Agriculture Sector: How to Position for the Fourth Quarter
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Tianfeng Securities keeps an Outperform view on China's agriculture sector heading into the fourth quarter. Hog producers remain loss-making and capacity reduction continues; with sector losses and policy regulation accelerating the cull, the analysts favor core assets with strong cost control—Muyuan Foods, Wens Foodstuff, and Dekon Food and Agriculture—while valuation now hinges on management quality and profitability. Milk prices have risen for four straight weeks on better supply-demand dynamics, benefiting dairy names such as Youran Dairy and Modern Dairy, while beef-cattle capacity has cleared thoroughly and price gains may last longer than expected. A super El Nino has formed, stoking crop-reduction expectations and lifting rubber prices, relevant for Hainan Rubber. Pet consumption is upgrading toward refined, functional products, with domestic brands gaining share (Gambol Pet, China Pet Foods). White-feather chicken remains at a cyclical bottom, with the autumn-winter peak season expected to lift demand; Sunner Foods is the poultry pick.
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