Shares of DEKON AGR (02419) surged more than 14% during the morning session. As of this report, the stock is up 12.46%, trading at HK$46.2 with a turnover of HK$28.41 million.

The recent price movement follows reports of intensified policy measures to regulate hog production capacity. Since June, the Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission have held consecutive meetings on capacity control. For the first time, these meetings imposed a rigid "four leadership" requirement on large-scale breeding enterprises and set a firm deadline for completing capacity reduction and the culling of low-efficiency sows by the end of September.

As local implementation rules are being rolled out and leading companies successively set quantified reduction targets, the process of reducing hog production capacity is shifting from a previous phase of "passive reduction" to a new stage of "active acceleration."

Analysis from Shanxi Securities suggests the hog industry has been under sustained pressure recently. Periods of industry losses are considered a favorable window for capacity reduction. Guided by industrial policies, the policy-driven capacity reduction is expected to progress simultaneously. This year could witness the third significant round of capacity reduction since 2021, potentially leading to a recovery in the fundamentals and valuation of the hog farming sector.