Muyuan Co. achieves record July sales of 6.66 million head: Demonstrating leading resilience through volume supporting price, pig cycle turning point speculation heats up

On August 7th, the three major Hong Kong stock indices rebounded from the lows. The Hang Seng Index closed up 0.69% or 171 points at 25081.63 points, re-establishing above the 25,000 integer level, with a total daily turnover of approximately HKD 245.7 billion; the Hang Seng China Enterprises Index rose by 0.55% concurrently. On the trading floor, the AI hardware sector, which had led gains earlier, saw a high-level retreat. Risk-averse funds showed increasing demand for low-valuation defensive stocks, and pork concepts within the agriculture sector once again became a focus of market attention. Just two days prior, the breeding leader Muyuan Co. (02714.HK) disclosed its highly anticipated July sales brief—in the context of continuously bottoming pork prices, this "volume-to-price" performance provided the latest commentary for judging the turning point of the pork cycle. Muyuan's Record 6.66 Million Head Sales in July: Volume Growth Counteracts Price Decline, Continuing the Volume-to-Price Logic After market close on August 5th, Muyuan Co. released its July 2026 sales brief. Data showed that the company sold approximately 6.66 million head of pork products in July, a year-on-year increase of 4.82%; the average selling price of pork products was about RMB 10.64 per kilogram, a year-on-year decrease of 25.59%, but a month-on-month rebound of 9.8%; and the revenue from pork product sales was approximately RMB 8.897 billion, a year-on-year decrease of 23.56%. During the same period, the company's wholly-owned subsidiary Muyuan Meat Food and its subsidiary slaughterhouse processed about 2.763 million head of live pigs, and the slaughtering capacity utilization continued to climb. Looking only at year-on-year data, the double-digit declines in revenue and price are not remarkable, but they hold deep significance within the broader industry context. Firstly, the monthly sales of 6.66 million head set a high for the year, demonstrating the leader's "contrarian volume increase" amidst the general industry atmosphere of capacity contraction and waiting. Secondly, the month-on-month rebound of the average selling price by nearly ten percent corroborates the rhythm of the temporary rebound in pork prices in July, suggesting that the most pessimistic period for prices may have passed. Thirdly, the year-on-year decrease in revenue (23.56%) is less than the decrease in price (25.59%), indicating that the hedging effect of "volume-to-price" on cash flow is becoming evident. Reviewing Muyuan's previous semi-annual report forecast, the company expected a loss of RMB 5.7 billion to RMB 6.7 billion in the first half of 2026, but the cost improvement path is clear: the full cost of live pig breeding has been continuously declining since the beginning of the year, falling to RMB 11.6/kg in May and about RMB 11.7/kg in June; the cost of excellent farms has been stably controlled below RMB 11/kg, getting closer to the target cost of below RMB 11.5/kg for the full year. In an environment where pork prices have long been below the industry average cost line, cost control capability is the "moat" for surviving the cycle. Intensifying Industry Divergence: Some Companies Issue Profit Warnings, Others Accumulate Strength A horizontal comparison shows that the resilience of breeding leaders is not the industry norm. In late July, Cinda Jiajiang (01610.HK) issued a profit warning, estimating that the company's owners would incur a loss of approximately RMB 1 billion to RMB 1.2 billion for the first six months ending June 30, 2026, before fair value adjustments of biological assets, whereas in the same period of 2025, there was a profit of approximately RMB 198 million, marking a shift from profit to loss year-on-year. The company stated that the decline in performance was mainly due to low live pig selling prices, which squeezed the profit margin of the breeding business. After issuing the profit warning, the stock weakened along with the sector in early August, falling by nearly 3% at one point. Another leading company, Wenshi Co., Ltd., data disclosed on the evening of August 5th also confirms industry trends: the company sold 27.421 million live pigs (including hogs and fresh meat) in July, with revenue of 3.662 billion RMB. The average price of live hogs was 10.80 RMB/kg, showing month-on-month changes of 6.66%, 18.97%, and 12.27%, and year-on-year changes of -13.36%, -24.91%, and -25.93%. Similar to Muyuan, Wenshi also showed positive signals in July, with "month-on-month sales growth and month-on-month price recovery." Institutions generally believe that leading enterprises are widening the gap with small and medium-sized breeders through cost advantages and ample cash flow during this deep bottoming phase, leading to a potential further increase in industry concentration. The clearance of small and medium-sized capacity lacking financial support is the underlying logic for the next cycle reversal. Pig prices are still bottoming: futures prices hit a new low, and peak season expectations are discounted However, the short-term fundamentals of pig prices are not optimistic. As of August 3rd, the national average ex-factory price for three-yuan live pigs has fallen to about 