Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance relative to the market [6][9]. Core Insights - The company reported a significant improvement in its financial performance, achieving a net profit of 0.76 billion yuan in the first half of 2025, a substantial turnaround from losses in the previous year. This was primarily driven by a decrease in breeding costs [4][5]. - The company has seen a decline in both the sales price and volume of pigs sold, yet it remains profitable due to cost reductions achieved through better procurement management and production efficiency [5]. - The slaughtering and meat processing segment generated revenue of 41.42 billion yuan, reflecting a year-on-year increase of 5.29%, with a notable rise in the number of pigs slaughtered [5]. Financial Summary - The company’s total revenue for 2025 is projected to reach 101.02 billion yuan, with an expected growth rate of 11.12% [6][8]. - Earnings per share (EPS) are forecasted to increase significantly from 0.09 yuan in 2024 to 1.20 yuan by 2027, indicating strong growth potential [6][8]. - The company’s debt-to-asset ratio stands at 72.4%, with expectations for a decrease to 51.9% by 2027, suggesting improved financial stability [8].

Core Viewpoint - New Hope Liuhe Co., Ltd. reported significant growth in revenue and profit for the first half of 2025, driven by its feed and pig farming businesses, despite a decline in domestic pig prices compared to the previous year [2][3]. Financial Performance - In the first half of 2025, New Hope achieved operating revenue of 51.625 billion yuan, a year-on-year increase of 4.13% [2]. - The net profit attributable to shareholders reached 755 million yuan, marking a 162% increase and a turnaround from losses [2]. Business Segments - The feed business generated operating revenue of 35.479 billion yuan, up 7.88%, with total feed sales reaching 13.93 million tons, an increase of 13% [2]. - In pig farming and slaughtering, New Hope sold 2.0566 million piglets and 6.3928 million fattened pigs, totaling 8.4494 million pigs, with revenue of 10.801 billion yuan from sales and 3.568 billion yuan from slaughtering [2]. Market Conditions - Domestic pig prices have decreased compared to the same period last year, averaging around 14 yuan per kilogram [3]. - The average number of weaned piglets per sow increased to 11.2, and the average PSY (pigs weaned per sow per year) rose to 25.4, indicating improved productivity [3]. Cost Management and Technology - The average weaning cost per pig was approximately 260 yuan, down by 30 yuan from the end of the previous year [3]. - The company is enhancing production efficiency through digitalization and smart technology, aiming to reduce the cost of fattened pigs to below 13 yuan per kilogram in the second half of the year [4].

Group 1 - The company reported a revenue of 51.625 billion yuan for the first half of the year, representing a year-on-year increase of 4.13%, and a net profit of 755 million yuan, up 162% year-on-year [1] - In the feed business, total sales volume reached 13.93 million tons, a year-on-year increase of 13%, with export feed sales of 11.48 million tons, up 16% [1] - The company implemented measures to manage raw material procurement effectively, including strategic partnerships with suppliers and optimizing raw material costs, resulting in a reduction of production costs by approximately 30 yuan per ton [1] Group 2 - The company sold a total of 844.94 thousand pigs, generating revenue of 10.801 billion yuan, with an average PSY of 25.4, which is industry-leading [2] - The company is advancing digitalization and automation in its operations, with increased coverage of smart equipment and the launch of an AI assistant for pig farming [2] - In the slaughtering business, the company processed 1.6442 million pigs, achieving revenue of 3.568 billion yuan, and developed a linkage capability between breeding and slaughtering [2] Group 3 - The domestic animal husbandry industry is transitioning into a low-level operational phase in 2025, following a cyclical recovery in 2024, with a downward adjustment in the number of breeding sows expected [3] - The high pig prices in mid-2024 led to an increase in the number of breeding sows and pigs, but the subsequent price decline at the end of the year curbed further industry expansion [3]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 15% relative to the industry index in the next six months [4][16]. Core Views - The company has achieved profitability in its breeding business, with ongoing cost reduction and efficiency improvements [2][3]. - The slaughtering segment shows steady growth with a significant increase in gross margin, benefiting from favorable market conditions and operational efficiencies [2][3]. - The company is positioned as a leading player in the pig slaughtering industry in Zhejiang Province, with a comprehensive layout across the entire pig industry chain [3]. Financial Summary - Revenue is projected to grow from 85.78 billion CNY in 2023 to 129.24 billion CNY by 2027, with year-on-year growth rates of -9.2%, 6.0%, 9.4%, 15.6%, and 12.5% respectively [1][3]. - The net profit attributable to the parent company is expected to recover from a loss of 605 million CNY in 2023 to a profit of 702 million CNY in 2027, with significant growth rates of -789.3%, 112.1%, 177.3%, 104.9%, and 69.2% [1][3]. - The company’s return on equity (ROE) is forecasted to improve from -28.8% in 2023 to 21.1% in 2027 [1][3]. Operational Highlights - In the first half of 2025, the company achieved revenue of 4.244 billion CNY, representing a year-on-year increase of 1.89%, and a net profit of 76 million CNY, up 163.98% year-on-year [1][2]. - The slaughtering business generated revenue of 4.142 billion CNY in the first half of 2025, with a gross margin of 7.33%, reflecting a year-on-year increase of 4.05 percentage points [2]. - The breeding segment saw a reduction in piglet sales, focusing on increasing the output of commercial and breeding pigs, which is expected to further optimize breeding costs [2].

