Affected by the downturn in the market, the profit of Wen's pig breeding business has suffered a deep loss, and the profit of the chicken business has declined year-on-year.
Punctuation financial researcher Lu Gong.
In 2023, pig prices will continue to be sluggish, and listed pig companies will lose money in a large area. Pig leader Wen's Food Group Co., Ltd. *** hereinafter referred to as Wen's Co., Ltd., 300498SZ) with a loss of 6.5 billion yuan lower limit to become the "pre-loss king" in pig enterprises.
Listed pig companies have recently disclosed their 2023 performance forecasts, and under the downward trend of pig prices, major companies have released reports that are mostly pre-losses. Even pre-profitable pig enterprises mainly benefit from other factors other than the pig business. For example, New Hope (000876.) with a pre-profit of 300 million yuan in 2023SZ), benefiting from the increase in net profit attributable to the parent company due to the introduction of strategic investment in the company's white feather meat and poultry and food deep processing business, which is a non-recurring profit and loss item; In the same year, the highest pre-profit amount of 10 billion yuan *ST Zhengbang (002157SZ), because the company's reorganization plan has been implemented, and the performance has increased significantly year-on-year.
Among the many pre-loss reports, the one handed over by Wen's shares has attracted market attention. According to the data, the company expects a net profit loss of 6 billion yuan to 6.5 billion yuan attributable to the parent company in 2023, exceeding the pre-loss of pig enterprises that have been disclosed so far. And in addition to pig breeding, Wen's shares also carry out chicken raising business. In 2023, due to the decline in chicken sales**, the chicken business has also become one of the businesses that "drags" the company's profits.
Under the parallel of losses and downturn, Wen's shares are still waiting for opportunities to adjust the pace of expansion. Punctuation financial researchers noted that the company issued convertible corporate bonds to unspecified objects in March 2021, with a total issuance of 929.7 billion yuan. In this fundraising plan, the company intends to invest the raised funds in the construction of pig farms, animal husbandry communities, livestock and poultry farms and other projects. Recently, due to changes in the market environment, the existing resources in the two places of the above-mentioned investment projects have been able to meet the local production needs, so the company has terminated the two fundraising projects. 1 remainingThe 5.1 billion yuan raised will continue to be retained in the company's special fund-raising account. The company said, "We will scientifically and prudently select new investment projects as soon as possible." ”
In the company's 2024 business plan, the number of pig business slaughter and the number of yellow feather broiler sales will increase compared with 2023. Among them, the pig business slaughter target is 30 million to 33 million heads. If this goal is achieved, Wen's shares may become the second leading pig enterprise in the industry with more than 30 million heads.
Wen's 2023 performance forecast
Data**: Company announcements.
Pig prices fell and then turned into losses
The trend of pig prices is closely related to the profitability of major pig enterprises.
In 2022, live pigs (outer three yuan and inner three yuan) **hereinafter referred to as live pigs**) have been in a ** situation for more than half a year: from 12 yuan kg in March all the way up to more than 28 yuan kg in October of that year. Although pig prices have fallen in the following two months, they are still higher than in March**. In this context, Muyuan shares (002714SZ), superstar agriculture and animal husbandry (603477SH), Dabeinong (002385SZ), Hefeng shares (603609SH) and other pig companies will hand over their profit report cards in 2022. Wen's shares are no exception, the company's monthly pig sales revenue increased from 15 in February of the same year7.5 billion yuan continued to rise to 59 in November3.3 billion yuan, a slight drop to 42 in December9 billion yuan. Thanks to this, Wen's shares will turn losses into profits in 2022 and achieve a net profit attributable to the parent company of 528.9 billion yuan, the profit is second only to the above-mentioned enterprises in Muyuan shares.
However, the pig price trend is not stable. In January 2023, the hog *** once hit a low of less than 15 yuan kg. In the following months, the pig ** continued to be at a low level of about 15 yuan kg, and the highest time of the year did not exceed 20 yuan kg. This year, Wen's shares turned from profit to loss again. According to the performance forecast, the company expects a net profit loss of 6 billion yuan to 6.5 billion yuan attributable to the parent company in 2023, or become the "pre-loss king" in the industry.
