Recently, driven by the peak consumption season at the end of the year, the share price of 100 billion “pig grass” Muyuan Foods Co.Ltd(002714) has continued to rebound, rising nearly 13% since December 21.

On December 24, Muyuan Foods Co.Ltd(002714) shares soared by 4.27%, but after hours data showed that Muyuan Foods Co.Ltd(002714) had a block transaction with a discount of 1 billion yuan, 13.7% lower than the closing price. The sellers were Citic Securities Company Limited(600030) Shenzhen Binhai Avenue Securities Business Department. At the same time, the two institutions increased their positions against the trend, with a total purchase amount of more than 700 million yuan.

In addition, Muyuan Foods Co.Ltd(002714) has also responded to its frequently questioned financial problems and cash flow problems recently. Chairman Qin Yinglin said that it is also a reality that the company has tight cash flow due to the factors such as the industry at the bottom of the cycle, but the financial support of major shareholders, fixed increase, suspension of project construction and other means are the necessary countermeasures retained by the enterprise in the process of rapid running. At present, Muyuan Foods Co.Ltd(002714) is financing through multiple channels to meet capital needs.

As for the problem that the industry mentioned is at the bottom of the cycle, recently, the discussion on the inflection point of the pig cycle is very hot. However, from the current price trend and supply and demand pattern of pigs, many institutions predict that the pig price is still possible to double bottom.

1 billion yuan discount block transaction

After hours data on December 24 showed that there were three discount block transactions on Muyuan Foods Co.Ltd(002714) that day, with a total of 22.17 million shares traded at a transaction price of 45.13 yuan / share, 13.7% lower than today’s closing price. The total transaction amount of these three discount block transactions was about 1 billion yuan, accounting for 27.4% of the transaction amount on that day.

it is worth noting that the sellers of these three discount block transactions are Citic Securities Company Limited(600030) Shenzhen Binhai Avenue Securities Business Department, or cash out and reduce their holdings for the same shareholder.

However, while Citic Securities Company Limited(600030) Shenzhen Binhai Avenue Securities Business Department made a large reduction, the two institutions increased their positions against the trend, with a total purchase amount of more than 700 million yuan, indicating that institutional investors are optimistic about Muyuan Foods Co.Ltd(002714) .

Recently, a head public fund manager in Shanghai also expressed his optimism about Muyuan Foods Co.Ltd(002714) in an interview with a Chinese reporter of a securities firm. He believes that this excellent breeding enterprise has a competitive advantage over its peers, and the market share will continue to increase in the future, which may contribute a higher excess return to the portfolio.

Recently, the share price of Muyuan Foods Co.Ltd(002714) has also been relatively strong. Driven by the peak consumption season at the end of the year, Muyuan Foods Co.Ltd(002714) has rebounded by nearly 13% since December 21, including a sharp rise of 4.27% on December 24. The share price closed at 52.28 yuan / share, with a total market value of 275.1 billion yuan; In addition, Wens Foodstuff Group Co.Ltd(300498) , Beijing Dabeinong Technology Group Co.Ltd(002385) , New Hope Liuhe Co.Ltd(000876) have rebounded to varying degrees.

In terms of pig prices, pig prices have actually warmed up since the national day. Muyuan Foods Co.Ltd(002714) it was announced on December 6 that in November, the company sold 3.874 million pigs (including 72000 piglets), with a sales revenue of 6.767 billion yuan; The average selling price of the company’s commercial pigs was 15.96 yuan / kg, an increase of 34.34% over October 2021.

recent response to financial and cash flow doubts

While the stock price stabilized, recently, Muyuan Foods Co.Ltd(002714) also responded to its frequently questioned financial problems and cash flow problems, stabilizing investor sentiment to a certain extent.

For example, on the afternoon of December 22, Muyuan Foods Co.Ltd(002714) held the fifth extraordinary general meeting of shareholders in 2021, and Muyuan Foods Co.Ltd(002714) chairman Qin Yinglin and company executives responded to current financial and cash flow problems.

Qin Yinglin said that it is normal to question whether it is a financial problem or a cash flow problem concerned by the market. In the face of factors such as the industry at the bottom of the cycle, it is also a reality that the company’s cash flow is relatively tight, but the financial support of major shareholders, fixed increase, suspension of project construction and other means are the necessary countermeasures retained by the enterprise in the process of rapid running. At present, Muyuan Foods Co.Ltd(002714) is financing through multiple channels to meet capital needs.

