According to Financial Associated Press on January 8 (Reporters Zhang Chenjing and Wang Pingan), benefiting from the upward trend of the pig cycle, the leading hog farming company, Muyuan Foods (002714.SZ), is expected to turn profitable in its 2024 performance with net income projected to exceed 17 billion yuan year-on-year.

This evening, Muyuan Foods released its 2024 performance forecast, estimating a net income of 17 billion to 18 billion yuan for the year. The company stated in the announcement that the performance changes are mainly due to the increase in hog slaughter volumes and average selling prices compared to the same period last year, as well as the decrease in hog farming costs compared to last year.

As the slaughter volume continues to increase, the company's revenue has reached a new high. According to the latest sales brief, in 2024, Muyuan Foods sold a total of 71.602 million hogs, including 65.477 million commodity hogs, 5.659 million piglets, and 0.465 million breeding hogs, achieving the annual slaughter target set at the beginning of the year of 66 million to -72 million heads, with hog sale revenue of 136.225 billion yuan. Based on sales brief calculations, the company's average selling price for 2024 is about 16.30 yuan/kg, a year-on-year increase of 12.70%.

At the same time, Muyuan Foods has gradually reduced costs, broadening its profit margin. Reporters from Financial Associated Press learned from Muyuan Foods that since the beginning of the year, the total cost of hog farming has shown a continuous downward trend, with the cost in December last year already dropping to about 13 yuan/kg, down 2.8 yuan/kg from the beginning of the year, reaching its lowest level in recent years, primarily due to reduced fodder prices and improved production results. Currently, the complete cost of superior farms has dropped to 11.38 yuan/kg, and with ongoing replication and promotion of experience in other farms, it is hoped to achieve a cost target of 12 yuan/kg by 2025, not considering fluctuations in fodder raw material prices.

In addition, production indicators of Muyuan Foods have further improved. It is understood that the PSY (the number of weaned piglets provided by each sow per year, an important indicator of pig farm efficiency and sow reproduction performance) in November was above 29, with a survival rate close to 86%, the daily weight gain of fattening pigs exceeding 800g, and the feed-to-meat ratio around 2.8.

In 2024, the reduction in hog production capacity is gradually being realized, with overall hog prices showing a trend of rising first and then falling, and the supply-demand situation has improved compared to 2023, putting hog farming companies with cost advantages "in a favorable position." Recently, Wens Foodstuff Group (300498.SZ) forecasted its 2024 revenue to exceed 100 billion yuan, with net profit expected to be between 9 billion and -9.5 billion yuan.

However, looking at the breeding sow inventory, hog supply is expected to gradually rebound in the first quarter of 2025. According to data from the Ministry of Agriculture, China’s breeding sow inventory is expected to reach a low point of 39.86 million heads in April 2024, followed by a consecutive seven-month rise month-on-month. As of the end of November 2024, the national breeding sow inventory stood at 40.8 million heads, the highest inventory since 2024. Based on the assumption that commodity hogs are slaughtered in 10 months, this theoretically corresponds to a continuous increase in hog slaughter volumes from March to September 2025.