Source: Times Weekly, Du Sumin
Performance changes arouse doubts
In 2021, with the collective blood loss of the top pig companies, Muyuan Stock (002714.SZ) can still survive on its own, making a profit of 6.9 billion yuan.But in the first quarter of 2022, Muyuan shares suffered a huge loss of 5.18 billion yuan, a loss far exceeding that of its competitors.
The sharp decline in performance has aroused regulatory attention, and the Shenzhen Stock Exchange recently issued an inquiry letter.On May 18, Muyuan shares disclosed the Shenzhen Stock Exchange's annual report inquiry letter, and the Shenzhen Stock Exchange required the company to respond to questions such as liquidity risks, growth in slaughtering volume, high concentration of suppliers, and no impairment of assets.
On May 21, Muyuan shares disclosed the information announcement of research activities, and answered questions including the company's cash flow, the reasons for the growth of slaughter at the bottom of the cycle, the development and operation of the slaughtering business, and the cost target for 2022.The company emphasized that at present, the company's operating cash flow is basically in a balanced state.Since March, the price of pigs has rebounded, and the operating cash flow of Muyuan Co., Ltd. has a slight surplus. It is expected that the price of live pigs in the second half of the year will be higher than that of the first half of the year, and the company's liquidity will continue to improve.
What is particularly puzzling is that, at the bottom of the cycle, the price of pork has dropped, but the sales of live pigs of Muyuan shares have risen sharply.
The bottom of the cycle soars in hurdles
Since December 2021, after the news that the commercial papers of 31 of its companies continued to be overdue was exposed, the financial problems and cash flow situation of Muyuan shares have been controversial, and the latest financial report has aggravated the outside world.
As of the end of 2021, the net cash flow from operating activities of Muyuan Co., Ltd. was 16.295 billion yuan, a year-on-year decrease of 29.72%; in the first quarter of 2022, the net cash flow from operating activities of the company was -0.58 billion yuan, the first time in the past three years. burden.The ability of Muyuan to obtain cash from operating activities has been greatly weakened.
In addition, the short-term debt balance of Muyuan shares in the first quarter of this year was -23.405 billion yuan, and the further expansion of the debt repayment fund gap made investors worried.As of the end of the first quarter of 2022, the balance of monetary funds held by Muyuan shares was 16.116 billion yuan. Although the balance increased by 32.12% from the beginning of the year, it was still insufficient to cover short-term maturing debts.
During the same period, the short-term debt balances of Wen's Shares (300498.SZ), Zhengbang Technology (002157.SZ), New Hope (000876.SZ), and Tianbang Shares (002124.SZ) were 5.122 billion yuan, -13.086 billion yuan, -9.965 billion yuan and -2.44 billion yuan.
In the first quarter of 2022, domestic live pig prices showed a unilateral downward trend.The data shows that from the beginning of January to the end of March, the cumulative decline was 3.77 yuan/kg, a drop of 24%.However, when the price of pigs fell, the number of slaughtered shares in Muyuan soared.The data shows that from January to February, March and April 2022, the sales of live pigs of Muyuan were 7.831 million, 5.986 million and 6.321 million, up 60.24%, 111.3% and 100.99% year-on-year respectively, corresponding to the price of commercial pigs. They are 12.38 yuan/kg, 11.67 yuan/kg and 12.56 yuan/kg respectively.
In response, Muyuan Co., Ltd. responded that the rapid growth in slaughter volume since the fourth quarter of 2021 is directly related to the rapid growth of fertile sows in the second half of 2020.
On May 22, Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, said in an interview with a reporter from Times Weekly that the number of live pigs to be slaughtered is determined by the number of sows that can be bred 10 months ago and the breeding rate. In the second quarter of 2021, whether it is The breeding enterprises and the national breeding stock of sows are at a high level.Therefore, in the first half of 2022, it is normal for the overall slaughter volume to be significantly higher than the same period of the previous year.
"With the production capacity reduction and efficiency optimization of reproductive sows in the third quarter of last year, it is expected that the year-on-year growth rate of slaughtering in the later period will drop." Zhu Zengyong analyzed.
The Times Weekly reporter noticed that New Hope, Wen's shares and Muyuan shares are in similar situations, while Zhengbang Technology and Tianbang's sales of live pigs have not increased significantly this year.
Specifically, the sales of live pigs of New Hope from January to April 2022 increased by 76.61%, 40.05%, 67.10% and 34.46% respectively year-on-year; the sales of live pigs of Wen's shares from January to April 2022 increased by 50.01% and 114.36% respectively year-on-year , 143.63% and 129.27%; Zhengbang Technology’s live pig sales from January to April 2022 increased by 21.86%, -33.63%, -6.84% and -22.44% year-on-year, respectively; Tianbang’s live pig sales from January to April 2022 were year-on-year An increase of 18.02%, -5.66%, 1.05%, and 87.87%.
Resist the pig cycle with the slaughter business
Under the super pig cycle, the price of pigs keeps falling. Many pig enterprises choose to extend the industrial chain by building their own slaughterhouses and meat processing plants to delay the time to market for pork and avoid the low price range.Muyuan shares are also one of them.
In March 2020, Muyuan Co., Ltd. announced the launch of the slaughterhouse construction project, and launched three slaughterhouse projects in Neixiang County, Zhengyang County, and Shangshui County, Henan, with a total designed production capacity of 6 million heads; in August 2021, Muyuan The stock announced again that it plans to raise no more than 9.55 billion yuan to expand the pig breeding construction project and the pig slaughtering project.Among them, 2.287 billion yuan was used to build four new hog slaughter projects, with a total slaughtering capacity of 13 million heads.
Up to now, Muyuan Co., Ltd. has put into operation 8 slaughter plants with a production capacity of 22 million heads/year.During the investor event, Muyuan shares revealed that the company expects to put into operation three more slaughterhouses this year, with a new production capacity of 9 million heads/year; at the same time, four new slaughterhouses will be built this year, with a new production capacity of 8 million heads/year.
Affected by the high cost of construction and commissioning of slaughterhouses in the early stage and the fall in pork prices, the slaughtering business of Muyuan Co., Ltd. failed to achieve profitability in 2021.Muyuan shares revealed that from 2022 to now, the slaughtering meat segment has lost about 300 million yuan and slaughtered 2.8 million live pigs.
"From the perspective of the enterprise's own development, after the enterprise develops to a certain size, it will continue to improve the structure of the industrial chain, and generally expand to the upstream and downstream of the industrial chain." Zhu Zengyong analyzed that from the perspective of preventing market risks, my country's pig production and downstream The integration of slaughtering and processing and sales chains is not high, and both the production end and the slaughtering and processing end face certain market risks. By establishing and developing their own slaughtering and processing businesses, breeding enterprises can alleviate the market risk of price fluctuations in the live pig market, and at the same time deploy downstream wholesale , Retail sales network.
He emphasized that improving the industrial chain is a medium and long-term goal and task, and the development strategy and business model of the downstream industrial chain of pig enterprises still need to be continuously explored.
Entering 2022, pig-raising enterprises are generally facing the double squeeze of low pig prices and high feed costs, and the total cost of live pigs for some enterprises is still relatively high.Zhu Zengyong believes that the primary task of enterprises is to reduce costs and increase efficiency. In addition to moderately reducing the production capacity of reproductive sows and improving reproductive efficiency and breeding efficiency, the pace of slaughtering should be slowed down.
"Overall, although the cost of breeding is still at a high level, it will generally decline in the later period." He said that the current pig price has rebounded to the industry's cash cost, and the financial pressure of enterprises has eased. The situation will improve in half a year.
