Financial Services Association, May 28 (Reporters Liu Jian and Wang Ping An) Recently, the Shenzhen Stock Exchange issued inquiry letters to a number of breeding companies, including Pig “Mao” Muyuan Co., Ltd. (002714.SZ), which attracted attention from the farming industry. Makihara Co., Ltd. said in its response that the company's profits will improve. According to multiple interviews and data published by Muyuan Co., Ltd., and cost estimates, the financial news agency reporter may achieve a profit of 17.704 billion yuan to 20.584 billion yuan in 2024.

Specifically, yesterday evening, in response to an inquiry letter from the Shenzhen Stock Exchange, Muyuan Co., Ltd. stated, “In the future, as the industry cycle improves, the company's operating performance improves and profit levels increase, the company will gradually reduce the level of leverage and continue to optimize its financial structure on the basis of steady management. Furthermore, as the pig market improves and costs fall, the company's profitability and cash flow are expected to improve significantly.”

In fact, pig prices have continued to pick up since April, and some pig companies, such as Wen's Co., Ltd. (300498.SZ) and New Hope (000876.SZ), have begun profit models.

In an interview with reporters, some analysts said, “According to monitoring, since the second half of March, self-breeding has basically turned a loss into a profit, and profits have now rebounded to 282 yuan/head; outsourced piglets have turned a loss into profit since the beginning of March, benefiting from the low price of piglets 5 and a half months ago. Currently, profits from outsourced piglets fattening have risen to 414 yuan/head, and the breeding side has broken out of the loss situation that continued for more than a year earlier. Along with the continuous improvement of pig supply and demand, pig prices are expected to rise in the medium term, and there is still room for improvement in breeding side profits.”

Looking ahead to the market, as of May 27, the average price of pigs in the country had reached 16.89 yuan/kg. In an interview with reporters, a number of analysts said that the low point of pig prices in 2024 may have passed, and the high point may be from July to September, but the exact height will depend on market sentiment. The rest of the year will generally fluctuate within the 16 yuan/20 yuan/kg range.

A Finance Association reporter noticed that Muyuan Co., Ltd. had already listed 24.161 million pigs in the previous 4 months. Earlier, the company said it expected to sell 66 million heads to 72 million heads this year, and that the total breeding cost target is 14 yuan/kg. The reporter made a rough estimate. Without considering the impact of piglets, if the average pig value is estimated at 18 yuan/kg, the company has 41.839 million heads to 478.39 million heads. Based on the calculation of 120 kilograms per pig, the remaining profit during the year may be 20.083 billion yuan - 22.963 billion yuan.

According to the first quarter financial report of Muyuan Co., Ltd., the company achieved a net loss of 2,379 billion yuan in Q1. However, the company previously stated that the full cost of pig breeding in April was 14.8 yuan/kg, and the sales report showed that the company's average sales price in April was 14.8 yuan/kg. Based on this estimate, the company achieved break-even in April, achieved a net loss of 2,379 billion yuan in the first four months, and a profit of 17.704 billion yuan to 20.584 billion yuan for the whole year.