Financial Associated Press, October 24 (Reporter Zhang Chenjing and Wang Ping an)Since the beginning of this year, the "meat king" Shuanghui Development (000895.SZ) pig slaughtering scale has increased, and continued to maintain business income and performance growth in the first three quarters. However, the increase of frozen goods inventory led to the continuous growth of the company's inventory, which reached 7.781 billion yuan as of the third quarter, and the net cash flow generated by the company's operating activities decreased compared with the same period last year.

Today, Shuanghui Development released a third-quarter report that the company's total external sales of meat products in the first three quarters were 2.4707 million tons, up 6.32 percent from the same period last year. The operating income was 46.193 billion yuan, an increase of 3.73% over the same period last year, and the attributable net profit was 4.327 billion yuan, an increase of 6.43% over the same period last year. In the third quarter, the company achieved operating income of 15.766 billion yuan, down 5.2% from the same period last year, and net profit attributable to 1.491 billion yuan, an increase of 11.62% over the same period last year.

Pork as an important part of raw materials and fresh products of Shuanghui Development Company, the annual frozen product strategy of the company may directly affect the cost of the company's main business. Pork prices remain low this year, and the pig industry continues to lose money. According to the past practice of the industry, the situation of slaughtering and frozen goods enterprises has increased when pig prices are low.

Since the beginning of this year, the inventory amount of Shuanghui development has continued to grow. According to the three-quarter report, the inventory amount has reached 7.781 billion yuan, an increase of 27.11% over the end of last year. Shuanghui Development said in its financial report that the slaughtering scale of the Group expanded and the inventory of frozen goods increased during the reporting period. However, the increase in frozen goods inventory will occupy the enterprise's cash flow. In the first three quarters, the net cash flow generated by Shuanghui's development and business activities decreased by 39.26% compared with the same period last year.

It is worth mentioning that the company's long-term and short-term borrowing increased significantly, with short-term borrowing rising to 11.269 billion yuan in the third quarter, an increase of 258.05% over the end of last year; the company rarely increased its long-term borrowing to 962 million yuan, and its asset-liability ratio increased to 51.07% from 39.08% at the end of last year. As for the increase in borrowing, Shuanghui Development said that during the reporting period, the company periodically replenished working capital and increased bank borrowing according to the needs of fund management and production and operation.

People in the industry told the Financial Associated Press that the market is off-season after the Spring Festival, and slaughtering enterprises often kill pigs for storage from March to May and store them for half a year. The lower pig prices in the first quarter of this year have strengthened this seasonal effect, but this year's frozen goods consumption has declined and the carrying capacity is limited. At present, the general storage capacity of the market is higher than that of the same period, enterprises occupy more funds, and inventories remain high.

As the leader of traditional meat products, Shuanghui Development has been hoping that the prepared food business will become a new profit growth point for Shuanghui's development in the past two years. Recently, Shuanghui's development once again emphasizes the need to increase the size of the quick-frozen track, and the development of new business has also become the focus of investors. Today, Shuanghui Development said that prefabricated food business accounts for a small proportion of the company's overall revenue, and the company has set up a professional team to promote the development of prefabricated food business.