Sluggish Pig Prices Drag Down Performance: MUYUAN Reports H1 Net Loss of RMB 6.08 Billion as Operating Cash Flow Turns Negative | Financial Insights

MUYUAN, China's largest pig farming enterprise, saw a significant reversal in its performance in the first half of 2026, swinging from profit to loss. This reflects the profound impact of the downward cycle in domestic pig prices on the breeding industry.

According to the semi-annual report disclosed by the company on August 20, MUYUAN's operating revenue in the first half of the year was RMB 59.41 billion, a year-on-year decrease of 22.3%; the net profit attributable to shareholders of the listed company was a loss of RMB 6.08 billion, compared to a profit of RMB 10.53 billion in the same period last year, representing a year-on-year swing to a loss of 157.7%. Basic earnings per share dropped from RMB 1.96 in the same period last year to a loss of RMB 1.10.

Meanwhile, the net cash flow from operating activities turned negative, amounting to -RMB 2.22 billion during the reporting period, compared to a net inflow of RMB 17.35 billion in the same period last year, indicating significant pressure on the company's financial position. The company stated that it would not distribute cash dividends, issue bonus shares, or convert capital reserves into share capital for the current reporting period.

Low Pig Prices Are the Core Source of Pressure

Since the beginning of this year, the average selling price of MUYUAN's commercial pigs has remained at low levels, hovering around RMB 10 per kilogram for most of the period from March to June. The breeding business still dominates the company's overall profits, and low pig prices directly constituted the core driver of the huge loss in the first half of the year.

From an industry perspective, the current pig market remains at the bottom of the cycle. As the industry continues to suffer losses and the inventory of breeding sows is gradually reduced, the earlier capacity reduction is being transmitted to the supply side of commercial pigs. However, whether pig prices can effectively rebound still depends on the extent of subsequent capacity reduction, the pace of commercial pig shipments, and the recovery of terminal consumption.

Decline in Both Revenue and Profit, Significantly Narrowed Profitability

Financial data shows that MUYUAN's revenue in the first half of the year decreased by more than RMB 16.2 billion compared to the same period last year, a drop of 22.3%. After deducting non-recurring gains and losses, the net profit attributable to shareholders of the listed company was a loss of RMB 5.895 billion, a year-on-year decrease of 155.2%, which is basically consistent with the net profit figure, indicating that the loss mainly stemmed from the main business rather than non-recurring factors.

The weighted average return on net assets dropped from 13.79% in the same period last year to -7.48%, a decrease of 21.27 percentage points, indicating a significant erosion of profitability.

The asset side remained relatively stable. Total assets at the end of the reporting period were RMB 175.06 billion, a slight increase of 1.93% compared to the end of the previous year; net assets attributable to shareholders of the listed company were RMB 80.19 billion, an increase of 3.21% compared to the end of the previous year. The asset-liability ratio was 54.18%, basically flat compared to 54.15% at the end of the previous year.

In terms of debt, the company has an outstanding convertible bond, "Muyuan Convertible Bond," issued in August 2021 and maturing in August 2027, with a current balance of RMB 9.543 billion. The EBITDA interest coverage ratio plummeted from 13.81 times in the same period last year to 3.42 times in the current reporting period, a significant drop, reflecting that the buffer space for the company to pay interest under the current profitability level has been greatly compressed. As the convertible bond enters its final outstanding stage, the company's refinancing arrangements and cash flow management will continue to attract market attention.