Shennong Group(SH:605296) Changjiang Securities·2024-02-25 16:00Investment Rating - The report does not provide a specific investment rating for the company [9][39]. Core Insights - The company has maintained a rapid growth in pig production, with a CAGR of approximately 45% from 2014 to 2023, and is expected to reach an output of 2.5 million pigs in 2023 [5][19]. - The company's expansion in pig farming is characterized by sustainable growth rather than speculation, showing low correlation with pig price fluctuations [5][6]. - The company has established a modernized breeding system in collaboration with international partners, focusing on health, biosecurity, and information technology [20][21][22]. - The company is currently expanding into the Guangxi and Guangdong regions, where it anticipates significant growth in output and cost advantages [28][29]. Summary by Sections Production Growth - The company’s pig output has shown consistent growth, with 2014 output at 55,000 pigs, increasing to 929,000 in 2022 and projected to reach 1,520,000 in 2023 [5][19]. - The output growth rate has been robust, with most years exceeding 40%, except for 2017 and 2020, which saw growth rates of 14% and 3% respectively [5]. Cost Management - The company has maintained a competitive cost level, with the total cost per kilogram decreasing to 15.2 yuan in November 2023, driven by increased output and improved herd health [29][32]. - The cost structure is expected to continue improving, with a target of around 15 yuan per kilogram for the year [32]. Competitive Position - The company’s competitive advantages include a high degree of specialization and a focus on internal systems rather than acquisitions, similar to successful peers in the industry [19][60]. - The company has established partnerships with leading international firms to enhance its breeding and management practices, ensuring high health standards and modern production techniques [20][21]. Future Outlook - The company aims for a long-term target of 10 million pigs in output, with significant contributions expected from the Guangxi and Guangdong regions [33]. - The anticipated growth in these regions is expected to account for about one-third of the total output in 2023, indicating a strategic focus on high-quality development [29][32].