In view of the reasons for the pre-loss, Wen's shares respectively explained the operation of the two main businesses of pig raising and chicken raising. Let's take a look at the pig sector first, in 2023, the company will sell 2626 pork pigs (including hairy pigs and fresh products).220,000 heads, a year-on-year increase of 4665%, while the average sales price of woolly pigs decreased by 22 year-on-year26% to 1481 yuan kg. Although the company is constantly strengthening basic production management and production performance continues to improve, the company's pig breeding business profit is still deeply lossy due to the year-on-year sales of live pigs.
In the same year, in the chicken sector, Wen's broiler chickens (including hairy chickens, fresh products and cooked food) also showed sales volume and average sales price. In addition, the average sales price of the company's chickens decreased year-on-year (11.).51%) also exceeded the year-on-year increase in broiler sales in the same period (9.).51%）。As a result, the profit of the chicken business for the whole year also decreased compared with the previous year.
In the new year, can Wen's shares reverse the huge losses and return to profitability?
At present, the company still has more than half of its revenue** in the pig sector, and the future trend of pig prices may be directly related to whether the company can turn around its losses. Industry insiders**, under the deepening trend of sow production capacity, there may be a turning point at the bottom of the pig cycle in the second quarter of 2024, and pig prices may pick up. Some people also believe that it is difficult for pigs to have a large cyclical reversal in 2024, but the overall will gradually improve.
Wen's shares are more optimistic about future pig price changes, and the company has said in investor events that pig prices in 2024 should theoretically be better than the average for the whole year of the previous year.
In the past two years, the trend of live pigs (outer ternary and inner ternary) ** has changed
Data**: China Pig Network.
The pace of expansion is unabated
Under the gradual increase in pig prices, the increasing sales volume is also the reason for the huge loss of Wen's shares. According to the data, in 2023, the cumulative sales volume of Wen's pigs will reach 2626220,000 heads, compared with 1,790 in the same period last year860,000 heads, an increase of more than 8 million heads. At the same time, the company's average sales price of woolly pigs in 2023 has declined, down 22. year-on-year26% to 1481 yuan kg.
Judging from the data of recent years, from 2018 to 2023, the sales volume of Wen's pigs (including hairy pigs and fresh products) will be 2229 respectively700,000 heads, 1851660,000 heads, 954550,000 heads, 1321740,000 heads, 1790860,000 heads and 2,626220,000 heads. During the aforementioned years, the company incurred losses in both 2021 and 2023. However, the company did not adjust the pace of expansion because of this, and continued to expand production in the following years.
Previously, an investor asked Wen's shares about the "2024 sows planning for the number of sows that can reproduce", to which the company responded, "It is preliminarily determined that the number of sows that can reproduce will increase by about 100,000 in 2024." It further stated that "for the company, in addition to the number of breeding pigs, the company pays more attention to the quality and production efficiency of breeding pigs. In the future, the company will continue to do a good job in the basic management of breeding pigs, implement the management of disease prevention and control, continue to restore and optimize the breeding pig system, and strive to improve production performance and reduce production costs by improving the production technical indicators of breeding pig groups. ”
For the chicken sector that will sell **the same in 2023), Wen's shares may also continue to expand production. "The company expects the sales of yellow feather broiler products to achieve stable growth, and preliminarily plans to increase the number of yellow feather broiler sales by 5% to 10% in 2024 compared to 2023," the company said at an investor event. ”
According to the above-mentioned expansion rhythm plan, in 2024, if the pig and yellow feather broiler industries perform well throughout the year, and the market rebounds steadily year-on-year, then Wen's shares may be expected to return to profitability and will reap the benefits brought by the expansion. If the market is still sluggish in the new year, and pig prices and yellow feather broilers continue to remain low, the company is still at risk of continuing to lose money, and the scale of the loss is not small. So, when will this pig cycle be reversed?