Muyuan Foods (002714) 财通证券·2024-08-12 00:23Investment Rating - The report maintains an "Accumulate" rating for the company [1][3]. Core Views - The company is a leading player in the pig farming industry, with a fully integrated pork supply chain that includes feed processing, breeding, pig farming, and slaughtering [2][9]. - The pig price has entered an upward cycle, with the price reaching 10.43 CNY/kg on August 1, 2023, a 32.8% increase from the beginning of the year, indicating potential profitability for the company [2][18]. - The company has a significant cost advantage, with average profits per pig being nearly 100 CNY higher than the industry average, driven by scale procurement, breeding systems, and technological innovations [2][22]. Summary by Sections Company Overview - The company was established in 1992 and has focused on pig farming for over 30 years, expanding its operations outside Henan province since 2012 [2][9]. - The annual pig output has grown from 11.01 million heads in 2018 to 63.82 million heads in 2023, achieving a market share of 8.8% [2][9]. Industry Trends - The pig farming industry is experiencing a trend towards larger-scale operations, which are better equipped to manage costs and navigate price fluctuations [16][21]. - The current pig price cycle began in April 2022, with a typical upward phase lasting around 20 months [17][18]. Financial Performance - The company is expected to achieve revenues of 1283.8 billion CNY in 2024, with net profits projected at 181.2 billion CNY [3][41]. - The company’s revenue growth rate is forecasted to be 15.8% in 2024, followed by 1.0% in 2025 and a slight decline of 0.6% in 2026 [3][41]. Cost Structure and Efficiency - The company has maintained a cost advantage through innovations in feed formulation, breeding systems, and smart farming technologies [2][22]. - The average cost of raising pigs is expected to decrease, with a target of reducing costs by 600 CNY per pig [2][36]. Future Outlook - The company is well-positioned for long-term growth, with a focus on high-quality development in its breeding and slaughtering operations [2][24]. - The company’s capital expenditure needs are expected to decline, leading to a lower debt ratio and potential for increased dividends in the future [2][39].