10.32 RMB/kg, continuously operating below the industry average breeding cost line, and breeding enterprises are generally incurring losses. The signals from the futures market are even more direct: the main contract for live pig futures, 2609, closed at 10690 RMB/ton, falling by over a thousand points in two weeks since the high on July 20th, a decline of over 15% from the high at the beginning of July, and setting a new low since the contract's listing. Looking back at July, pig prices experienced a noticeable low rebound—the national average price for three-yuan live pigs on July 5th was 10.62 RMB/kg, with a weekly increase reaching 12.74%, leading to excited market discussions about a "reversal." However, the good times were short-lived, and pig prices re-entered a correction channel starting in mid-July. The concentrated realization of delayed pig sources, scale farm August planned increases, and prior secondary fattening pig sources led to renewed supply pressure. Institutions point out that pig prices in early August are likely to continue with slight weak fluctuations, and the supply-strong, demand-weak pattern is difficult to reverse in the short term. Although there are expectations of demand recovery from the abatement of high temperatures, the start of the school year, and preparations for major festivals in late August and September, caution is needed regarding the characteristic of "not being prosperous in the peak season." Capacity reduction accelerates: breeding sows approach reasonable stock levels What determines the direction of the pig cycle is never the short-term price, but the capacity. Data from the National Bureau of Statistics shows that as of the end of the second quarter of 2026, the national breeding sow stock was 37.8 million head, a decrease of 2.63 million head year-on-year, or 6.5%, with a month-on-month decrease expanding to 3.2%, significantly higher than the 1.44% in the first quarter—a clear acceleration in reduction. The current stock level has dropped to 100.8% of the 37.5 million head normal stock set by the Ministry of Agriculture and Rural Affairs, exceeding it by only about 300,000 head, and is gradually entering the green and reasonable range. Industry insiders believe that the official data confirms that capacity reduction has entered a "deep water zone." However, it is important to be clear that the supply capacity corresponding to the same base of breeding sows is increasing against the background of improved breeding efficiency; and the national live pig slaughter of 372 million head in the first half of the year, which still grew by 1.7% year-on-year, is still releasing supply inertia. Because of this, multiple futures and brokerage institutions have postponed the timing of the cycle reversal: Yide Futures believes that the long-term direction of capacity reduction is certain, but the cycle turning point is likely to be delayed until the end of 2026 or even early 2027, and even if a reversal occurs, the starting pace will be relatively gentle, making it difficult to replicate the large gains of the previous cycle. Investment perspective: tracking left-side layout windows and turning point signals Returning to the Hong Kong stock market, pork concept stocks have recently shown cyclical activity characterized by "negative news being fully priced in." As the Hang Seng Index returned to 25,000 points on August 7th, the demand from defensive funds for undervalued, high-dividend defensive stocks increased, making the breeding sector a key vehicle for the reversal in capital maneuvering due to its extremely low valuation percentile and clear de-stocking logic. Policy also provided warmth, with regulators repeatedly emphasizing the stabilization of pig and other livestock products and prices, and the continuous tightening of policies to regulate pig production capacity, providing a bottom support for the sector. For investors, the core conflict at this stage is the time lag between the "timing of left-side positioning" and the "timing of reversal realization." Based on tracking indicators, the following points are worth paying close attention to:

Whether the breeding sow inventory can further fall below 37.5 million head and remain at a low level;

Whether pig prices can stabilize near industry cost lines, and the actual realization of peak season demand;

The marginal changes in quantity, price, and cost in the monthly sales data of leading pig enterprises;

Whether there are accelerating signals of capacity clearance under industry cash flow pressure, and the pace of exit by small and medium-sized retail investors.

Strategically, leading enterprises with cost advantages, stable cash flows, and continuously growing slaughter volumes (such as Muyuan Co., Ltd. and Dekang Animal Husbandry Co., Ltd.) offer greater certainty to navigate the cycle and are suitable for phased positioning with a left-side mindset; while second-tier stocks with greater elasticity are better suited for participation after confirming a reversal signal. Regarding risks, caution is needed regarding persistently weak demand, de-stocking falling short of expectations, and the pressure on sector valuations caused by a secondary bottoming of pig prices. (This article is compiled based on public information and does not constitute any investment advice. The market is risky, and investment requires caution.)