Hong Kong Stock Concept Tracker | Capacity Continues to Destock, Pig Prices Weakly Recover, an Upward Inflection Point Is Expected in the Second Quarter of Next Year (with Concept Stocks)

Entering October, signals of capacity reduction in the hog industry chain continue to increase: on one hand, leading hog enterprises are proactively cutting sow capacity, with piglet prices and farming profits continuing to bottom out; 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, breeding sow inventories tracked by Yongyi and Mysteel 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%. As breeding sow inventories have declined for multiple consecutive months, commercial hog supply is expected to shrink substantially from the second quarter of next year, and an upward inflection point for hog prices is approaching. Overall, hog prices in the third quarter did not form a trend-based rally. Under a pattern of repeated fluctuations, profit pressure on the farming side remained persistently high. Data shows that in the second quarter of 2026, the national average hog slaughter price was 9.47 yuan/kg, and the third-quarter average rebounded to 10.73 yuan/kg, up 13.31% quarter-on-quarter, but due to the high base in the prior year, it fell sharply by 22.08% year-on-year, leaving the industry overall still in a weak phase of the cycle. Industry estimates show that in the third quarter, the average monthly loss under the farrow-to-finish model reached 159.85 yuan/head, clearly indicating deep industry losses. Muyuan Foods Group, Jiangxi Zhengbang Technology, Tech-Bank Food, and Jiangsu Lihua Foods Group all sold more in the first three quarters of 2026 than in the same period last year, but all saw year-on-year declines in sales revenue. "Higher volume without higher revenue" remains the main tone of the current market. Among them, Muyuan Foods Group sold 58.73 million commercial hogs in the first three quarters, up 2.45% year-on-year; sales revenue was 76.817 billion yuan, down 25.72% year-on-year. Jiangxi Zhengbang Technology's hog sales in the first three quarters increased 41.48%, while sales revenue fell about 5.3% year-on-year. The latest sales brief shows that Muyuan Foods Group sold about 6.42 million commercial hogs in September, up 15.24% year-on-year; the average selling price of commercial hogs was about 10.36 yuan/kg, down 19.57% year-on-year; and it achieved sales revenue of about 8.520 billion yuan, down 6.01% year-on-year. Wens Foodstuff Group sold 2.9883 million hogs in September, down 10.13% year-on-year; it achieved sales revenue of 4.056 billion yuan, down 18.47% year-on-year. As of the end of September 2026, Muyuan Foods Group's breeding sow inventory was 2.974 million head, down 139,000 head from 3.113 million head at the end of June, a cumulative decline of about 4.5% in the third quarter, completing its phased target of reducing to below 3 million head. Piglet prices are a core bellwether for industry expectations and farmers' willingness to restock. The average monthly piglet price in September was 142.30 yuan/head, down 19.84% month-on-month and plunging 49.32% year-on-year, a sharp decline on both a year-on-year and month-on-month basis. The room for further increases in hog slaughter volumes will continue to shrink. The fourth-quarter market will be dominated by a structurally weak recovery, with no trend-based bull market; over the medium to long term, as capacity reduction continues to materialize, the supply-demand structure of the hog market in 2027 will be further optimized, and a window for industry profit recovery is expected to gradually open. China Great Wall pointed out that in the first half, the industry remained in a deep-loss range, but capacity reduction signals have emerged, breeding sow inventories continue to decline, and in the second half, Mid-Autumn Festival and National Day stocking as well as the year-end curing peak season are expected to drive a recovery in demand, with hog prices possibly seeing a moderate recovery. Hua Chuang Securities said that, referring to multi-dimensional data such as breeding sows and piglets, from a timing perspective, the significant effect of supply contraction or the profitability inflection point for hog prices is highly likely to appear in 2027Q2, but the sector's current valuation is at a low level, and it is recommended to pay attention to allocation opportunities in the hog sector. Related concept stocks: Muyuan Foods Group (02714): Muyuan Foods Group sold about 6.42 million commercial hogs in September, up 15.24% year-on-year; the average selling price of commercial hogs was about 10.36 yuan/kg, down 19.57% year-on-year; and it achieved sales revenue of about 8.520 billion yuan, down 6.01% year-on-year. DEKON AGR (02419): In August 2026, the group sold 935,030 commercial hogs, with commercial hog sales revenue of RMB 1.325 billion; the group's average selling price of commercial hogs was RMB 10.94/kg, up 4.79% from July 2026. For the eight months ended August 31, 2026, the group sold a total of 7,762,930 commercial hogs, with commercial hog sales revenue of RMB 10.740 billion. COFCO JOYCOME (01610): In the first half of 2026, it achieved operating revenue of 8.736 billion yuan, down 2.5% year-on-year; net loss before fair value adjustment of biological assets was 1.095 billion yuan, compared with net profit of 203 million yuan in the same period last year. The decline in performance was mainly affected by lower hog selling prices and the proactive reduction of volume in the meat import business to control risk.