Matters:

Company announcement: In March 2024, the company sold 5.471 million pigs (including 4.937 million commercial pigs, 475,000 piglets, and 59,000 breeding pigs), of which a total of 855,000 pigs were sold to the wholly-owned subsidiary Muyuan Meat Food Co., Ltd. and its subsidiaries. From January to January 2024, the company sold a total of 16.011 million pigs, including 15.377 million commercial pigs, 597,000 piglets, and 107,000 breeding pigs. By the end of March 2024, the company had 3.142 million breeding sows.

Guoxin Agriculture's opinion: 1) The number of pigs released by Muyuan Co., Ltd. increased 9.4% year on year in March 2024, and the total number of pigs released from January to January 2024 increased 15.6% year on year, and the listing continued to grow steadily. 2) Muyuan Co., Ltd. is a benchmark pig enterprise with excellent management level, and the cost has remained the highest in the industry for a long time. From a value perspective, through continuous excess profits, the company is expected to continue to grow bigger and stronger in the future. 3) The company has sufficient production capacity reserves. The current pig breeding capacity is 80 million heads/year. It is expected that the release of pigs will continue to grow steadily in 2024. Furthermore, based on the self-breeding and self-raising model and the binary return breeding system accumulated over a long period of time, the company is expected to achieve a rapid increase in pig production capacity during the upward cycle, or benefit from the sharp increase in volume and price dividends brought about by the reversal of pig prices. 4) Risk warning: An uncontrollable pig epidemic death occurred in the industry, cost pressure brought about by an uncontrollable rise in raw food prices, and profit fluctuations caused by large fluctuations in pig prices. 5) Investment advice: The company is a leading benchmark in pig breeding. The management system continues to improve. Through continuous excess profits, the market share is expected to continue to increase, and key recommendations will continue. We maintain our profit forecast. We expect net profit to be 42.67/152.60 billion yuan and 25.182 billion yuan for 23-25. EPS is -0.78/2.79/4.60 yuan, respectively. Corresponding to the current stock price PE, it is -55/15/9 X, respectively, to maintain a “buy” rating.