Benefiting from the rebound in the pig market, Muyuan Shares (002714.SZ), which has suffered losses for four consecutive quarters, has made a single-quarter profit, with an average daily profit of nearly a "small target." As pig prices return to an upward trend, Muyuan Co., Ltd. restarted its breeding production capacity of 6 million heads in Q3. Some institutions predict that the company's pig breeding production capacity will reach about 75 million heads by the end of this year, and its pig breeding capacity is expected to reach 80 million heads in 2023.
According to Muyuan’s third quarter report, the company’s net profit in the third quarter was 8.196 billion yuan, a year-on-year increase of 1,097.41. Operating income in the first three quarters was 80.774 billion yuan, a year-on-year increase of 43.52%; net profit attributable to shareholders of listed companies in the first three quarters was 1.512 billion yuan, a year-on-year decrease of 82.63%. With the expansion of business scale, the balance of accounts receivable and prepaid accounts of Muyuan Co., Ltd. increased by 44.21 and 139.11 year-on-year compared with the beginning of the period. Muyuan Co., Ltd. explained that this was mainly due to the expansion of the slaughtering and meat business and the increase in the company's purchase of some feed raw materials.
As of the third quarter, the company’s number of reproductive sows has rebounded from the end of June. Muyuan Co., Ltd. stated in its recent research minutes that it expects to maintain an upward trend before the end of the year. The company's breeding volume has remained at around 600,000 per month since the first quarter. Huaan Securities research report stated that as pig prices return to the upward channel, the company's cash flow pressure can be alleviated, and the Q4 reproductive sow inventory is expected to continue to rebound. It is expected that Muyuan Co., Ltd.'s pig breeding production capacity will reach about 75 million heads by the end of the year, and its pig breeding production capacity is expected to reach 80 million heads in 2023.
It is worth mentioning that reporters from the Financial Associated Press noticed that according to the third quarter report released by Muyuan Co., Ltd., the balance of employee compensation payable in the third quarter decreased by approximately 16.1% compared with the beginning of this year. In this year’s semi-annual report of Muyuan Shares, the remuneration of key management personnel decreased from 20.98 million yuan in the first half of 2021 to 4.7 million yuan.
As for the remuneration of key management personnel, Muyuan Shares previously told reporters from the Financial Associated Press: Company management personnel mainly refer to the company’s directors, supervisors and senior managers. In order to better support the achievement of the company’s strategic goals, In order to achieve sustainable development of the company, the compensation plan of key personnel holding management positions in the company is linked to operating performance indicators such as company profits.
The reason behind the obvious recovery of Muyuan's third-quarter financial statements is that the year-on-year increase in slaughter volume is related to the pig price hitting a new high before the African swine fever. Due to the periodic tight supply, the current pig breeding can reach an average of per head. The profit of 1,000 yuan is already at a historical high.
On October 24, the National Bureau of Statistics announced the national breeding sow inventory in the third quarter. Driven by the increase in pig slaughter, pork production also continued to increase. In the first three quarters, national pork production was 41.5 million tons, a year-on-year increase. 5.9. With the release of early production capacity, the growth rate of pig production has slowed down, market prices have continued to rebound, and breeding expectations are promising. Farmers are actively replenishing the number of pigs, and the number of pigs has increased month-on-month. At the end of the third quarter, the number of live pigs in the country was 443.94 million, a year-on-year increase of 1.4% and a month-on-month increase of 3.1%. It has increased month-on-month for two consecutive quarters. Among them, the number of reproductive sows was 43.62 million, which was within a reasonable range.
Looking forward to the fourth quarter, pig prices are still expected to be in an upward cycle, and breeding groups can also benefit from this. Xu Xueping, a pig analyst at Shanghai Steel Federation, told a reporter from the Associated Press that pig prices are likely to turn volatile and adjust in late October. Under the control of policy adjustments and weak terminal consumption, large-scale farms are expected to increase their expected slaughter, and prices are under pressure to fall. However, the power of raising prices at low points on the breeding side is still strong, with limited room for decline, and the overall high range fluctuates. There may still be tentative momentum for higher prices in mid-to-early November, but the room for further gains is limited. In the mid-term, prices will mainly fluctuate in a narrow range at high levels. Demand has increased in December, but sales before the holiday are relatively concentrated, and with the approaching The holiday policy is expected to increase the storage of pork, increasing the risk of price decline.