The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof. Application Proof of MUYUAN FOODS CO., LTD. 牧原食品股份有限公司 (A joint stock company incorporated in the People's Republic of China with limite ...

Core Viewpoint - The report indicates that the current pig cycle is nearing its bottom, with potential for a price increase in the future, driven by supply adjustments in response to declining breeding profits [10][19]. Group 1: Commodity Market Overview - The overall commodity market showed a weak trend, with the South China Industrial Products Index declining by 0.72% week-on-week [1]. - The top five gainers in industrial products included pulp, paraxylene, urea, aluminum, and zinc, while the biggest losers were asphalt, iron ore, methanol, butadiene rubber, and propylene [1]. Group 2: Pulp Market Analysis - Pulp futures prices increased by 3.10%, showing a bullish trend technically, with low import costs and improved corporate profits [2]. - Domestic pulp inventory at major ports has seen a slight decrease, but remains at a relatively high level, indicating a loose supply [2]. - Demand from downstream paper production has generally increased, with white cardboard starting to stock up for the Spring Festival orders, leading to a recovery in trading [2]. Group 3: Asphalt Market Analysis - Asphalt futures prices fell by 6.59%, influenced by a drop in international oil prices and weak demand [6]. - With decreasing temperatures, road projects in northern regions have largely halted, while southern projects may enter a rush phase, putting pressure on future demand [6]. - Despite a contraction in supply with low operating rates, weak demand has led to significant declines in both futures and spot prices [6]. Group 4: Agricultural Products Overview - The South China Agricultural Products Index rebounded by 0.57% week-on-week, with the top five gainers being soybean meal, chicken eggs, corn, and corn starch, while the biggest losers included red dates, fiberboard, rapeseed, apples, and palm oil [8]. Group 5: Pig Cycle Analysis - The pig cycle is primarily driven by supply-side factors, with stable pork demand in China. When pork prices rise, farmers increase breeding, leading to a subsequent supply surplus and price decline [10]. - Historical trends show that the time from price peak to trough is typically around one year, while the recovery phase can take between one to four years [10]. - Current pig prices are in a bottoming phase, with expectations of a price peak around August 2024, suggesting that prices may be close to their bottom now [10]. Group 6: Breeding and Supply Dynamics - The growth rate of breeding sows is expected to peak in April 2025, after which it will gradually decline, impacting pig supply [12]. - The relationship between pig output and pork prices is inversely correlated, with a lag of about six months [12]. - As of late September 2025, breeding profits have turned negative, leading to a slow reduction in breeding sows, but an acceleration in this reduction is anticipated due to ongoing losses [14][19].

Group 1 - The core viewpoint of the news highlights the recent developments in the livestock industry, particularly the pig farming sector, where a policy shift is expected to lead to a reduction in production capacity and a potential revaluation of low-cost advantage companies [1][2] - The China Livestock Breeding Index (930707) shows mixed performance among its constituent stocks, with Brother Technology (002562) leading the gains at 10.02%, while Haida Group (002311) experienced the largest decline [1] - The Livestock ETF (159867) has seen continuous net inflows over the past six days, with a peak single-day net inflow of 98.05 million yuan, totaling 218 million yuan, indicating strong investor interest in the sector [1] Group 2 - The recent pig production capacity adjustment meeting mandated that 25 leading pig companies must collectively reduce production by 1 million breeding sows by the end of the year, marking a shift from policy discussions to quantitative assessments [1] - The pig farming sector is expected to benefit from a rotation in the pig cycle and a reduction in supply, which could positively influence pig prices and the overall performance of the sector [2] - The top ten weighted stocks in the China Livestock Breeding Index account for 65.57% of the index, with leading companies such as Muyuan Foods (002714) and Wens Foodstuffs (300498) being significant players in the market [3]

Core Viewpoint - The company has demonstrated strong financial performance in 2024, with significant growth in revenue and net profit, driven by favorable market conditions and operational efficiencies [1][2]. Financial Performance - In 2024, the company achieved a total revenue of 137.947 billion yuan, representing a year-on-year increase of 24.43% [1]. - The net profit attributable to shareholders reached 17.881 billion yuan, up 519.42% year-on-year [1]. - The adjusted net profit was 18.747 billion yuan, reflecting a year-on-year growth of 565.61% [1]. - In Q4 alone, the company reported revenue of 41.172 billion yuan, a 47.61% increase year-on-year, and a net profit of 7.4 billion yuan, up 405.67% [1]. Operational Efficiency - The company sold 71.6 million pigs and processed 12.52 million pigs, with total pork product sales reaching 1.42 million tons [2]. - The company has improved breeding efficiency and optimized feed formulas, which has led to reduced breeding costs [2]. - As of January 2025, the total breeding cost is approximately 13.1 yuan/kg, with a target to reach 12 yuan/kg [2]. Industry Position and Shareholder Returns - The company is a leading player in the pig farming industry, benefiting from strong management practices [2]. - The company has revised its shareholder return policy, committing to distribute at least 40% of the distributable profits as cash dividends annually [2]. - The long-term profitability of the industry is expected to remain stable, particularly for companies with management and cost advantages [2]. Investment Outlook - The company is projected to achieve net profits of 19.69 billion yuan, 19.84 billion yuan, and 22.46 billion yuan for the years 2025, 2026, and 2027, respectively [3]. - The expected earnings per share (EPS) for these years are 3.60 yuan, 3.63 yuan, and 4.11 yuan, with corresponding price-to-earnings (PE) ratios of 10.75, 10.67, and 9.42 [3].