Wen's Co., Ltd. recently stated during a roadshow that based on historical experience, the second half of the year is the peak season for meat consumption, and preliminary predictions are that pig prices in the second half of the year should be better than in the first half of the year. However, past experience also shows that once pig prices rise, secondary fattening participants, social capital, etc. enter the market one after another, which may have a certain impact on pig prices in the second half of the year.

According to Guolian Securities, a total of 145.987 million pigs were listed in the pig breeding sector in '23, an increase of 17.30% over the previous year. Driven by low pig prices, the overall revenue of the sector declined slightly by 1.48%, and the industry lost 13.6 billion yuan in '23. The bottom of pig prices has stabilized since February '24, and the industry continues to lose money but the margin has narrowed.

The balance ratio of the 24Q1 sector declined slightly, but remained relatively high. Most listed pig companies contracted production capacity, the productive biological assets of 24Q1 listed pig companies fell 7.87% year on year, and projects under construction fell 21.64% year on year.

Entering 2024Q1, although the market has not clearly escaped the cold winter, there are also quite a few positive signs. Pig prices are not weak in the off-season, prices of bulk agricultural products continue to decline, and overseas demand for pet food is growing steadily, etc., and the pace of cycle recovery may gradually gradually slow down.

Pig cycle breeding enterprises:

COFCO Jiajiakang (01610): COFCO Jiajiakang is betting on a rebound in pig prices to buck the trend and expand production. On April 18, COFCO Jiajiakang officially started construction of the 662,400 green and healthy pig breeding project in Taonan City, Jilin Province. The total investment of the project is about 10 billion yuan, and the entire green ecological pig breeding industry chain project of 3 million heads will be launched in installments. The first phase of the project will invest a total of 2,014 billion yuan to build a breeding base with 662,400 pigs per year and supporting ancillary facilities.

Wanzhou International (00288): Wanzhou International accounts for a high proportion of overseas business. CICC pointed out that Wanzhou's profit performance in the first quarter of fiscal year 2024 beat market expectations, mainly due to a marked decrease in losses in the US pork business. Revenue for the period fell 8.3% year on year; operating profit increased 37.3% year on year; core net profit to mother increased 73% year on year. Among them, the operating profit of the Chinese market fell 10.4% year over year. As for operating profit in the US and European markets, the year-on-year increase was 208.1% and 156.5%.