommendations include controlling positions to avoid uncertainties during the holiday while being prepared for potential liquidity recovery post-holiday [3][8] Industry Strategy - In the agriculture sector, pig inventory is at a low point, with price bottoms being tested ahead of the holiday, indicating a potential recovery in market sentiment regarding pig prices [5][8] - The report highlights that the average weight of pigs post-slaughter has dropped to approximately 88.3 kg, suggesting limited downside for pig prices, with expectations for a price turning point in Q2 2026 [5][8] Thematic Strategy - The military industry is highlighted for its potential due to the resonance of domestic and international demand, with significant growth opportunities anticipated in unmanned and deep-sea technologies, as well as in military trade markets [6][8] - The report emphasizes the importance of the "14th Five-Year Plan" for the military sector, which is expected to clarify new equipment construction plans and enhance investment opportunities [6][8]

Group 1 - Morgan Stanley increased its stake in Muyuan Foods (02714) by 1.26614 million shares at a price of HKD 40.3031 per share, totaling approximately HKD 51.0294 million [1][3] - After the increase, Morgan Stanley's total shareholding in Muyuan Foods is approximately 31.0612 million shares, representing a holding percentage of 11.33% [1][3]

Core Insights - The report indicates a cautiously optimistic outlook for February, with the index expected to stabilize and oscillate around the highs and lows of January, suggesting a controlled approach to position management during the holiday season [3][8] - The mid-cap blue-chip style is expected to continue, with a focus on adjusting positions rather than passive defense, particularly in the agricultural and chemical sectors [3][8] Industry Strategy - In the agricultural sector, the report highlights that pig inventory is at a low point, with price bottoms being tested ahead of the holiday season. The market's pessimistic expectations regarding pig prices are seen as overestimated, with a potential recovery in prices anticipated as inventory levels stabilize [5][8] - The report notes that the average weight of pigs post-slaughter has dropped to approximately 88.3 kg, indicating limited downward price movement potential. The report predicts a price turning point in Q2 2026, with the average price for the year expected to exceed market expectations [5][8] - The report emphasizes the military industry, highlighting the resonance of domestic and international demand, with significant investment opportunities anticipated as the "14th Five-Year Plan" unfolds, particularly in unmanned and deep-sea technologies [6][8] Related Investment Opportunities - Recommended stocks in the agricultural sector include Muyuan Foods (002714), Wens Foodstuff Group (300498), and Haida Group (002311), with a buy rating suggested [5][8] - In the military sector, recommended stocks include Huaxin Technology (688281) and Guobo Electronics (688375), with a buy rating suggested [6][8]

Core Insights - Morgan Stanley increased its stake in Muyuan Foods Co., Ltd. by purchasing 1,266,140 shares at an average price of HKD 40.3031 per share, totaling approximately HKD 51.03 million [1][3] - Following this transaction, Morgan Stanley's total holdings in Muyuan Foods rose to 31,061,241 shares, increasing its ownership percentage from 10.87% to 11.33% [1][3] Summary by Categories Shareholding Activity - Morgan Stanley acquired an additional 1,266,140 shares of Muyuan Foods on February 9, 2026 [1][3] - The total investment for this acquisition was around HKD 51.03 million [1] - After the purchase, Morgan Stanley's total shareholding reached 31,061,241 shares [1][3] Ownership Percentage - The ownership percentage of Morgan Stanley in Muyuan Foods increased from 10.87% to 11.33% following the recent acquisition [1][3]