For example, on October 19, Muyuan Foods Co.Ltd(002714) issued a plan for raising funds by non-public offering of shares, which plans to raise no more than 6 billion yuan from the controlling shareholder muyuan group at an issue price of 40.21 yuan / share, which will be used to supplement working capital after deducting the issuance expenses; Before this fixed increase, Muyuan Foods Co.Ltd(002714) also issued 9.55 billion yuan of convertible bonds, of which 5.1 billion yuan was used for pig reproduction construction projects, 1.9 billion yuan was used for pig slaughter projects, and the remaining 2.55 billion yuan was used to supplement working capital and repay bank loans.

Secretary Qin Jun also introduced the on-site inspection by the regulatory authorities in July this year. Qin Jun said that the company’s finance can stand inspection and its authenticity is beyond doubt. At present, the company has no major events that should be disclosed but not disclosed, and there is no inconsistency between the disclosed events and the facts.

Since then, on December 23, Muyuan Foods Co.Ltd(002714) further responded to the recent market doubts when accepting the survey of institutional investors.

for the query of financial problems, the company said that the company’s financial data was logical, and the recently hired third-party audit institution also conducted special verification on relevant matters, and the conclusion was that there was no abnormality. Muyuan Foods Co.Ltd(002714) said that the company has developed rapidly in recent years. At the same time, due to the influence of external environment and other factors, the tense cash flow at a certain stage is normal. At present, the company has made corresponding adjustments in engineering construction, and the construction progress has slowed down.

for the question of liquidity, the company said that after the commercial ticket incident, the company took a variety of measures to quickly solve the problem, standardize business operations and improve personnel ability. At present, the company’s business with major cooperative banks is progressing smoothly, and there is no loan withdrawal and loan interruption. At the same time, the company’s fixed increase work is also advancing. In October this year, the company issued a plan for non-public offering of shares and issued no more than 6 billion yuan of additional shares to the company’s controlling shareholder Muyuan Industrial Group Co., Ltd.

Recently, the general meeting of shareholders considered the adjustment of the loan amount applied by the company to the controlling shareholder muyuan industry to no more than 5 billion yuan. The company believes that after the relevant matters are considered and approved, it will also provide strong support for the next development of the company.

when the pig cycle is “warm at first and cold at last”

When the share price of pig enterprises began to stabilize, the discussion on the inflection point of the pig cycle was also very hot in the near future. However, from the current trend of pig prices, many institutions predicted that there was still the possibility of a double bottom in pig prices.

According to the Research Report of Sealand Securities Co.Ltd(000750) , the essence of the formation of pig cycle is the mismatch of supply and demand, and supply is the key factor affecting the pig cycle. It often takes 10-12 months from sow stocking to pig marketing. Sow stocking determines the pig stocking after 8-12 months, which affects the change of pig price. From the analysis of the cycle W-shaped bottom, it is expected that the pig price will hit the bottom again from June to August 2022, and the pig price is expected to reach the bottom again at about 11-12 yuan.

open source Securities believes that when the pig distribution cycle is still “warm at first, it is expected that there will be an obvious mismatch between supply and demand in 2022h1 industry. The pig price is expected to fall below the industry cost line again in January 2022, so the industry will fall into a loss again, and the disadvantageous production capacity will show obvious signs of acceleration at this stage. Kaiyuan Securities believes that from June to July 2022, the industry’s production capacity is expected to be more than 15% higher than the high level from May to June 2021, supporting the emergence of a new round of pig cycle price reversal.

Xiao Nan, star fund manager of e fund, once wrote in the semi annual report: “In the first half of the year, considering that the decline of pig price will bring a new round of industry reshuffle, some production capacity blindly expanded at the high pig price regardless of their own cost capacity will be eliminated, and the industry pattern will further concentrate on the leader, so we increased our holdings in the breeding sector. However, we underestimated the time required for the industry to clear, and the position increase was too left, which did not achieve the expected effect.”

according to the data of China pig breeding network, China’s pig prices fell all the way after reaching the high point of 36.94 yuan / kg in early January. Although they rebounded around the national day, there has been a slight correction again recently. As of December 24, the quotation was 16.1 yuan / kg, which still has a lot of room for adjustment compared with the prediction of the above research report.

extended reading

“Pig grass” led the strong rebound of breeding stocks! But this signal deserves attention

It is not enough for investors to answer “pig grass” Muyuan Foods Co.Ltd(002714) simply

(brokerage China)