Shares in the pork sector have once again moved higher. At the time of writing, DEKON AGR (02419) was up 5.68% to HK$53.95, COFCO JOYCOME (01610) rose 4.55% to HK$1.15, and MUYUAN (02714) gained 4.43% to HK$34.4.

The positive movement follows data showing a continuous increase in national live hog and pork prices over the first two weeks of July. For instance, the wholesale price for lean pork at Beijing's Xinfadi market reached 14.4 yuan per kilogram on July 12, marking a 15% increase compared to July 1. Liu Tong, an analyst at the Xinfadi market, noted that the peak price in early July occurred on July 8, averaging 14.55 yuan per kilogram, which is the highest level seen since the Lunar New Year.

Market analysis suggests that driven by both policy measures aimed at curbing industry overcapacity and production cuts due to financial losses, the sector may be entering a period of accelerated capacity reduction. This outlook presents a potential opportunity for early positioning within the hog farming segment.

From a medium to long-term perspective, as the industry focuses on high-quality development, leading farming enterprises are expected to continue lowering their production costs. This trend could potentially raise the average profit per head across the cycle. Furthermore, with policies likely to restrain capital expenditure, these companies may see more stable cash flows, increasing expectations for shareholder dividends. Early investment in leading hog farming companies is therefore viewed favorably.