Three mid-sized companies see their earnings increase by more than 10 times; leading firms begin piloting pig farming in residential buildings.
Release time： 2020-07-30
Recently, the tiered system of Sichuan Litian Animal Husbandry Co., Ltd. Pig farm It has been completed and put into operation in Dazhou City. However, raising pigs in multi-story buildings is not a new concept—it has already gained momentum across various regions in recent years. In December 2019, the Ministry of Natural Resources and the Ministry of Agriculture and Rural Affairs jointly issued the “Notice on Relevant Issues Concerning the Management of Land for Facility Agriculture,” explicitly stating that multi-story buildings are permitted for the construction of livestock facilities.
Currently, leading pig farming enterprises such as New Hope and Wens Foodstuff Co., Ltd. have begun to experiment with multi-story pig farms. Compared to traditional pig farming methods, multi-story pig farming can significantly save land and labor, facilitate unified management and large-scale operations, and is particularly suitable for regions lacking sufficient farmland for livestock raising. However, the construction costs are relatively high.
A relevant official from New Hope stated that when planning the pig-farming-in-high-rise project, cost is the primary consideration. If local hog prices are high, it’s okay to increase fixed-asset investment somewhat—after all, we can proceed with the planned high-rise pig farm.
As we enter the interim report disclosure period, leading pig farming companies are all posting impressive financial results. Three companies—Muyuan Shares, Xinwufeng, and Dabeinong—are expected to see their net profits for the first half of this year increase by more than 10 times at the upper limit. In addition, several pork-themed stocks—including Zhengbang Technology, Tiankang Bio, Tangrenshen, and Tianbang Shares—are forecasted to achieve year-on-year net profit growth rates exceeding 100% in the first half of the year. Aonong Biotech’s interim report shows that its net profit attributable to shareholders has surged by over 15 times.
Tangrenshen, which just released its 2020 interim report last night, reported that its net profit for the first half of the year increased by 859.06% year-on-year, primarily due to the 2020 birth... Pig prices It is showing a sustained upward trend.
Today, CICC issued a statement noting that, compounded by the COVID-19 pandemic, China's live pig slaughter volume in the first quarter of 2020 fell to 131 million heads—a near-decade low—due to the outbreak of African swine fever. Pork prices remain high against the backdrop of tight supply.
It is projected that in 2020, the number of live pigs marketed will decline by 22% year-on-year, and pork production will drop by 11% year-on-year. From the demand side, if consumer demand recovers to the level of the same period in 2019 in the second half of the year, the supply gap for pork in the third quarter will be significant.
Regarding the recent pullback in the agricultural sector that has followed the broader market, China Merchants Securities commented that for the most advanced, industrialized, and closed-loop pig farming enterprises, performance over the next six to eight quarters will likely continue to show substantial quarter-on-quarter growth. The recently released interim reports are just the beginning.
Currently, the cost center in the live pig farming industry has risen from the previous range of 13–15 yuan/kg to 18–20 yuan/kg. As a result, there is limited room for pig prices to fall significantly. A small number of companies that boast exceptionally low costs and rapid expansion rates can expect their profitability to remain high over the next few years, ushering in an era of weaker profit cycles. With further data releases, leading companies are poised to drive the sector toward a valuation-recovery rally.
It is argued that certainty and consistently industry-leading cost advantages will be the primary focus of investment. We strongly recommend paying close attention to leading companies—such as Muyuan Foods—that have already achieved stable control over African swine fever, are experiencing sustained high growth in pig shipments, continuously optimizing costs, and are poised for future development in integrated, closed-loop industrial farming. We also suggest focusing on COFCO Meat, a regionally integrated leader whose disease prevention and control efforts have demonstrably improved and which remains undervalued.
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