At present, how to judge the past round of pig cycle (2018-2023)?
The market believes that there are at least four historical cycles: the craziest cycle of expansion in history; The longest loss period in history (some people count 21 months); The cycle with the worst deterioration of the industrial balance sheet in history is, of course, the cycle in history in which China's pig industry has reached the highest scale and the largest number of free-range households.
The pig industry is deeply reconstructed, and the large-scale pig factory occupies the leading position in the industry's production capacity, but it has "collectively fallen" and fallen into deep losses (many companies have lost money for three consecutive years), high-leverage expansion, high debt and expansion, and even Muyuan, which has been listed for ten years without a loss record, has ushered in the first annual loss, and the industry is facing the most serious industrial crisis.
Political and economic Jun observes, in the face of the pig cycle, the playing style of pig enterprises is different, and Muyuan's "problem-solving technique" may provide a reference path for crossing the pig cycle.
Industry whistleblowers
In 2023, ** will continue to maintain between 13 yuan and 15 yuan (failing to reach the industry average of **16 yuan or more) for the longest 12 months. That is to say, the vast majority of pig enterprises in the largest year in history slaughter, but this round of the cycle of the most sustained downturn in the year, which led to the industry-wide losses.
There are market participants who warnThe high-leverage expansion of pig enterprises against the market has led to high-debt enterprises forcibly increasing their market share, but due to the continued downturn of pigs, they have embarked on a situation where the scale of debt is unsustainable.
The market has confirmed that there have been listed companies due to brittle cash flow, bank loans, employees have left, and they have to sell pigs, heading for a downturn in the autumn of crisis.
Let's take a look at the changes in the debt ratio of some listed pig enterprises in the past five years (from the end of 2018 to the third quarter of 2023) according to market sources:
Muyuan: 54% to 59%, almost unchanged;
Wen's: 34% to 60%, almost doubled;
Zhengbang: 68% to 163%, insolvent, bankruptcy reorganization;
New Hope: 48% to 73%, a significant increase, no increase;
Tianbang: 61% to 87%, a significant increase, no increase;
Aonong: 69% to 90%, a significant increase, no increase;
High debt management, coupled with the continued sluggish pig prices, the industry is facing an unprecedented crisis, pig enterprises collectively misjudged this pig cycle?
No. In December 2019, when the pig price of this round of pig cycle caused by non-plague rose by 30 yuan and 40 yuan per kilogram the most astonishing, Qin Yinglin, chairman of Muyuan, put forward an early warning at a ** sharing meeting:"Who will be the exiter? "Clearly shouted to the peer pig enterprises "don't take dividends as ability", and warned the industry people to "have a surplus in operation, and there is an aftermath in withdrawal".This sober voice was like a clear spring in the scorching heat, and it was enlightened, but no one responded.
At that time, most of the pig enterprises that were attracted by high pig prices and were expanding wildly were busy airlifting foreign breeding pigs. From the perspective of the scale of fattening pigs, it takes about 34 months from the expansion of breeding pigs to the market of fattening pigs. Three years later, in 2023, the year of the centralized listing of fattening pigs in these pig enterprises, the concentration of major pig enterprises has reached a record high, and the current pig price has been stampeded, and the collective has fallen into the quagmire of losses.
Of course, looking at the blind expansion of China's pig industry, we also have to reflect on the inducement of policy dividends, which amplify industrial credit and contribute to the barbaric expansion of the pig industry.
To every pig to benefit
At that time, the calm Muyuan had already felt the scene of depression after the collective expansion of the industry. In fact, Muyuan's thinking is not only the blind obedience dilemma of the industry after the collective expansion, but also sees that the quantitative expansion of the pig industry supported by capital will inevitably lead to a long-term imbalance between supply and demand in the market, and even a high-level supply balance, pig profits are compressed, and the industry has entered a period of low profits.
As early as 2017 in the previous cycle (2014-2018).Qin Yinglin foresightfully put forward a three-stage theory of the development of China's pig industry in terms of capital competition, cost competition and value competition (optimized to quantity competition, quality competition and value competition in 2023).
Muyuan realized that when the capital-driven quantitative expansion, that is, the pig enterprise entered the stage of cost competition, and only by reducing costs and increasing efficiency could there be a chance of survivalThe most effective way to compete to reduce costs and increase efficiency is to survive inwardly, to be efficient and effective in technology, talent and management, and to benefit every pig. Clearly, this is a transformation of the company's business strategy.
In fact, the foresight of Muyuan in the development of the pig industry is also reflected in the impact of environmental protection policies on the pig industry in the last cycle (2014-2018). It is the advantages of environmental protection that have won development opportunities for Muyuan", which is also the prerequisite for Muyuan to win sustainable development.
