**: Visual China.
Fattening a little, and strive to be slaughtered before the New Year, I am afraid that after the New Year, I will go far again. Before the arrival of the Year of the Dragon, Li Chun, a farmer in the Mingshan District of Ya'an City, Sichuan Province, is stepping up the fattening of a batch of pigs. In his words, in fact, it has already lost money, but the probability of slaughtering before the year will be higher than that after the year, hoping to reduce the loss.
In fact, Li Chun is not the only one who loses. Looking at the entire pig market, in the context of the continued low pig prices, the whole industry will basically be in a state of loss throughout 2023.
Analysts also told Titanium Technology that according to the average cost and average sales price of the whole industry in 2023, listed companies whose main business is pig breeding are expected to lose money in their annual reports. According to the data disclosed by the Ministry of Agriculture and Rural Affairs, the loss in 2023 (the average loss of self-breeding and self-raising is about 76 yuan) can only be regarded as a moderate loss, but because the loss lasts for a long time, not only will the exit be accelerated, but the cost competition between enterprise groups will also become more intense. In this context, the pig industry has been differentiated, and the tight capital chain has accelerated the reduction of production, but there are still enterprises that have expanded against the trend.
As for the trend of pig prices in 2024, the industry generally said, "With the continuous clearing of production capacity, superimposed on the downward and non-plague impact of corn and soybean meal, pig prices are expected to rebound in 2024, but the key depends on the consumption level." ”
On the evening of January 30, Muyuan shares (002714SZ) and Dawnrays (001201SZ) both released performance forecasts, and it is expected to achieve net profit of about -4.7 billion yuan, -3.9 billion yuan, and about -5 billion yuan in 2023, respectively4 billion yuan -4$8 billion; The day before, Superstar Agriculture and Animal Husbandry (603477SH) and Shennong Group (605296SH) disclosed a performance forecast that the former's net profit in 2023 will be -73 billion -59 billion yuan, the latter is -43.5 billion yuan -35.5 billion yuan.
Time goes back further, and the new Wufeng (600975SH) also announced that it expects a loss of between 1.1 billion yuan and 1.4 billion yuan in 2023.
New Hope (000876.)SZ) and *ST Zhengbang (002157.)SZ) is pre-profit, but specific to the hog business, both recorded losses. Specifically, New Hope is expected to make a profit of 300 million yuan in 2023 with the support of the introduction of war investment in Baiyu's meat, poultry and food deep processing business to increase the net profit attributable to the parent company. However, under the influence of the loss of the pig industry, the net profit after deduction is expected to be -4.5 billion yuan.
ST Zhengbang is in a similar situation, although it relies on restructuring to achieve revenue of 6 billion to 7 billion yuan and net profit attributable to the parent of 80-10 billion yuan, but specifically to the pig business, the loss is also 3 billion to 4 billion yuan. 
As for the reasons for the loss, pig companies have pointed to the continued downturn of pigs. Shennong Group said: "During the reporting period, the average sales price of live pigs was 1442 yuan kg, compared with 18 in the same period last year12 yuan kg, down 2042%, resulting in a significant decline in the company's annual operating performance in 2023 compared to the same period last year. ”
Superstar Agriculture and Animal Husbandry also said that the company's performance losses were mainly caused by the large number of pigs. Due to the pig *** and other reasons, the company also made provisions for inventory decline and asset impairment losses for consumable biological assets and fixed assets in accordance with the provisions of the accounting standards for business enterprises and the principle of prudence.
