Financial News Agency, November 24 (Reporters Zhang Chenjing and Wang Ping An) High farming costs and debt ratios are higher than the industry average. The continued decline in Aonong Biotech's (603363.SH) performance in the first three quarters has raised concerns in the market. At the performance briefing held by the company today, Wu Youlin, chairman of Aonong Biotech, said that the company is currently investing through multiple channels, and the company's fixed increase is still under review. In addition to being used to repay the shareholders' own debts, the funds obtained from the majority shareholders' equity transfers will be used to finance and support listed companies.

As the “dark horse” of the rapid expansion of the farming industry in the past, Aonong Biotech is currently facing the double test of cost and capital under the “longest pig cycle.” In terms of farming costs, Aonong Biotech has always made few announcements. Previously, Aonong Biotech did not give a clear response on the interactive website. At today's performance briefing, in the face of questions from investors, the company still avoided talking about it.

Wu Youlin only said, “The company's pig breeding business has developed rapidly in the past two to three years. The reduction in pig breeding costs requires a certain amount of time and process. The company will continue to strengthen cost reduction and efficiency measures and strengthen management.”

However, according to the fixed capital increase response in September of this year, the company disclosed the average weight and cost of raising pigs, fattening pigs, breeding pigs, and eliminating pigs in the past 4 years.

According to relevant data estimates, the overall average cost of farming for the first six months of 2023 was 19.83 yuan/kg, and the costs from 2020 to 2022 were 28.51 yuan/kg, 26.30 yuan/kg, and 21.61 yuan/kg, respectively.

Through the above data, it can be seen that the company's farming costs have continued to decline in the past four years, but they are still significantly higher than the industry average. Long-term losses and “blood loss” are compounded by rising debt ratios. Market concerns are not without reason.

As of the Third Quarterly Report, the company's balance ratio reached 89.41%, and the company's short-term loans reached 4,051 million yuan, but the monetary capital was only 300 million yuan, and the net cash flow from operating activities was 661 million yuan, so there was a certain funding gap.

However, there is no “dawn” in pig prices, which have been sluggish for a long time. In the peak consumption season, pig prices continue to run at a low level, and market pessimism spreads. Today, the National Development and Reform Commission monitored that the national average pig food price ratio has been running between 5:1 and 6:1 for more than three weeks, and is in the second-level warning range for excessive decline determined by the “Plan for Improving the Government's Pork Reserve Regulation Mechanism to Secure Supply and Stable Prices in the Pork Market”. The Development and Reform Commission, together with relevant departments, will begin the third batch of central pork reserve collection and storage work within the year.

We cannot wait for pig prices to pick up. The fixed increase has not yet been implemented; we can only “save ourselves by breaking our arm.” In September of this year, Aonong Biotech announced the sale of a subsidiary in the breeding sector. In addition to this, the company recently issued an announcement stating that Chairman Wu Youlin plans to transfer no more than 152 million shares of the company in the near future, and that the transfer portion will not exceed 17.5% of the company's total share capital.

At today's performance meeting, investors are very concerned about the company's capital utilization. Wu Youlin responded to future countermeasures. First, make rational use of supplier accounts, make maximum use of account policies granted by suppliers under the conditions agreed in contracts, second, do a good job in financial institution credit management, increase corporate credit, and enhance loan renewal capabilities; third, transfer some assets to improve debt ratios, which will help reduce the company's debt ratio after equity settlement is completed. Finally, the company's feed and food business is profit-oriented, and pig farming is cost-oriented. The overall cost situation is improved through measures such as optimizing relatively inefficient units, appropriately reducing storage size, and leaning resource allocation towards regions or teams with cost advantages and management advantages. Furthermore, the majority shareholders of the company have disclosed proposed agreements to transfer shares, and in addition to repaying shareholders' own debts, the proceeds will be used to finance and support listed companies.