Xinhua Finance and economics, Beijing, January 19 (reporter Cui Lu, Yuan Bo, LV Guangyi) - with the end of the last round of pig cycle, pork prices have shown a "cliff like" decline since the second half of 2021, bringing great pressure to China's pig breeding industry. Some pig enterprises said that in 2021, the breeding cost increased, the production efficiency decreased, and the overall operation was difficult. Looking forward to 2022, large-scale pig enterprises will find new profit growth points by tapping potential internally and extending to the downstream industrial chain. In this issue, Xinhua Finance entered New Hope Liuhe Co.Ltd(000876) Liuhe, Muyuan Foods Co.Ltd(002714) and Jiangxi Zhengbang Technology Co.Ltd(002157) to have an exclusive dialogue with the board secretary on the production and operation direction and book cash flow in the new year to explore the survival and development space of pig enterprises.
Q: what is the company's business development plan for 2022 and whether there is a specific production expansion plan?
Wens Foodstuff Group Co.Ltd(300498) Dong Mi Mei JinFang told Xinhua Finance and economics that the loss of the pig sector was mainly due to the substantial increase in industrial output and supply, and the superposition of covid-19 epidemic weakened consumption. "In recent years, the industry generally believes that African swine fever has not had much impact on the recovery of China's pig output, so they are increasing their output. A large number of inputs have led to a cliff like decline in pig prices from April 2021. When buying pig seedlings in February and March, the price of pigs is still very high. After six months of cultivation, pigs are not as expensive as pig seedlings, which is equivalent to white breeding and loss." He also stressed that with the weakening of the impact of African swine fever, the production rate of Wen's pig business is gradually recovering. The number of pigs sold in 2018 is 22.29 million. It is expected that the number of pigs sold in 2021 will be between 12 million and 13 million, and 17 million to 18 million in 2022. By the end of 2022, there will be a chance to recover to the output of the same period at the end of 2018.
Bai Xubo, representative of Liuhe securities affairs, said that for New Hope Liuhe Co.Ltd(000876) , it is necessary to maintain the existing capacity scale in 2022, focus on improving internal skills, improve production efficiency and reduce production costs, and strictly control the investment in new capacity. In terms of output, the number of pigs will increase by a certain margin in 2022. However, this growth is more based on the existing production capacity. By improving the production efficiency, the production full load rate, sow production performance, fat pig weight gain efficiency and other indicators are improved. This increase in output is not simply due to the expansion of market share, but helps to reduce the allocation of various asset inputs, so as to reduce the breeding cost.
Muyuan Foods Co.Ltd(002714) Secretary Qin Jun said that now muyuan has farms in 25 provinces (cities and autonomous regions) across the country, and there will be some increase in slaughter in 2022, mainly due to the release of new farms in 2021, because there is a cycle from piglets to slaughter. There will be some production expansion plans in 2022, but the rhythm will be grasped according to the market situation. In the future, the breeding scale of muyuan will be expanded to about 100 million.
Q: what is the prediction of pork price trend next?
New Hope Liuhe Co.Ltd(000876) Bai Xubo, representative of Liuhe securities affairs, believes that the whole industry is still at the bottom of the cycle in 2022. It is expected that after the Spring Festival, the pig price will first appear a downward trend, reach the lowest point of the year in the middle of the year, and may usher in a reversal of trend and turn into the upward range by the end of 2022.
Muyuan Foods Co.Ltd(002714) Dong Secretary Qin Jun also added: "now the pork price is basically in the bottom area. Before the Spring Festival, even if the price is not high, the quantity will be very large. But after that, it does not rule out a seasonal decline, or a decline to 12 yuan / kg, or even more extreme." He also made a judgment based on the existing data that the pork price will improve in the second half of 2022.
Wens Foodstuff Group Co.Ltd(300498) Dong Mi Mei JinFang pointed out that with the arrival of the traditional consumption peak season of the Spring Festival, the price of pigs is not prosperous in the peak season and the price continues to decline. As for the trend of pork price in 2022, he said that due to the demand of pig breeding enterprises to reduce production capacity, the pork price will still be at the low point of the cycle in the first half of 2022 and may improve in the second half of 2022. On the whole, the pork price will remain low for most of the year. Therefore, Wen's will increase the number of sows by 10% every month in early 2021, To grasp the possible upward cycle in 2022.
Q: what is the current cash flow of the company and whether there is a phenomenon of double high deposit and loan?
The market is concerned about the cash flow position of Wens Foodstuff Group Co.Ltd(300498) . Dong Meijin responded: "In fact, the production capacity of Wen's pigs is close to 40 million. In addition to African swine fever and market conditions, another factor affecting production capacity and yield is capital capacity. Compared with September and October 2020, the enterprise has passed the difficult period of capital. At present, the capital on the account exceeds 10 billion yuan, which can provide support for the next round of increasing production capacity and reducing liabilities. It is reported that , the main sources of cash flow of more than 10 billion yuan are bank loans, enterprise convertible bonds, corporate bonds, US dollar bonds and supply chain finance. In response to the question of double high deposit and loan, Mei JinFang said: "at present, the company's deposit amount and loan amount are really high. There are two main reasons: first, the industry is at a low ebb and profits are at a loss. In order to stabilize the operation of the enterprise, it needs to borrow and increase loans; Second, it is expected that the industry's trough and loss will continue for some time. In order to cope with the increasing capital demand in the future, deposits will be increased in advance. But these are reasonable.
New Hope Liuhe Co.Ltd(000876) Liuhe said that the company successfully issued 8.15 billion yuan of convertible bonds in November 2021, and the current cash flow situation is good.
In 2021 Muyuan Foods Co.Ltd(002714) fell into a whirlpool of public opinion due to a series of events such as overdue commercial tickets and rating outlook. The company said that it was normal for the market to pay attention to cash flow and raise questions. At present, although the cash flow is tight, 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, it is enough to deal with the bottom of the current "pig cycle", and the company does not have the phenomenon of double high deposit and loan.
