Financial Services Association, April 1 (Reporters Liu Jian and Wang Ping An) The production capacity of Superstar Agriculture and Animal Husbandry (603477.SH) has continued to expand since 2020, but due to the external environment where the pig market continued to be sluggish last year, the company experienced its first loss since listing.

In fact, against the backdrop of a sluggish cycle, some listed pig companies began reducing production capacity last year, and the continuous expansion route of superstar agriculture and animal husbandry inevitably aroused investors' curiosity. At today's 2023 annual results meeting, the company's chairman Duan Lifeng revealed the company's future plans. “The company will expand production capacity through leasing, acquisition, construction and expansion of pig farms to achieve the goal of listing more than 10 million heads.”

In the short term, against the backdrop of a growth rate of over 70% for three consecutive years, the company's Dechang Superstar Pig Breeding Integrated Project was put into operation this year, which is expected to drive the company to further increase its sales volume this year. Regarding the progress of the project, Duan Lifeng said, “The Dechang Superstar Pig Breeding Integrated Project is currently progressing in an orderly manner. It is expected that full production will be reached within this year.”

According to research reports, it is expected that in the context of the company's early construction of sow farms and the implementation of new leased sow production capacity, the future growth of the company's pig production will be fully guaranteed: we expect the company to release pigs in 2024-2025, which is expected to reach 4 million or 7 million heads.

It should be noted that in the context of rapid expansion of production capacity, the demand for cash flow from listed companies has also attracted investors' attention. As of the end of 2023, the company's balance ratio was 59.85%, compared to 48.85% at the end of the previous year; short-term loans were 1.153 billion yuan, an increase of 124.90% over the end of the previous period, and the monetary capital on the account was 446 million yuan.

In response to this, some investors bluntly asked at the results meeting. If pig prices continue to be sluggish, how can the company ensure abundant cash flow and smooth operation? Duan Lifeng said, “The company will strengthen asset-light production expansion methods; strengthen production management to improve farming efficiency, reduce farming costs, and improve healthy cash flow; strengthen fund management and cost control, and supplement operating working capital in due course through various financial channels such as banks.”

Looking ahead to this year, as of the end of February, the number of sows that can be raised nationwide was 40.42 million, down 0.6% from the previous month, down 0.6% from the previous month; the year-on-year decline was 6.9%, with a year-on-year decline for 8 consecutive months. Continued decline in production capacity is expected to drive the gradual recovery of the market and spur the performance of pig companies to break out of the vortex of losses. Some industry insiders pointed out, “The overall situation is expected to gradually shift to a basic balance of supply in the second half of the year.”

Duan Lifeng, on the other hand, believes, “There is a reversal in the market in 2024. In the future, the company will obtain profits by reducing costs, etc.”

According to public information, in 2023, Superstar Agriculture and Animal Husbandry achieved revenue of 4,041 billion yuan, an increase of 1.83% over the previous year; net loss of 645 million yuan; net profit returned to mother last year of 158 million yuan, which turned profit and loss over the previous year.