Recently, pig breeding enterprises intensively disclosed financial reports. From the perspective of performance, affected by the downturn of pork prices and the rise of raw material costs, relevant enterprises generally recorded losses in the first quarter of 2022.
In 2021, most leading enterprises in the industry also suffered losses, including Jiangxi Zhengbang Technology Co.Ltd(002157) loss of 18.8 billion yuan, Wens Foodstuff Group Co.Ltd(300498) loss of 13.4 billion yuan, New Hope Liuhe Co.Ltd(000876) loss of nearly 9.6 billion yuan and Tech-Bank Food Co.Ltd(002124) loss of more than 4.4 billion yuan. The industry leader Muyuan Foods Co.Ltd(002714) , however, maintained profitability and achieved a net profit of 6.9 billion yuan in the whole year, which is mainly due to the company’s adoption of the business model of “full self-supporting, full chain and intelligent”, and the breeding cost is much lower than that of other enterprises.
It is worth noting that after experiencing the “cold winter”, the pig cycle has a bottoming trend. According to the data of the Ministry of agriculture and rural areas, the wholesale price of pork rose by 5.6% month on month this week, which has risen for two consecutive weeks. In addition, according to the data of China pig breeding network, since hitting a low of 11.78 yuan / kg in mid March, pork prices have rebounded by 25.8%, and the latest quotation on April 29 was 14.82 yuan / kg.
In addition, from the perspective of the futures market, the futures contract price due in September on April 29 was 18.56 yuan per kilogram, which to some extent reflected the market’s expectation that the pig price would rise to a reasonable range in the second half of the year.
“Zhumao” had a revenue of 78.89 billion yuan and a net profit of 6.9 billion yuan last year
On April 29, “Zhumao” Muyuan Foods Co.Ltd(002714) disclosed the annual report. Data show that in 2021, Muyuan Foods Co.Ltd(002714) achieved an operating revenue of 78.89 billion yuan, an increase of 40.18% year-on-year; The net profit attributable to shareholders of listed companies was 6.904 billion yuan, a year-on-year decrease of 74.85%. The company plans to distribute a cash dividend of 2.48 yuan (including tax) to all shareholders for every 10 shares.
During the reporting period, Muyuan Foods Co.Ltd(002714) mainly engaged in pig breeding and sales and pig slaughtering. In 2021, the company sold 40.263 million pigs, including 36.887 million commercial pigs, 3.095 million piglets and 281000 breeding pigs. In 2022, the company expects to sell 50 million to 56 million pigs.
In addition, throughout 2021, Muyuan Foods Co.Ltd(002714) slaughtered 2.899 million pigs in total, realizing a revenue of 5.42 billion yuan from slaughtering and meat business. By the end of 2021, the company’s slaughtering business has established 78 service stations in 22 provinces across the country, with more than 5000 customers from agricultural batch dealers, chain supermarkets, chain catering, food processing enterprises and new retail enterprises. A total of 6 slaughtering subsidiaries of the company have been put into operation, with a slaughtering capacity of 16 million units / year.
In terms of industry, other leading enterprises in the pig breeding industry recorded losses in 2021. Among them, Jiangxi Zhengbang Technology Co.Ltd(002157) lost 18.8 billion yuan in the whole year, while the profit in the same period of last year was 5.7 billion yuan Wens Foodstuff Group Co.Ltd(300498) lost 13.4 billion yuan in the whole year and made a profit of 7.4 billion yuan in the same period of last year New Hope Liuhe Co.Ltd(000876) lost nearly 9.6 billion yuan and made a profit of 4.9 billion yuan in the same period last year.
On the 29th, Muyuan Foods Co.Ltd(002714) also disclosed the first quarterly report. In the first quarter of 2022, the company’s revenue was 18.278 billion yuan, a year-on-year decrease of 9.30%; The net profit loss attributable to shareholders of listed companies was 5.18 billion yuan. At the end of the first quarter, the company’s monetary capital was 16.1 billion yuan, an increase of 31.12% over the beginning of the year, mainly due to the increase of cash inflow from financing activities in the current period.
In the first quarter of this year, enterprises in the industry generally suffered losses, including Wens Foodstuff Group Co.Ltd(300498) , New Hope Liuhe Co.Ltd(000876) , Jiangxi Zhengbang Technology Co.Ltd(002157) , Tech-Bank Food Co.Ltd(002124) , Leshan Giantstar Farming&Husbandry Corporation Limited(603477) , with losses of 3.763 billion yuan, 2.879 billion yuan, 2.433 billion yuan, 674 million yuan and 311 million yuan respectively.
will continue to implement the strategy of full self support, full chain and intelligence
It is understood that Muyuan Foods Co.Ltd(002714) adopts the self breeding mode and has formulated a series of standardized systems and technical specifications for various production processes in business links such as feed processing, breeding pig breeding, breeding pig expansion and commercial pig feeding. The full cost of the company was once reduced to less than 15 yuan / kg at the end of last year, which is the lowest in the whole industry.
