Financial Union News reported on October 21st (Reporters: Liu Jian, Wang Ping'an) Against the backdrop of rising hog prices and falling breeding costs, Jiangsu Lihua Animal Husbandry (300761.SZ) maintained double-digit growth in hog and chicken sales in the first three quarters while also returning to profitability.

Tonight, Jiangsu Lihua Animal Husbandry released its third quarter report for 2024. In the first three quarters, the company achieved revenue of 12.684 billion yuan, a year-on-year increase of 13.65%; net income attributable to shareholders of the listed company was 1.161 billion yuan, turning around from a 0.285 billion yuan loss in the same period last year; basic earnings per share were 1.40 yuan. In particular, in the third quarter, net income was 0.586 billion yuan, a year-on-year increase of 91.02%.

Information shows that Jiangsu Lihua Animal Husbandry's main business is the breeding, slaughtering, processing, and sales of Huangyu broilers, as well as the breeding and sales of commodity pigs and geese. The company's main products include commodity Huangyu broilers, commodity pigs, and geese, making it the second largest Huangyu chicken breeding enterprise in the country.

Financial Union News reporters noted that the company saw a rapid growth trend in hog and Huangyu chicken sales volumes in the first three quarters. During the reporting period, the company sold 0.7916 million hogs, a 35.36% increase compared to the same period last year, and 0.376 billion chickens, a 12.24% increase from the previous year.

Specifically regarding the hog business, the rise in hog prices became an important factor contributing to the company's performance improvement in the first three quarters. Starting from May, hog prices have been steadily increasing, reaching a yearly high of 21 yuan/kg in August. The company's sales brief also indicated that the average selling price of hogs showed a monthly increasing trend during the reporting period, with only a slight decrease in September.

While hog prices were on the rise, the company also made progress in reducing hog breeding costs. According to the company, 'At the beginning of the year, due to the impact of regional epidemics at the end of last year, coupled with a small planned volume of slaughtered hogs in February, production costs were affected in the first quarter. The complete cost was around 17.6 yuan/kg in that quarter, returning to normal in the second quarter at 14.8 yuan/kg. With the increase in slaughter volume in the second half of the year, there is still a space of about 0.6 yuan/kg in the reduction of breeding costs in terms of depreciation and period expenses.'

It is worth mentioning that as of the end of June, the company had built commodity pig production capacity of around 1.8 million heads; there were 0.08 million breeding sows in inventory, which is expected to further increase in the second half of the year. It is estimated that over 0.8 million pigs will be slaughtered in the second half of the year, with a total annual slaughter expected to exceed 1.2 million. Based on the initial 9-month slaughter of 0.7916 million pigs, the company may need to slaughter over 0.4 million pigs in the fourth quarter.

Regarding Huang Yuji, from the sales briefing, although the sales price of the company's Huang Yuji did not show a significant increase from January to September, staying above 13 yuan/kilogram, the decrease in breeding costs expanded the profit space. According to the company's previous disclosure, 'The complete cost of a kilogram of chicken in the first half of the year was 6.1 yuan, a decrease of 13.48% compared to the same period last year; with the complete cost of a kilogram of chicken in the second quarter being 5.9 yuan.'

Looking ahead to the fourth quarter market, some analysts believe that overall in the fourth quarter, Huang Yuji enterprises still have profit space. 'Currently, Huang Ji enterprises are indeed reducing costs, whether they are large enterprises or small individual households, they are reducing the cost of raising chickens, and large enterprises have low costs this year with good profits. For large enterprises, in addition to cost reduction, companies are also continuously developing new product lines based on consumer demand, enhancing species performance, and appropriately sharing costs through scale.'