To benefit from every pig, from an economic point of view, Muyuan has participated in the transformation of the law of economic developmentIn the traditional "savings-investment" economic growth model, each competitor will expand production with the support of capital and technology in order to increase returns, and finally in the race to chase scale growth, it will move towards the "synthesis fallacy" - rising costs and falling profits, and all competitors fall into the survival curse of the law of diminishing investment returns.
Now, if Muyuan wants to break this survival curse and benefit every pig, he has actually entered a new endogenous economic growth model, that is, to tap the potential of internal knowledge and technology of the enterprise, and take the road of technological innovation and development. In the innovative market players, knowledge is the core variable of the new economic format, and knowledge has the power to automatically eliminate other knowledge and actual capital goods, that is to say, knowledge has the characteristics of technological breakthroughs that break the market equilibrium competition, or may cause market players to achieve high returns or high growth under the conditions of non-equilibrium competition, that is, to break through the law of diseconomies of scale.
This is where the endogenous logic of "meta-point force and bottom breakthrough" put forward by Muyuan in this cycle of development. Last year's open day activities, Muyuan put forward the goal of "600 yuan to reduce costs, to create and share 400 billion profits in the industry", which is intended to point to the whole industry pig enterprises to change the mode of development, to tap the potential of knowledge, through technological innovation to achieve 600 yuan per pig cost reduction, the industry to share 400 billion potential benefits.
A convincing market comparison data is that in the past five years (2018-2023), Muyuan has made a total profit of more than 50 billion yuan, reflecting the advantages of technological innovation to support the development of Muyuan.
Of course, today's Muyuan's technological innovation can not resist the impact of too low pig prices, which also indirectly shows that the road of Muyuan's innovation to tap potential and reduce costs is still tortuous and long.
Root down a hundred feet
On December 9, 2023, Qin Yinglin delivered a keynote speech on "Meta Point Force, Bottom Breakthrough, and Sustainable Development" at the 21st Annual Conference of Chinese Business Leaders held by China Entrepreneur.
Over the years, his speeches have been focused on technological innovation. "Innovation needs to be discovered by science and technology. What did you find? New knowledge, new technology, new path, new logic. ”
In the past five years, Muyuan has invested as much as 32.5 billion yuan in technological innovation, realizing the modern transformation of pig breeding from mechanization, automation to intelligence, and plugging in the wings of digitalization for China's pig industry.
Today, when Muyuan concentrates resources, talents and material resources to benefit each pig, the value point that the market should pay attention to should not only stay in technological innovation, but also pay attention to the strategic orientation behind Muyuan's investment in technological innovation.
Practicing the knowledge innovation strategy, the attitude of Muyuan people is "to take root in the downward and strive to break the sky", which is a vivid interpretation of the innovation and growth of the enterprise.
In fact, for Muyuan's insistence on taking the road of innovation and growth, Qin Yinglin wrote in "Who Will Quit?" three years ago. In the speech, it has been made clear and clear: inward, to the ability to develop to make money is the right way, to be professional, focused, stubborn, this is the next 5-10 years, who will exit the key strategy.
Enterprises will have different decision-making logic for different strategic choices. In Qin Yinglin's view, choosing the path of innovation and growth will be a dead end to technical capacity building, technical ability affects profitability and cash flow, and the exit of a pig enterprise lies in weak profitability and cash flow shortage. Technical capacity building includes talent, product quality, disease prevention and control, compliance and legal implementation of policies, and environmental protection, etc.
Of course, management improvement also needs to rely on technology. Without hardware technical support, the management of large enterprises will certainly not work. Whether technology, equipment, and pig house construction can prevent and control non-plague, and whether it can support mechanization, automation, and intelligence are all technical prerequisites for management.
At present, the reason why many pig enterprises have high debt managementThe corporate crisis facing the pressure of delisting is obviously due to the fact that the company has gone wrong in terms of strategic misalignment, insufficient technology investment, and poor management due to the pursuit of huge profits.
At present, China's pig industry is facing a downturn crisis, political and economic Jun believes that the way to crack the pig enterprise is not only to alleviate the survival pressure under high leverage, but also to transform the development mode, from the quantitative survival and development model to the high-quality innovative growth mode of the transition, which is the pig enterprise to win the pig cycle of the winner. Muyuan's innovative growth practice has provided a way for the industry to pass through the pig cycle.
*: Political and economic perspectives.
Disclaimer: This article is ** content, does not represent the position of this magazine, and does not constitute investment advice.