① “Feed Brother” New Hope recorded a profit of 249 million yuan last year, a sharp decrease in losses over the previous year ② Affected by the continued slump in the pig market, the company recorded a loss of 1,934 million yuan in 2024Q1 ③ The company made some progress in reducing costs and increasing efficiency, and the full cost of fat pigs listed on the operating line reached 15.8 yuan/kg
Financial Services Association, April 30 (Reporters Liu Jian and Wang Ping An) Judging from the 2023 financial reports of listed pig companies that have been released so far, the vast majority of them experienced large losses, including Muyuan shares (002714.SZ) and Wen's shares (300498.SZ), but New Hope (000876.SZ), which had the third largest sales volume in China last year, bucked the trend and earned nearly 300 million dollars.
Yesterday evening, New Hope released its 2023 annual report. During the reporting period, the company achieved revenue of 141.703 billion yuan, an increase of 0.14% over the previous year; net profit attributable to shareholders of listed companies was 249 million yuan, an increase of 1,709 billion yuan over the previous year, and a loss reduction of 117.07%.
Specifically, the feed business is still the main support point for the company's performance. During the reporting period, the company sold 28.76 million tons of feed, achieving operating income of 81.279 billion yuan, an increase of 2.65% year on year, and net profit per ton increased nearly 7% year on year. Furthermore, the company performed well in overseas markets, and overseas market revenue increased 15.67% year over year. Earlier, the company said, “Currently, overseas sales volume is about 4.5 million tons per year. In the next two years, the company expects overseas feed to grow from 4.5 million tons to more than 6 million tons, and its overseas profit is expected to increase from 600 million to 700 million yuan to about 1 billion yuan.”
The pig breeding side has put some pressure on the company's performance. The domestic pig market was sluggish last year. It was the first full year of loss since 2014, and the breeding side was almost completely destroyed. During the reporting period, the company released 17.68 million pigs, an increase of 21% over the previous year; achieved operating income of 21.302 billion yuan; during the reporting period, a total of 3.96 million pigs were slaughtered, an increase of 36% over the previous year, and achieved operating income of 7.058 billion yuan, an increase of 6.01% over the previous year.
In fact, the company's profit did not come from the pig breeding sector. The company deducted non-net profit of 4.608 billion yuan during the reporting period. The company also previously stated, “The introduction of strategic investment in the company's white feather meat, poultry and food deep processing business affected the increase in net profit to the mother during the reporting period. The impact amount was about 5.1 billion yuan to 5.2 billion yuan. This project is an unrecurring profit and loss.”
It is worth noting that at the end of the cycle, the company is also seeking solutions. Last year, the company carried out a comprehensive reorganization and strategic adjustment of the business, not only introducing strategic investors into the whitefeather meat, poultry and deep food processing sectors, but also dealing with some idle production capacity, focusing on reducing costs and increasing efficiency, focusing on the two major industries of feed, pig breeding, and slaughter.
In fact, judging from the results, the company has indeed made some progress in reducing costs and increasing efficiency. By the end of the reporting period, the company's average PSY had recovered to 23.5; the cost of weaning had dropped to around 340 yuan/head, down 60 yuan/head from the fourth quarter of 2022; the cost of migrating sows had dropped to 2,700 yuan/head, down about 2,100 yuan/head from the beginning of 2022; the total cost of fat pigs released on the operating line reached 15.8 yuan/kg, down 0.9 yuan/kg from the fourth quarter of 2022, significantly narrowing the gap with excellent cost companies in the industry.
However, as the slump in pig prices continued into the first quarter of this year, the company's Q1 performance was still under pressure. According to the first-quarter report released by the company on the same day, the company achieved operating income of 23.908 billion yuan during the reporting period, a year-on-year decrease of 29.49%; net profit to mother was a loss of 1,934 billion yuan, and the balance ratio rose slightly to 74.03%.
Looking ahead to this year, pig production capacity will continue to decline, and the industry's supply and demand pattern is expected to improve. Muyuan Co., Ltd. and Wen's Co., Ltd. are all cautiously optimistic about the market in the second half of the year. Some industry insiders believe, “The improvement in the supply and demand pattern will drive the recovery of the market, and related pig companies are expected to get a good opportunity to recover profits. However, considering that the efficiency of sows is improving and that the breeding base is still high, pig prices may not be too high, and relevant pig companies still need to make financial preparations and reduce costs and increase efficiency.”
New Hope said, “The integrated layout of the company's industrial chain can help distribute operating pressure and hedge market risks. At the same time, it currently has sufficient capital reserves, and various financial institutions currently grant more than 100 billion yuan in credit.