Core Viewpoint - Dachen Foods (03999.HK) reported a revenue of RMB 4.495 billion for the first three quarters, a 4.1% increase year-on-year, but faced a shareholder loss of RMB 14.684 million, marking a shift from profit to loss due to oversupply and weak demand in the chicken market [1] Financial Performance - Revenue for the first three quarters was RMB 4.495 billion, up 4.1% compared to the same period last year [1] - Shareholder loss amounted to RMB 14.684 million, a significant decline from profitability in the previous year [1] Business Segments - The revenue contributions from various business segments are as follows: processed food (46%), feed (27.5%), and meat products (26.5%) [1] - Processed food accounted for 76.5% of the total gross profit, while feed and meat products contributed 17.6% and 5.9% respectively [1] Market Conditions - The chicken supply has significantly increased due to rapid expansion in the domestic chicken industry, leading to a supply-demand imbalance and a substantial drop in chicken prices, reaching near five-year lows [1] - The processed food segment saw a revenue increase of 6.1% year-on-year, but faced a decline in gross margin due to intense market competition, resulting in a 0.6% decrease in gross profit [1] - Despite a reduction in raw meat costs, the more significant price drop in processed food has compressed profit margins in this segment [1]

Core Insights - The chicken industry is experiencing significant performance divergence among listed companies in Q3, with some achieving remarkable profit growth while others face substantial declines [1][2]. Group 1: Company Performance - Shengnong Development (002299) reported a net profit increase of 202.82% year-on-year, reaching 1.159 billion yuan, despite a 11.4% decline in Q3 net profit [1]. - Chunxue Food (605567) saw a staggering 1320.44% increase in net profit for the first three quarters, totaling 33.87 million yuan, with Q3 net profit growth of 190.90% driven by cost optimization and export growth [1]. - Lihua Co. (300761) experienced a 75.27% decline in net profit for the first three quarters, with Q3 decline further expanding to 76.40% due to downward pressure on yellow feather chicken prices [1]. - Yisheng Co. (002458) faced an 89.42% drop in net profit for the first three quarters, with negative growth in both revenue and net profit in Q3, although showing improvement on a quarter-on-quarter basis [1]. - Minhe Co. (002234) continued to incur losses, reporting a net loss of 230 million yuan for the first three quarters [1]. Group 2: Industry Trends - The fluctuations in the chicken industry are attributed to a combination of price cycles and cost disturbances, with yellow feather chicken selling at an average price of 13.53 yuan/kg in Q3 [2]. - The average price of white feather chicken products in September was 8,663 yuan/ton, reflecting a 0.8% decrease month-on-month and a 6.4% year-on-year decline, primarily due to high inventory levels and weaker-than-expected consumer demand [2]. - The industry anticipates a potential recovery in both volume and price in Q4, driven by upcoming holidays and limited supply growth, which may support price increases for yellow feather chicken [2]. Group 3: Market Dynamics - The rapid decline in pork prices since October may lead to lower-than-expected demand for chicken as a substitute [3]. - Leading companies are focusing on full industry chain integration and channel structure upgrades to build competitive advantages, making them attractive to investors [3].