Feng Yonghui, chief analyst of Sopig.com, told Titanium **APP that the average sales price of the whole industry in 2023 will be about 15 yuan kg, a decrease of 20%-30% compared with 2022, and the average sales price is about 16 yuan kg lower than the average cost of the whole industry. "As long as there is no accident, the main business of the pig breeding listed companies, their annual reports are basically losses, but the difference between more losses or less losses. ”
However, it mentioned that "if the company's operating conditions and capital chain are normal, the loss margin should be within 15%, which can only be regarded as a moderate loss." ”
It should be noted that in the case of pig grinding, the slaughter volume of most head pig enterprises has increased instead of decreasing. Taking New Hope as an example, its cumulative sales of live pigs in 2023 will be 1768240,000 heads, compared to 1,461 in 2022390,000 heads; Wen's shares (300498SZ) sold 2626 pigs in 2023220,000 heads (including hairy pigs and fresh products), a year-on-year increase of 4665%；Muyuan shares sold 6381 live pigs throughout the year60,000 heads, and this data in 2022 is 6,12010,000 heads.
Due to the decline in live pigs, in the case of an increase in pig slaughter, the actual growth of pig sales revenue of the above-mentioned pig enterprises is limited, and even a decline has occurred.
New Hope Hog Sales, **Company Announcement).
Although the loss of the whole industry in 2023 is not large, because this is the third consecutive year of loss, the production capacity of blunt knife cutting meat is the main theme of the whole year, especially many ** withdrawals. Feng Yonghui said that according to the data released by the Ministry of Agriculture and Rural Affairs, in 2023, the national production capacity of fertile sows will be reduced by 5%-6%, which is a relatively normal reduction from a historical point of view.
The statistics of 123 designated sample enterprises of Mysteel agricultural products also show that the number of sows that can reproduce in large-scale farms in December last year was 484820,000 heads, a decrease of 2 from the previous month02%, a year-on-year decrease of 545%。
Continuous losses have led to pressure on the capital chain, and cost reduction has become the primary option for enterprises to go through the cycle. Feng Yonghui told the company that the cost reduction of pig enterprises is mainly carried out from two dimensions, one is feeding management, that is, to improve the production capacity of sows, commonly known as PSY; The second is to reduce the cost of feed.
It was found that in the context of the long-term grinding of the pig cycle, listed pig enterprises have repeatedly emphasized "cost reduction" in public information or public occasions, and from the data point of view, it has indeed achieved certain results.
Taking New Hope as an example, it was clearly mentioned in its recent investment records that "the company's November PSY has increased from 21 to 25 at the beginning of the year, and the average weaning of the litter has increased to 10."8 heads; The weaning cost is 334 yuan, compared with more than 400 at the beginning of the year, a decrease of more than 100 yuan, and the decline in weaning cost has a positive impact on the complete cost of subsequent slaughter of fat pigs; The survival rate in the fattening stage reached 91%, and the feed-to-meat ratio dropped to 27 or less. ”
Dawnrays also said in last year's investment records that the full cost of 2023Q1, Q2, and Q3 was 18 respectively5 yuan kg, 183 yuan kg and 178 yuan kg, and it is expected to drop to 17 yuan kg by the end of the year.
Shennong Group's investment records also show that its annual cost in 2023 is on a downward trend, and the breeding cost from November to December is 143+ yuan kg, the complete cost is 152+ yuan kg, 157+ yuan kg (excluding the year-end bonus), the reason for the slightly higher complete cost in December is mainly due to the decrease in the amount of slaughter in December to affect the amortization of expenses. In 2024, the company's cost reduction target is about 1 yuan kg, and the breeding cost and complete cost target are 14 yuan kg and 15 yuan kg respectively. 
