MUYUAN Posts Over RMB 6 Billion Loss in H1; Test of Costs Amid Bottoming Hog Prices Not Yet Over

Hog prices remain at low levels, dragging MUYUAN back into losses.

On August 20, MUYUAN released its semi-annual report. In the first half of the year, the company achieved operating revenue of RMB 59.41 billion, a year-on-year decrease of 22.3%; net profit attributable to shareholders was a loss of RMB 6.078 billion, compared to a profit of RMB 10.53 billion in the same period last year; net cash flow from operating activities turned from RMB 17.351 billion to -RMB 2.224 billion.

The weakening performance is mainly attributed to the decline in hog prices.

Data from the National Bureau of Statistics shows that the national average hog price in the first half of the year fell by 23.1% year-on-year. During the same period, pork production still increased by 3.3%, and hog shipments rose by 1.7%, indicating that supply pressure has not yet eased significantly.

By the end of the second quarter, the national inventory of breeding sows dropped to 37.8 million head, a year-on-year decrease of 6.5%, approaching the normal retention level of 37.5 million head, as basic production capacity begins to further adjust downward.

Against the backdrop of low hog prices, cost has become a more critical operational variable for MUYUAN.

In the first half of the year, MUYUAN sold 38.615 million commercial hogs. The fully loaded cost of hog farming was approximately RMB 11.7/kg in June, further dropping to RMB 11.5/kg in July, nearing the company's full-year average cost target.

Cost reduction does not rely entirely on feed prices.

MUYUAN's management previously summarized the subsequent cost-reduction path as focusing on disease prevention and control, employee and cadre incentives, pig breeding, and intelligent applications. Essentially, this continues to improve production indicators such as survival rate, feed conversion ratio, and daily weight gain.

MUYUAN also stated to Wall Street News that non-cash costs such as depreciation and amortization currently account for more than 10% of the fully loaded cost, with cash costs slightly above RMB 10/kg; the company noted that recent national hog prices have exceeded its cash cost level.

Another area of improvement comes from the slaughtering business.

In the first half of the year, MUYUAN slaughtered 17.234 million hogs, a year-on-year increase of 50.98%; revenue from slaughtering and meat products reached RMB 22.061 billion, a year-on-year increase of 14.04%, maintaining profitability after achieving annual profitability for the first time in 2025.

For MUYUAN, the two variables to watch next are when the adjustment in industry basic production capacity will truly transmit to hog prices, and how much further room there is for cost reductions amidst fluctuations in feed raw material prices.