Muyuan Foods (002714.SZ / 2714.HK): Initiate at Buy: Hogging Limelight with Cost Edge, Vertical Integration

We initiate on the Muyuan A- and H-share at Buy with target prices of Rmb50.90 and HK$48.00. The company looks best placed for a longer, calmer hog cycle ahead, backed by structural cost leadership, self-sufficient breeding, and a slaughtering business that is increasingly smoothing earnings. Profitability still hinges on hog prices, but we expect a recovery in 2027/28E to lift earnings given Muyuan's scale and operating advantages. It is China's largest hog breeder and slaughterer, having turned the 2018 African Swine Fever crisis into a lasting scale and cost edge. Muyuan is the cleanest proxy to China's hog cycle recovery, in our view. China is in its seventh hog cycle since 2000, but we expect this one to be longer and calmer, given higher consolidation, more frequent and tighter govt intervention on supplies, and favorable policies toward farms. We expect prices to improve in 2027E, soft in 1H and firmer in 2H, as the more noticeable recent sow inventory decline flows through the