Muyuan Foods (SZ:002714) Changjiang Securities·2025-05-14 13:50Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company has transitioned from a high-growth phase to a high-quality development phase, with continuous improvements in internal management and leading industry breeding costs. The profitability of the slaughtering business is improving, and there are prospects for international expansion, creating a new growth curve. The company has long-term investment value, with its current valuation at a historical low, as of May 6, 2025, the price-to-book (PB) ratio is 2.88, which is at the 1.59% historical percentile [2][4]. Financial Performance - In Q1 2025, the company reported revenue of 36.06 billion yuan, a year-on-year increase of 37%. The net profit reached 4.62 billion yuan, with the attributable net profit at 4.49 billion yuan, marking a significant turnaround from losses in the previous year [4][10]. - The average breeding cost in Q1 2025 was approximately 12.8 yuan/kg, while the average selling price of commodity pigs was 14.6 yuan/kg. The company achieved a total of 22.66 million pigs slaughtered, representing a year-on-year increase of 42% [10][24]. - The estimated profit per commodity pig was around 220 yuan, and the profit from breeding operations in Q1 2025 was approximately 4.65 billion yuan, compared to a loss of 2.71 billion yuan in the same period last year [10][24]. Cost Management and Future Outlook - The company is actively optimizing breeding costs, with the latest complete cost reduced to 12.5 yuan/kg. The target for average complete cost in 2025 is set at 12 yuan/kg, driven by improvements in breeding technology, genetic updates, and health management [10][24]. - The average number of breeding sows as of March 2025 was 3.41 million, an increase of 11% year-on-year, with expectations for slaughtering volume to exceed 85 million pigs in 2025, a 20% increase from 2024 [10][24]. Debt Management and Shareholder Returns - The company has adjusted its debt structure, with a debt ratio of 59.2% as of Q1 2025, down 4.39 percentage points year-on-year. Capital expenditures are gradually decreasing, allowing for more cash flow to be directed towards shareholder returns [10][24]. - In 2024, the total profit distribution accounted for 40% of net profit, with buybacks and dividends totaling 45% of net profit [10][24].