A-shares continued to decline on Wednesday, with the three major indexes all hitting new lows intraday. Hog stocks continue to decline, with the index falling about 5% since 2024. In the context of the continuous decline of pigs and the destocking of sows, when will the spring of pig breeding enterprises come?
200 billion giants dived
As the absolute leader of pig breeding enterprises, Muyuan shares became the leader on Wednesday. In 0After 05% opened slightly lower, Muyuan shares fell rapidly all the way, falling more than 8% intraday, although the decline narrowed slightly, but still fell 497%。In terms of market capitalization, Muyuan shares evaporated about 10.5 billion yuan on Wednesday, and the latest market value was 200.7 billion yuan. Entering 2024, Muyuan's shares are weak and lower as a whole, with a cumulative decline of more than 10% in 7 trading days. Especially in the last 4 trading days, Muyuan shares continued to close in the negative, with a cumulative decline of 1033%。Previously, Muyuan shares experienced a wave of more than 30%. In the stock bar, many shareholders complained about Wednesday's **. At present, the number of shareholders of Muyuan shares is 30190,000 households. 
Pig breeding stocks fell collectively
The performance of Muyuan shares is a microcosm of pig breeding stocks. According to the data of Oriental Wealth Choice, since 2024, all 10 pig breeding enterprises in A-share have fallen **, except for Muyuan shares, superstar agriculture and animal husbandry have fallen by more than 8%, Tianbang Food has fallen by more than 7%, New Hope, *ST Zhengbang, and Dongrui shares have fallen by more than 6%, and Shennong Group has fallen by more than 5%. Compared with the most ** in history, most of the pig breeding stocks have also suffered a long period of large **, such as *ST Zhengbang, the latest price (2.$51) and 2598 yuan is the most historical, compared with more than 90%. Tianbang Food and New Hope are also about 80%, Luoniushan is nearly 70%, and Muyuan shares are about 60%. 
The balance of borrowings increased substantially
As for the plunge of Muyuan shares on Wednesday, in the eyes of many market participants, it is closely related to the announcement of its disclosure of new borrowings on the evening of January 9. In the announcement of Muyuan shares, Muyuan shares said that as of December 31, 2023 (unaudited), the company's loan balance was 7799.8 billion yuan, an increase of 187 from the end of 20220.3 billion yuan, accounting for 2124%。Of these, 164 were borrowed by banks1.3 billion yuan, accounting for 87.7 percent of new borrowings in 202376%。However, Muyuan shares said that the announcement was only issued in accordance with relevant regulations, and compared with September 30, 2023, the new borrowings in the fourth quarter of 2023 were less than 2 billion yuan, which was to meet business needs. The company's current cash flow is safe and stable, and the business operation is normal.
It is worth mentioning that many pig companies have been actively "making money" recently. For example, New Hope plans to raise no more than 73500 million yuan for upgrading pig farms, acquisitions, debt repayment, etc. Tianbang Food plans to increase more than 2.7 billion yuan for the upgrading of digital and intelligent pig farms and replenishment of working capital.
New Hope said the low pig price has put pressure on the company's financial statements. At present, due to the long pig cycle, all companies are trying to strengthen the safety cushion, and the company also maintains more sufficient self-owned funds through fixed increases, which is more beneficial to the medium and long term.
The industry's dilemma remains unresolved
Although the "increase in borrowing" may be the fuse for Muyuan's plunge on Wednesday, as far as the weakening of the entire pig breeding stock is concerned, it is more that the industry's predicament has not yet fully improved.
On the one hand, the pig ** is still declining, which compresses the profit margin of the enterprise to a certain extent. According to data from Oriental Wealth Choice, the latest ** live pig on January 10, 2024 is 1408 yuan kg, which is the same as 17 on August 10, 202317 yuan kg compared with a decrease of about 18%. And 27 at the end of October 202273 yuan kilograms, ** is close to 50%. 
On the other hand, the number of fertile sows still maintains a high population. According to the data, as of November 2023, the national breeding sow herd is 41.58 million heads, which is 101 of the normal number of 41 million heads4%。Although it has fallen by about 9% compared with 45.64 million head in June 2021, it is still at a high level since 2009.
There is also the fact that pig breeding enterprises continue to lose money. According to the Financial Associated Press, according to the relevant data accounting, in 2023, there will be 10 months of live pigs ** below the breakeven line, the industry's annual profit is negative, and almost all breeding entities in the industry are in a state of loss.
According to the data of Oriental Wealth Choice, the above 10 pig breeding enterprises will all lose money in the first three quarters of 2023, and Wen's shares will be 45The loss of 300 million yuan topped the list, and New Hope (-38.).5.8 billion yuan), *ST Zhengbang (-28.1.9 billion yuan), Muyuan shares (-184.2 billion yuan), Tianbang Food (-15.6.6 billion yuan) also lost more than 1 billion yuan. 
Cycle bottom features?
However, in the view of many institutions, although the industry is still insufficient, over time, the pig cycle has obvious bottom characteristics.
CICC pointed out that the current cash flow consumption of the industry is close to a critical point, and the industry may return from "capital competition" to "cost competition". In the first half of 2023, the pig breeding industry will have "deep losses, high debt, and slow decommissioning", mainly because the cash flow of pig enterprises is still resilient, and the industry will change from the previous "profit hedging loss" to "profit + financing hedging loss" model, and raising funds through the capital market to hedge industrial losses. In the third quarter of 2023, the average cash of listed pig enterprises is close to the bottom of the last cycle in the first half of 2018, and the asset-liability ratio of pig enterprises is at a historical high. Hua Chuang pointed out that in the short term, although the demand side has some support, the pressure on the end of the slaughter is greater, and the frozen product inventory is still to be digested, the impact of pig disease continues, and the pig price is expected to be weak. In the medium and long term, the pressure on industrial cash flow has increased significantly, and it is easy to increase and difficult to decrease, and there is also a lack of window period for supplementing, and production capacity may be depleted or continued. At present, the characteristics of the bottom position of the pig cycle are obvious, and it is recommended that the bottom position be configured with pig breeding. GF** said that the pig industry has experienced nearly three years of adjustment, and the current high-cost and high-leverage production capacity in the industry is facing greater financial pressure, and there is uncertainty in the winter pig disease, and the trend of industry capacity is expected to continue. In the face of the bottom of the cycle of aquaculture enterprises actively "open source and reduce expenditure", some enterprises refinancing in the near future, a number of breeding enterprises also have refinancing plans, it is recommended to pay attention to the follow-up progress. Valuations of the sector are still at historically low levels, and opportunities for potential cycle reversals are well understood. It is for investors' information only and does not constitute investment advice
Article**: Oriental Wealth Research Center).