牧原股份深度报告：求索不止，玉汝于成

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Viewpoints - The report emphasizes that the company's ability to continuously break through the boundaries of industry economies of scale is rooted in its innovative spirit. The focus on pig health and over two decades of experience in breeding and feeding have allowed the company to demonstrate strong resilience in the face of severe disease challenges post-African swine fever [2][6]. - In the context of intense cost competition in the pig farming industry, only group enterprises with significant cost advantages are expected to thrive. The report is optimistic about the company's ability to achieve excess profits in the industry and its sustainability [2][6]. - Currently, the company's overall valuation is at a historical low, and its profitability is expected to benefit from a recovery in the breeding market. Long-term, as capital expenditures slow down and the debt-to-asset ratio decreases, the future dividend payout ratio is also expected to increase [2][6]. Summary by Sections Industry Cost Competition Intensifies - Following the African swine fever outbreak, the high profitability in the pig farming industry attracted rapid capital entry. The capital expenditures of major listed companies grew significantly in 2019 and 2020, with market share increasing from 7.0% in 2018 to 20.7% in 2023. The cost competition in the industry has entered a heated phase, where only large-scale enterprises with significant cost advantages will have growth and profit potential [6][20]. - The company has demonstrated outstanding cost control capabilities, with a complete cost of 15.1 yuan/kg in 2023, leading among its peers. With technological advancements and improved capacity utilization, costs are expected to continue to decline, maintaining a leading ROE level in the industry [6][20]. Why the Company Can Become a Long-term Cost Benchmark - The company's long-term independent innovation has allowed it to establish its own production system and methodology in the pig farming industry. The focus on pig health has become a core differentiator in cost, with continuous hardware upgrades creating a highly disease-resistant farming environment. Digital innovations have enabled financial and process management at a granular level, enhancing the positive effects of personnel on pig health [7][32]. - The innovative dual-cross breeding system has created a resilient sow population, improving the proportion of high-performance litters and enabling rapid recovery from disease impacts. The company's deep research in feed formulation, combined with its raw material sourcing advantages, continues to provide economic benefits [7][32]. Current Investment Value of the Company - In the short term, the pig cycle's upward turning point may have emerged, with pig prices expected to rise. The company's market value and price-to-book ratio are at historical lows, and profitability is anticipated to benefit from the recovery in breeding market conditions. Assuming a pig price of 19 yuan/kg, the company's profit elasticity could reach 31 billion yuan, corresponding to a valuation of only 7.7X [8][6]. - Long-term, the company's high profitability, driven by its low complete cost level, is expected to lead to a rapid recovery of its balance sheet as capital expenditures slow down. Once free cash flow turns positive, the dividend payout ratio is likely to increase [8][6].