The feed industry is currently experiencing a slowdown, with the boom phase expected to reach its lowest point. This decline is largely influenced by the year-on-year decrease in the growth of live pig populations, which has led to a sluggish performance in feed sales. For instance, large-scale feed producers are projected to maintain a growth rate of around 10%. While there may be months with single-digit growth, the overall trend remains stable. Moreover, as the base effect from the previous year fades, profit pressures are expected to ease after the first quarter.
Looking ahead, the industry may face a period of low income growth, potentially occurring in the second or third quarter. However, the worst profit performance is likely to have already occurred in the first quarter. Despite this, the business climate is not expected to deteriorate further, signaling a potential turning point.
Currently, the industry is witnessing a “dual trend†scenario. On one side, small and medium-sized retail investors—often the main customer base—are struggling with weak demand and poor profitability. On the other hand, large-scale farms targeting customers with 5,000 to 10,000 head of livestock continue to show strong growth. These larger clients benefit from the stability and competitive advantages that emerge during market downturns, reinforcing their position in the sector.
From our recent visits, it’s clear that leading feed companies such as Dabeinong and Zhengda have matured significantly in terms of internal systems and talent development. These companies now offer more than just feed—they provide comprehensive services that include products, support, information, management, financial solutions, and marketing. Because these services deliver measurable and quantifiable results, competition among feed companies is shifting from cost leadership to differentiation.
In terms of investment strategy, we believe Dabeinong (002385, BUY) holds a strong position due to its extensive experience in serving large clients and its early advantage in building an integrated platform. The company’s positive corporate culture and effective talent incentive system contribute to maintaining strong customer loyalty and satisfaction. Based on our observations, the rapid expansion of its large client base is likely to drive continued growth, even amid industry challenges. Short-term fluctuations should not affect the company’s “buy†rating.
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HANDAN ZHONGBAO IMPORT AND EXPORT TRADING CO.,LTD , https://www.hdzbfastener.com