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Financial Services Association, July 5 (Reporters Liu Jian and Wang Ping An) Since the second quarter, pig prices have continued to rise, and profits on the farming side have improved markedly. Among them, New Hope (000876.SZ) expects to achieve a profit of about 0.735 billion yuan in the second quarter. Looking ahead to the second half of the year, the Finance Association reporter interviewed industry insiders and learned that in the second half of the year, against the backdrop of an upward pig cycle, there is still room for improvement in breeding side profits, and the annual performance of major pig companies is still supported.

This evening, New Hope released its 2024 semi-annual results forecast. It is expected to achieve a net loss of 1.2 billion yuan, a year-on-year reduction of 59.77%. According to the first quarterly report, the company achieved a net loss of 1.934 billion yuan in Q1. Based on this estimate, the company achieved a profit of about 0.734 billion yuan in a single quarter in the second quarter. This is also the first time that the company has achieved profit in a single quarter after losing for 5 consecutive quarters.

A CIFA reporter noticed that the continued rise in the pig market was the main factor in the company's profit in Q2. According to Choice data monitoring, pig prices have risen significantly since March, and during some periods of time they even approached the high of 19 yuan/kg.

New Hope also stated in the performance forecast, “The pig market picked up in the second quarter, and pig prices rose compared to the same period. Combined with improvements in the company's production and management, breeding costs declined steadily. The profit for a single quarter is expected to be about 0.75 billion yuan, reducing the overall performance loss for the first half of the year by more than 50% year-on-year.”

In fact, it can also be seen from the company's sales briefing that the recovery in pig prices supported the company's performance improvement. In January-June, the company sold 8.6886 million pigs, achieving sales revenue of 1.348 billion yuan. Its average monthly sales price showed a clear month-on-month upward trend, reaching 18.07 yuan/kg in June, up more than 4.77 yuan/kg from January.

It is worth noting that the continued decline in breeding costs has also provided important support for the company's performance. The company stated at the performance briefing on June 25, “Up to now, the total cost of listing fat pigs on the operating line has dropped to 14.7, and according to this trend, it can drop below 14.2 by the end of the year.”

Looking ahead to the second half of the year, from December 2022 to March 2024, the cumulative decline in breeding sows reached 9.1%. Judging from the historical review, an 8%-10% reduction in each pig cycle is enough to support a new round of price increases. In an interview with a reporter from the Financial Federation, an industry insider pointed out, “Pig prices continued to rise in the first half of the year. Coupled with the continuous decline on the cost side, there was a marked improvement in profits on the pig breeding side. The breeding side has already overcome the loss situation that continued for more than a year earlier. At present, a new pig cycle has begun to rise. It is expected that pig prices will continue to rise in the medium term, and there is still room for improvement in profits on the breeding side. The profits of major pig companies during the year are still quite worth looking forward to.”