As the meat business platform of COFCO Group, COFCO Home Good Health's imported meat business has become a wind vane for the industry to some extent.

COFCO Home Good Health Product Revenue Structure

The company's recent interim results announcement shows that in the first half of 2021, its meat import sales dropped to 75,000 tons from 175,000 tons in the same period of the previous year, while its domestic sales of fresh pork rose from 51,000 tons to 65,000 tons. The gap between the two parts of the sales has been significantly reduced.

It is important to note that COFCO's meat imports include not only pork, but also beef, poultry, lamb and by-products. Beef was once its largest imported meat product.

In terms of contribution to profit, its meat import business turned a profit in the first half of the year, while its fresh pork business still had a small loss. Specifically, its meat import business revenue (including internal sales) fell from 4.85 billion yuan in the same period last year to 2.039 billion yuan, profit from a loss of 100 million yuan to a profit of 132 million yuan.

In this regard, COFCO Jiajiakang explained that the company's import business to strengthen market research and judgment, increased the proportion of back-to-back lock single, strict control of market risk. At the same time, the company realized a full range of value-added meat import business: sales, focusing on key regions and channels, end-type customers (corporate customers, restaurant customers and retail customers) to 75% of the revenue; categories, imported chilled beef to complete the whole grade from Wagyu beef to grass-fed coverage, to meet the needs of different customer segments; production, in close cooperation with the meat division, to provide customers with the whole industry chain value-added services. The company is also working closely with the meat products division to provide customers with value-added services across the entire industry chain.

It is understood that in the first half of 2021, China's pork imports (excluding by-products) were 2.3 million tons, an increase of 8.5% year-on-year, accounting for about 8.5% of the national pork production; beef imports (excluding by-products) were 1.13 million tons, an increase of 13.7% year-on-year, accounting for about 38.8% of the national beef production.

But for overall contribution, it was its hog farming business that made the biggest difference. The segment's first-half revenue (including internal counterpart sales) was 4.226 billion yuan, generating a profit of 1.596 billion yuan, compared with 2.76 billion yuan and 1.761 billion yuan, respectively, in the same period a year earlier.

In the first half of the year, COFCO Jiajiakang farrowed 1,672,000 hogs, up 108.7% year-on-year. Its commercial hogs were slaughtered at an average weight of 115.7 kilograms per head, with an average sales price of 23.44 yuan per kilogram.

By the end of June, its hog breeding capacity had reached 6.021 million head, with 330,000 breeding and reserve breeding stock (including breeding boars), reaching the designed capacity scale. The company is also continuing to expand its core herd, introducing more than 1,500 Danish purebred pigs in April this year.