China News Network, March 3 (Zhongxin Financial Reporter Xie Yiguan) Listed pig enterprises that are still in the "cloud" of losses in 25 will finally "raise their eyebrows" in 2021. Judging from the 2022 performance announcement of listed pig enterprises, the performance of most pig companies has improved significantly, and the revenue scale of some enterprises has even exceeded the 2022 billion mark for the first time, but there are also pig enterprises that are deeply in the "quagmire" of losses.

Since 2023, pig prices have continued to be low, where will pig companies go?

Infographic. Photo courtesy of Changchun Customs

Most listed pig companies "pick up"

According to the performance forecast previously released by Makihara Co., Ltd., it is expected that the revenue in 2022 will be 1220 billion yuan to 1270 billion yuan, and the net profit attributable to shareholders of listed companies will be 120 billion yuan to 140 billion yuan, an increase of 73.82% to 102.79% over the same period of the previous year.

With revenue exceeding 100 billion yuan and net profit exceeding 10 billion, "Pig Mao" Makihara shares have firmly occupied the throne of "performance king" with proud performance.

Another "leading pig enterprise" Wenshi Co., Ltd. preliminary accounting shows that in 2022, the net profit attributable to shareholders of listed companies will be 52.2 billion yuan, compared with the loss of 2021.134 billion yuan in <>, successfully turning losses into profits.

From the perspective of net profit growth, at present, pig enterprises such as Wen's shares, Tianbang Food, Luoniushan, and Xinwufeng are expected to more than double year-on-year.

However, there are also pig enterprises that have not got rid of the loss situation. For example, New Hope expects a net profit loss attributable to shareholders of listed companies of 2022 million yuan to 4 million yuan in 1, but the loss has been greatly alleviated compared with the same period last year.

Zhengbang Technology, a "big pig farmer" that was in turmoil last year, is still mired in huge losses, and it is expected that the loss in 2022 may reach 110 billion yuan to 130 billion yuan. At present, Zhengbang Technology has started the pre-restructuring, but there is uncertainty about whether it can enter the restructuring process, and there is also a risk that Zhengbang Technology's shares will be terminated.

Why are listed pig enterprises performing well

Talking about the reasons for the change in performance, many listed pig companies mentioned that the average pig sales price in 2022 increased year-on-year.

Looking at pig prices in 2022, the first quarter was affected by seasonal consumption off-season and high supply, and pig prices performed sluggishly. Entering the second quarter, the supply of live pigs tightened and pig prices began to rise. From late June to early July, pig prices experienced a wave of rapid rise, and after mid-July, they entered a stable and slightly rising plateau, and after November, there was a small correction.

Data map: A supermarket in Taiyuan, Shanxi, consumers are buying pork. Photo by Zhang Yun, reporter of China News Agency

Overall, pig prices will first decline and then rise in 2022, and the performance of many pig enterprises will also recover.

"Last year, pig prices fluctuated relatively large, before low and then high, most pig enterprises annual profits are near the cost line, lower cost enterprises have achieved profits, higher cost enterprises still have losses." Feng Yonghui, an analyst at China Pig Early Warning Network, told Zhongxin Financial Reporter.

Another factor contributing to the growth of most pig companies is pig sales. Judging from the financial report, many pig companies will press the "accelerator button" in 2022.

Among them, the three major pig giants of Makihara Co., Ltd., Wens Co., Ltd. and New Hope Co., Ltd. sold 6120.1 million pigs, 1790.86 million and 1461.39 million pigs last year, respectively, an increase of about 52%, 35.49% and 46.46% year-on-year.

Launch a sprint to low cost, pig enterprises set goals

New Hope once said in response to investor inquiries that since the great development of the pig industry in 2019 and 2020, major enterprises have suffered to varying degrees due to the rapid expansion of pig farms, pig herds and team management scales, resulting in relatively insufficient production management capabilities, sudden increases in breeding costs, and weak profitability.

Under the background of rising feed raw material prices and "pig cycle", cost control, as a major factor affecting the performance of pig enterprises, is also being paid attention to by more and more pig enterprises.

As Dongxing Securities said, it is most critical to grasp the certainty of cost in the context of pig price uncertainty, and enterprises that occupy cost advantages have higher performance growth flexibility and investment value.

Judging from the disclosure of listed companies, in 2023, pig companies have launched a sprint to lower costs.

Zhang Banghui, chairman of Tianbang Food, previously said that Tianbang Food will challenge the goal of fattening pigs with a cost of less than 5 yuan / jin and weaning piglets with a cost of less than 200 yuan / head in the future.

If Tianbang Food succeeds in the challenge, it is expected to become the pig company with the lowest breeding cost, and the position is currently occupied by Makihara shares. Makihara recently revealed that the current complete cost of the company's commercial pigs has been less than 15.5 yuan / kg, and there is still room for the cost of pig breeding to decline in 2023.

What will be the performance of listed pig companies in 2023?

Although pig enterprises continue to improve breeding efficiency and reduce breeding costs, since the beginning of the year, pig prices have continued to be at a low level, bringing some uncertainty to the performance of pig enterprises in 2023.

Screenshot from the Information Center of the Ministry of Agriculture and Rural Affairs.

In Feng Yonghui's view, since the beginning of this year, although the pig price is in a low position, it is still close to the cost line overall, and even if it loses, it is much less than the same period last year. "And the increase in the capacity of breeding sows in the second half of 2022 is small, and the impact on the overall pig market this year is relatively limited."

The number of breeding sows is an important indicator to judge the trend of the pig market. According to Zeng Yande, chief agronomist and director of the Department of Development Planning of the Ministry of Agriculture and Rural Affairs, the number of breeding sows in the country at the end of December 2022 was close to 12 million, slightly higher than the upper limit of green and reasonable areas for capacity regulation.

From the perspective of recent deployment, the Ministry of Agriculture and Rural Affairs will also strengthen the regulation of pig production capacity as the next key work. In the "Implementation Opinions of the Ministry of Agriculture and Rural Affairs on Implementing the Key Work Deployment of the Party Central Committee and the State Council for Comprehensively Promoting Rural Revitalization in 2023" issued not long ago, it is clear that the assessment of pig production capacity regulation and control work will be carried out to ensure that the number of breeding sows remains in a reasonable area of about 4100 million.

"On the whole, pig prices are expected to remain volatile this year, with average prices above the cost line, slightly higher than last year." Feng Yonghui said that this year's listed pig enterprises continue to achieve profitability or there is little problem. (End)