Under the competition of cost and financial strength, the industry's production capacity has been continuously cleared, and the reshuffle has accelerated. Feng Yonghui said, "The capital chain of many enterprises has reached the verge of breaking, and losses are the last straw that crushes many listed companies, and reducing production capacity has become inevitable." ”
Typical examples such as *ST Zhengbang, which started to ** its pig farm assets as early as 2022. According to its briefing, from January to December 2023, the company sold a total of 547 live pigs850,000 heads, down 3514%；The cumulative sales revenue is 476.4 billion yuan, a year-on-year decrease of 4680%。
Aonong Biotech will begin to gradually transfer the equity of its subsidiaries in 2022, and by the end of December 2023, the company's pig inventory will be 109730,000 heads, a decrease of 54 from the end of December 202293%。
However, while enterprises with tight capital chains are actively or passively reducing production, some companies choose to expand production against the trend. Superstar Agriculture and Animal Husbandry will disclose the fixed increase plan at the end of 2023, and the plan to raise no more than 17500 million yuan for pig breeding capacity construction projects, breeding technology research and development projects, digital intelligent construction projects and supplementary working capital; Shennong Group also announced in June last year that it planned to raise no more than 115 billion yuan for pig breeding, feed processing construction projects and replenishment; Dekang Agriculture and Animal Husbandry (02419.), which landed in Hong Kong stocks in December last yearHK), approximately 50% of the net proceeds from the IPO will also be used to expand the existing pig and yellow-feathered broiler breeding business in the next three years.
Overall, however, the industry is cautious about expanding capacity. Wen's shares previously said: "Part of the industry's early investment and construction capacity has not been fully utilized, and the possibility of achieving high profitability in the short term is small, and enterprises in the industry maintain a cautious attitude of expanding production." At the same time, after several years of downturn, the debt ratio of industry practitioners has increased significantly, the financial pressure is greater, and the expansion capacity is relatively weak. In addition to the above, the current non-plague disease still has a greater impact on China's pig industry, and the industry is facing greater breeding risks. Based on the above factors, industry participants will look at the future development of the industry more rationally and will be relatively cautious in expanding production. ”
The production capacity is gradually reduced, and the pig cycle is long, can the grinding end in 2024?
In Feng Yonghui's view, "in terms of production capacity, pig prices will rebound in 2024; Since the fourth quarter of last year, the main feed raw materials such as corn and soybean meal have decreased by 20%-30%, and pig breeding will be profitable in 2024. Of course, Feng Yonghui's judgment is based on the fact that pork consumption as a whole will remain unchanged or increase in 2024.
Wei Hongmei, an analyst at Dongguan, also expressed a convergence view in the latest research report: "In the short term, according to the trend of the number of sows that can reproduce in 2023, it is expected that the supply of live pigs will slowly decline in 2024, and China's live pigs are expected to gradually recover; It is expected that the global soybean and corn supply will be loose as a whole in 2024, and the cost of pig breeding in China may continue to fall, and the profitability of pig breeding is expected to gradually recover. ”
According to the data of the business community, since the fourth quarter of last year, domestic soybean meal** has continued to fall. On January 30 this year, the benchmark price of soybean meal was 3,520 yuan tons, 11 percent from the beginning of the month16%。The benchmark price of corn is 233857 yuan tons, down 6 from the beginning of the month03%。Data from the Ministry of Agriculture and Rural Affairs also showed that in the third week of January this year, the national average of corn was **270 yuan kg, year-on-year **112%。
*: Business Agency).
Some pig breeding enterprises also told the company that the industry has been losing money for a long time and the epidemic is not spreading, and there is no doubt that the production capacity will continue to be reduced in 2024, but it is only a matter of how much. However, it admits that there is still controversy in the industry about the trend of live pigs in 2024, and the key lies in the prediction of consumption.
Xiangcai**'s view is more optimistic, it believes that after 2023, the pig-to-grain ratio has been below the profit and loss point, and the number of sows that can reproduce will begin to decline in July 2023, and it is expected that the number of pigs slaughtered will gradually decline around the second half of 2024. In addition, after the Spring Festival peak season ushered in a relatively off-season, the first half of the production capacity is not large, the second half of the pig slaughter will decline, then the pig price may usher in a relatively considerable **, maintain the industry "overweight" rating.
From a business perspective, it is also relatively optimistic. Wen's shares said in the recent reception survey, "on the whole, the company is cautiously optimistic about next year's pig prices, and next year's pig prices should theoretically be better than the average level of this year." ”(This article was first published in Titanium** app, written by Su Qitao).