Muyuan Foods (SZ:002714) 2 1 Shi Ji Jing Ji Bao Dao·2025-05-30 10:24Core Viewpoint - The recent surge in stock prices of pig farming companies in A-shares and H-shares, particularly Decon Agriculture (02419.HK), which saw a year-to-date increase of 162%, highlights the potential for valuation recovery in the sector, especially as major players like Muyuan Foods (002714.SZ) plan to list in Hong Kong [1][6][9]. Group 1: Market Performance - Decon Agriculture's stock price increased by over 15% in a single day, with a current valuation of approximately 6.3 times earnings for 2024, significantly lower than leading companies like Muyuan Foods and Wens Foodstuff (300498.SZ), which have P/E ratios above 12 [1][6]. - The number of H-share pig farming companies is limited, with Decon Agriculture being one of the few comparable firms, suggesting that the market may reference its valuation when pricing Muyuan Foods' H-share [1][2]. Group 2: Competitive Position - Decon Agriculture is projected to have a pig output of 8.78 million heads in 2024, second only to industry leaders like Muyuan Foods and Wens Foodstuff, indicating a strong competitive position [3]. - The company has achieved significant cost advantages, with its breeding program reportedly reducing costs to below 13 yuan per kilogram, placing it among the industry's top tier [3][4]. Group 3: Valuation Trends - Despite a strong operational performance, Decon Agriculture faced low market valuations since its listing in December 2023, with a P/E ratio dropping to around 3 times before recovering to 6.3 times following recent stock price increases [6][7]. - In contrast, other H-share companies like COFCO Joycome (01618.HK) have not experienced similar market performance, with a modest year-to-date increase of only 7% [7]. Group 4: Muyuan Foods' Strategy - Muyuan Foods is pursuing an H-share listing to enhance its international capital presence, aiming to attract long-term investors and improve its corporate governance [1][9]. - The company plans to use the funds raised from the H-share listing for global expansion, R&D investments, and working capital, which could help reduce its debt levels [11]. Group 5: Market Outlook - The domestic pig farming industry is expected to see a tightening supply as the number of breeding sows peaks and begins to decline, potentially leading to improved pricing conditions in the second half of the year [12]. - If pig prices rebound, it could provide additional support for the valuation of Muyuan Foods' H-shares [12].