Northeast Securities: Introducing Gaps to Catalyze Upside Prosperity, Protein Substitution Expands Long-term Space

The Zhitong Finance App learned that Northeast Securities released a research report saying that pork is still the largest source of meat consumption in China, but the growth rate of per capita consumption is slowing down, the share of consumption is declining year by year, while the share of poultry consumption is rising rapidly. With its extreme breeding efficiency, white-feather broilers have become the core breed of domestic poultry supply. The white feather broiler industry has clear characteristics of the industrial chain cycle operation. The core drive of the cycle stems from fluctuations in the supply of upstream ancestral breeding sources. The long-term growth logic of the white feather chicken industry is clear, and the long-term perspective is optimistic about the continuous incremental space brought about by downstream deep processing.

The main views of Northeast Securities are as follows:

Consumption upgrades drive protein structure optimization, and chicken racetrack growth has sufficient certainty

The diet structure of residents continues to shift to high-quality animal protein, and the long-term growth logic of low-fat poultry meat is clear. Since 2013, the per capita disposable income of domestic residents has been rising steadily, food consumption has gradually been upgraded, the share of staple food consumption has continued to decline, and demand for meat, poultry, aquatic products, etc. has been expanding year by year. By category, pork is still the largest source of meat consumption in China, but the per capita consumption growth rate is slowing down, the share of consumption is declining year by year, while the share of poultry consumption is rising rapidly. National health literacy is improving year by year, and high-quality protein circuits such as meal replacement and protein powder are expanding rapidly. The nutritional advantages of skinless chicken are high in protein and low in fat accurately matching the dietary needs of contemporary fitness people, young white-collar workers, and middle-aged and elderly groups. At the same time, Western-style fast food, prepared dishes, and braised snack foods have been expanded on multiple tracks, and white feather broiler products are suitable for consumption in all scenarios. Combined, there is a significant gap in the per capita chicken consumption and meat consumption structure between China and foreign countries. Compared with developed countries such as the US and Japan, there is still plenty of room for improvement in chicken consumption in China, and there is sufficient certainty about the long-term expansion of the industry. With its extreme breeding efficiency, white-feather broilers have become the core breed of domestic poultry supply.

Introducing disruptions to drive the supply contraction cycle, and upstream profit certainty is highlighted

White feather broilers have outstanding production efficiency, and have advantages in terms of meat ratio and release cycle. They are naturally suitable for intensive large-scale farming, and have stable long-term supply advantages. The white feather broiler industry has clear characteristics of the industrial chain cycle. The core drive of the cycle stems from fluctuations in the supply of upstream ancestral breeding sources. The complete breeding transmission cycle will be delayed layer by layer along the breeding chain, driving simultaneous changes in the supply and price of parent chicken seedlings and commercial chicken from top to bottom. In the upstream breeding expansion process, a dual-track pattern of imported introduction+domestic self-breeding is formed. The overseas bird flu epidemic can easily cause phased introduction and shutdown. Subsequent production capacity contraction pressure will be transmitted layer by layer. Prices of upstream breeding chickens and chicken seedlings fluctuate the most, and profit flexibility increases; on the midstream fattening and breeding side, the price of fur chickens is generally determined by market supply and demand, and breeding costs are affected by price fluctuations in bulk feed commodities such as corn and soybean meal. Therefore, there is a possibility of mismatch in price costs, so farming profits fluctuate naturally. As the market share of leading enterprises in the industry continues to increase, the integrated layout of the industrial chain is improved, and raw materials are locked Price and slaughter storage adjustment methods are popular, and industry profit fluctuations are narrowing year by year; the downstream terminal consumption chain covers multiple channels for restaurants, households, prepared dishes, and casual snacks. The demand base is stable. Compared with pork, chicken has a stable cost performance ratio and alternative properties. The price fluctuation is significantly smaller, and the overall operation remains stable.

Upstream price increases are expected to increase, and deep processing opens up room for long-term growth

The early generational breeding gap reduced medium- to long-term breeding production capacity. According to the breeding cycle, the production capacity gap may be first transmitted to the parent generation in July of this year, and further to commercial chicken seedlings after 14 months. Upstream chicken breeding and chicken seedlings have sufficient momentum to increase prices. The boom is expected to continue until the first half of next year. The short-term industry is optimistic about the upstream breeding sector. In the first half of 2026, the first half of 2026 was affected by the introduction and discontinuation of breeding. Chicken Seedling prices started a proactive rise ahead of schedule, driving the current profit of Chicken Breeder Longtou Yisheng Co., Ltd. to increase dramatically over the same period last year. From a long-term perspective, deep processing segments such as fried chicken and boneless chicken claws continue to open up the industry's growth ceiling. Even if the macro environment and consumer consumption pace cause short-term disturbances due to weak phased demand, the size of the deep processing market continues to expand the main line year by year; with the industrialization of prepared dishes, the rapid expansion of restaurant chains, and the continuous release of convenient food demand from young groups, white feather broiler relies on the core advantages of high cost efficiency and strong plasticity of segmented products, and continues to penetrate diverse consumption scenarios such as light food, fast food, casual snacks, and family meals. It accounts for the share of other livestock and poultry consumption, and the long-term growth logic of the industry is clear. The long-term dimension focuses on the continuous incremental space brought about by downstream deep processing.

Risk warning: feed raw material price fluctuation, livestock and poultry disease risk, product price fluctuation