深耕生猪养殖的龙头标杆，低成本助力穿越周期

Investment Rating - The report maintains a "Buy" rating for the company [1][4]. Core Views - The company is a leading player in the pig farming industry, with a significant cost advantage that helps it navigate through market cycles. The expected cost of producing market pigs in Q3 2023 is approximately 14.5 RMB/kg, resulting in an excess profit of nearly 350 RMB per head compared to the industry average [1]. - The pig farming industry is entering a positive cycle, with expectations for improved market conditions in 2024. Factors contributing to this outlook include a significant reduction in production capacity due to disease outbreaks and a general anticipation of higher pig prices [1][17]. - The company's management capabilities are industry-leading, with a focus on both soft and hard strengths. This includes refined production processes and a commitment to technological advancements in smart pig farming [1][28]. Company Overview - The company has established itself as a comprehensive player in the pig farming industry, integrating research, feed processing, breeding, and slaughtering. In 2023, it achieved a pig output of 63.82 million heads, with expectations for continued growth in 2024 [8]. - The company has a stable and concentrated shareholding structure, with the actual controllers holding 54.63% of the shares, reflecting strong confidence in the company's future [9][10]. Financial Performance - For the first three quarters of 2023, the company reported revenues of 82.97 billion RMB, a year-on-year increase of 2.72%. However, it faced a net loss of 1.84 billion RMB due to lower average pig prices [13]. - The company’s average cost of producing market pigs is expected to decrease, driven by lower feed prices and improved farming results [14]. Industry Insights - The pig farming industry has been in a down cycle since 2021, with significant losses experienced. However, the current outlook suggests a recovery phase is beginning, with expectations for reduced supply and increased prices in the latter half of 2024 [17][26]. - The industry is currently experiencing a reduction in breeding stock, with the number of breeding sows decreasing significantly, which is expected to lead to a tighter supply of market pigs [23][26]. Growth Potential - The company is expanding its slaughtering capacity, having processed 13.26 million pigs in 2023, a year-on-year increase of 80%. This expansion is expected to create new growth opportunities [1][8]. - The management team is focused on technological innovation, aiming to transition from a capital-intensive to a technology-intensive enterprise, which is expected to further enhance operational efficiency and profitability [28][29].