MUYUAN rushes for a secondary listing on the Hong Kong Stock Exchange, accelerating its entry into the global livestock market

The world's largest pig farming company MUYUAN plans to raise up to 1 billion USD through its listing in Hong Kong, which is expected to become one of the largest IPOs in the consumer sector this year.

Key Points:

• MUYUAN has submitted an application for a listing in Hong Kong, intending to use the funds raised to build a pig farming project worth 3.2 billion yuan in Vietnam, marking its first foray into overseas markets.
• This leading pig farming enterprise has expanded into slaughtering and meat processing in recent years, creating new sources of growth.

Tan Ying

In 1995, Qin Yinglin and his wife Qian Ying founded their first pig farm in the small town of Neixiang County, Henan Province, with just 200 sows and 2,000 piglets, hardly imagining that their small farm would eventually grow into a giant enterprise with 1,000 pig farms across China, capturing 5.4% of the global pig farming market.

In the first nine months of this year, MUYUAN FOOD CO., LTD. (002714.SZ) sold a total of 57.3 million live pigs and 11.5 million piglets. Among them, the company's integrated pig slaughtering and feed processing industrial park located in Neixiang consists of 21 six-story buildings, with an annual slaughtering capacity of 2.1 million live pigs, and an annual production capacity of about 100,000 per building.

MUYUAN is no stranger to the capital market, having been listed on the Shenzhen Stock Exchange as early as 2014. Now, the company is planning a secondary listing in the more internationally oriented Hong Kong market, aiming to raise as much as 1 billion USD, with a sponsorship team that includes Morgan Stanley, CITIC Securities, and Goldman Sachs. The company stated that the funds will be used to develop its first overseas integrated pig farming base in collaboration with BAF Vietnam Agriculture, while also promoting domestic business expansion.

Last week, MUYUAN submitted its listing application to the Hong Kong Stock Exchange, marking the company's second submission this year, as the previous application submitted in May had already expired. The company is actively seeking to seize the hot IPO window in Hong Kong in recent years, striving to complete what could become one of the largest listings among consumer companies in Hong Kong this year. The market is also paying attention to the possibility that after a successful listing, MUYUAN's market value could surpass WH Group (0288.HK) — the parent company of Smithfield Foods (SFD.US) in the United States — thus becoming the highest-valued pork-related company in the Hong Kong market.

Valuation discrepancies are believed to be the main reason for the delay in the company's listing process after its initial submission. Market brokers have significant differences in their profit forecasts for MUYUAN in 2025 — KGI Securities predicts a profit of 16.4 billion yuan (approximately 2.32 billion USD), while Huaxin Securities' forecast is as high as 20.24 billion yuan. Based on the above forecast range, MUYUAN's price-to-earnings (P/E) ratio is about 14 to 16 times, roughly double that of WH Group. WH Group raised 522 million USD in January this year by spinning off Smithfield and listing separately in the United States Muyuán stated that it plans to use the proceeds from its IPO to diversify its reliance on China's volatile live pig market, including promoting overseas expansion and extending its layout to downstream slaughtering and meat processing businesses.

The downstream transformation plan began in 2019 and quickly took shape in a short period. In the first three quarters of this year, the company's 10 slaughtering and processing projects achieved a total slaughter sales volume of 21.44 million tons, a year-on-year increase of 134%. Muyuán's Chief Strategy Officer Qin Jun stated that the company will gradually expand its production capacity, planning to add 1 to 2 new slaughterhouses each year.

Currently, the scale of the slaughtering and meat processing business is still relatively small, but the growth rate is significant. In the company's total revenue of 137.9 billion yuan last year, this business recorded revenue of 24.3 billion yuan, accounting for about 18% of total revenue, while the remaining revenue still mainly came from live pig breeding.

However, the growth momentum of the slaughtering and meat processing business has clearly accelerated. The revenue of this segment is expected to increase from about 10 billion yuan in the first half of 2024 to 19.3 billion yuan in the same period of 2025, with its share of total revenue rising to about 25%. In contrast, the live pig breeding business recorded only a 34% increase during the same period, significantly lagging behind the downstream processing business.

Demonstrating Strong Growth

Muyuán's total revenue in the first half of this year grew by 34% year-on-year, rising from 56.9 billion yuan in the same period last year to 76.5 billion yuan. Benefiting from China's position as the world's largest pork consumption market, the mainland business remains relatively robust; at the same time, Muyuán has also begun actively exploring international markets for new opportunities.

In September, the company established a subsidiary in Vietnam and cooperated with BAF Vietnam Agriculture to build a high-tech breeding project in Quang Ninh Province with a total investment of 3.2 billion yuan. Additionally, in August, the company signed a strategic cooperation agreement with Thailand's Charoen Pokphand Foods (CPF.BK), where both parties will explore global cooperation opportunities in areas such as feed and slaughtering.

Muyuán's listed shares in Shenzhen currently have a market value of approximately 270 billion yuan (about 38 billion USD). Given this scale, Bloomberg reported earlier this year that its target fundraising of 1 billion USD seems reasonable. Ernst & Young's latest report indicated that as of the end of November, there have been 8 IPO projects in Hong Kong this year with fundraising amounts exceeding 10 billion HKD (about 1.3 billion USD), showing that market sentiment remains strong.

However, investor sentiment may still be somewhat cautious. Muyuán's Shenzhen-listed shares have risen nearly 30% year-to-date, but have fallen about 20% from their mid-September highs. In the same industry, WH Group and Wen's Foodstuffs (300498.SZ), as well as New Hope Liuhe, also performed well in the first half of this year, but their subsequent performance weakened. Since mid-year, market sentiment has shifted, with pig prices having fallen about 30% year-on-year, partly due to high breeding sow inventories suppressing pig prices.

The latest operational data submitted by Muyuán to the Shenzhen Stock Exchange seems to reflect the impact of weak pig prices. According to the third-quarter data in the application documents, the company's revenue in the third quarter began to contract, falling 11.5% year-on-year to 35.3 billion yuan, while net profit plummeted by 56%, dropping to 4.25 billion yuan China is not only the world's largest consumer of pork but also the largest producer. In 2024, China's pork demand is expected to reach 58.2 million tons, accounting for about half of the global total demand of 115.2 million tons. The overall market is still growing, but the growth rate is moderate, with an average annual growth rate of only about 0.5% in pork consumption predicted until 2033.

The biggest structural change in the industry is that farming is accelerating its transformation towards large-scale and industrialized operations. By 2024, large-scale farms will account for 70.1% of China's pork production, compared to 90% in the United States. The scale advantage also gives MUYUAN a stronger market buffering capability, allowing it to have higher resistance to price fluctuations and greater cost adjustment flexibility compared to the previously individual and smallholder-dominated market structure