In the context of the sharp rise in feed raw materials from January to February, Muyuan Foods Co.Ltd(002714) the complete breeding cost is still controlled at about 16 yuan / kg. In the next step, the company will reduce the dispersion of breeding achievements within the company and reduce the overall breeding cost by improving the operation of high-cost backward farms and subsidiaries, strengthening internal management and personnel empowerment training and other measures.
Pork is the main meat consumption variety of urban and rural residents in China. In 2021, 67.128 million pigs were sold in China, and the annual pork output was 52.96 million tons, accounting for 59.59% of the main livestock and poultry meat output. The industry market scale reached trillion. China’s pig breeding industry has been dominated by free range breeding for a long time. Although the scale of breeding has improved in recent years, the overall level is still low.
According to public data, the top five enterprises in China ( Muyuan Foods Co.Ltd(002714) , Jiangxi Zhengbang Technology Co.Ltd(002157) , Wens Foodstuff Group Co.Ltd(300498) , twins, New Hope Liuhe Co.Ltd(000876) ) listed a total of 9.04 million pigs in 2021, accounting for 13.41% of the total number of pigs in China, an increase of 4.19 percentage points over last year, and there is still room for large-scale breeding.
In order to comply with the trend of large-scale breeding of animal husbandry, the company will continue to implement the strategy of full self feeding, full chain and intelligence, further expand the operation scale of feed processing, breeding pig breeding, breeding pig breeding, commercial pig breeding, slaughtering meat and other production links, continuously improve the quality of pig meat and food safety standards, and let more people eat high-quality pork.
industry fundamentals improved and pork prices continued to rebound recently
Since the beginning of 2021, pork prices have entered the downward channel. According to the data of China pig breeding network, the price of live pigs (foreign three yuan) fell to a low of 10.63 yuan / kg in October last year, down 71% from the high of 36.94 yuan / kg in early January 2021. Subsequently, pork prices hit the bottom and rebounded for nearly two months, with a maximum of nearly 19 yuan / kg; Since December, pork prices have fluctuated and fell again, and hit a low of 11.78 yuan / kg in mid March 2022.
Recently, pork prices have ushered in a strong rebound. According to the data of China pig breeding network, on April 29, the price of domestic pigs (foreign three yuan) was reported as 14.82 yuan / kg, rebounding 25.8% from the low in mid March.
In addition, according to the data of the Ministry of agriculture and rural areas, the wholesale price of pork increased by 5.6% month on month this week, which has increased month on month for two consecutive weeks.
In addition, from the perspective of the futures market, the futures contract price due in September on April 29 was 18.56 yuan per kilogram, which to some extent reflected the market’s expectation that the pig price would rise to a reasonable range in the second half of the year.
At the end of the first quarter of 2022, there were 422.53 million pigs, down 6% from the end of 2021. Among them, there are 41.85 million breeding sows, a decrease of 1.05 million compared with the end of January.
A spokesman for the national development and Reform Commission said recently that China’s pig production capacity has gradually decreased since July last year. At the end of March this year, the number of sows capable of breeding was 41.85 million, which is in the green range of pig production capacity regulation. With the recovery of later consumption, pig prices are expected to gradually rise to a reasonable range Guoyuan Securities Company Limited(000728) also pointed out that the fundamentals of the industry have improved, and the pig market is on the way.
Shengang Securities said that the pig cycle is going through the dark moment, the channel of capacity de conversion is opened, and the pig price is expected to usher in an upward inflection point during the year. Most breeding enterprises expand rapidly when cash flow is abundant, consuming a lot of funds. Cash flow is not enough to support long-term losses, and the de industrialization of industry capacity will accelerate. Historically, the bottom of the cycle or the inflection point of the upward cycle is the best time to allocate the breeding sector. In recent rounds of pig cycles, the rise and fall of the stock price of the breeding sector is often more than half a year ahead of the change of pig price.
Tianfeng Securities Co.Ltd(601162) recently released research report pointed out that Muyuan Foods Co.Ltd(002714) capacity reserve is sufficient, laying a solid foundation for the company’s subsequent growth. By the end of March, the company has been able to breed 2.752 million sows. On the one hand, it lays a foundation for the growth of the company in the future. It is estimated that the company will sell 50-60 million and 60-70 million sows in 20222023; On the other hand, the company deeply cultivates the pig track and has excellent pig operation and management. It can flexibly adjust the sales rhythm of piglets and breeding pigs according to the market situation, thicken the profits and optimize the operating cash flow. Considering the cost advantage of the company, the future business cycle is high, the average profit is high, and the fulfillment degree of the company’s historical listing cost is high, continue to focus on recommendation.
Up to now, Muyuan Foods Co.Ltd(002714) share price is 52.23 yuan / share, and the latest market value is 278 billion yuan.