Core Insights - In the first half of 2025, the company achieved operating revenue of 4.244 billion yuan, a year-on-year increase of 1.89%, and a net profit attributable to shareholders of 76.1731 million yuan, marking a turnaround from losses [1] - The company reported a significant increase in operating cash flow, reaching 444 million yuan, up 367.71% year-on-year, indicating strong cash flow management [1] Business Performance - The company's revenue and profit primarily stem from two main business segments: pig farming and pig slaughtering, which include fresh pork and sales of breeding pigs and piglets [1] - In the first half of 2025, the company maintained stable operations at its pig farms while gradually advancing a light-asset expansion model in collaboration with farmers, with pig sales volume remaining roughly the same as the previous year [1] - The company sold a total of 1.2712 million pigs, including 33,100 piglets, and slaughtered 2.5025 million pigs, generating 4.142 billion yuan in revenue from slaughtering and meat processing [1] Industry Position - The company is a leading integrated player in pig farming and slaughtering based in Zhejiang, with a comprehensive layout across the entire pig industry chain, including feed production, livestock farming, slaughtering, and meat processing [1] - The integrated industry chain layout allows the company to effectively smooth out fluctuations in the pig cycle, enhancing its ability to withstand market volatility and reducing the impact of market fluctuations on overall profitability, which is crucial for long-term stable development [1] Strategic Advantages - The company highlighted that its full industry chain layout provides advantages during price fluctuations; when pig prices drop, slaughtering profits increase, alleviating pressure on the farming segment [2] - Conversely, when pig prices rise, although slaughtering volumes may be affected, profitability can still be maintained, and farming profits can enhance overall company performance [2] - The self-breeding and self-raising model ensures production stability and controllability, effectively implementing disease prevention measures and ensuring the safety and effectiveness of the company's epidemic prevention system [2]

Core Viewpoint - The company has established a restrictive stock incentive plan for 2025 to ensure the effective implementation of its development strategy and operational goals, focusing on performance evaluation and incentive mechanisms for its management and key personnel [1][2]. Group 1: Assessment Objectives and Principles - The purpose of the assessment is to enhance the corporate governance structure and improve the performance evaluation system and incentive mechanisms for the management team and core employees, ensuring the successful implementation of the incentive plan and the achievement of long-term strategic goals [1]. - The assessment must adhere to principles of fairness, openness, and justice, linking the incentive plan closely with the performance and contributions of the incentivized individuals to maximize the interests of the company and its shareholders [1][2]. Group 2: Assessment Scope and Institutions - The assessment applies to all individuals participating in the incentive plan [2]. - The Human Resources Department is responsible for the specific assessment work, maintaining assessment results, and preparing performance assessment reports for submission to the Board's Compensation and Assessment Committee [2][5]. Group 3: Performance Evaluation Indicators and Standards - The performance evaluation for the first grant of restricted stocks requires the company to meet one of two conditions for each assessment year, based on 2024 performance: - For 2025, a revenue growth rate of no less than 10% or a pig slaughter volume growth rate of no less than 5% with a breeding cost not exceeding 12.80 yuan/kg [2][3]. - For 2026, a revenue growth rate of no less than 24% or a pig slaughter volume growth rate of no less than 10% with a breeding cost not exceeding 12.50 yuan/kg [2][4]. - For 2027, a revenue growth rate of no less than 64% or a pig slaughter volume growth rate of no less than 15% with a breeding cost not exceeding 12.20 yuan/kg [2][4]. Group 4: Assessment Results and Management - If the company fails to meet the performance targets, all restricted stocks granted to the incentivized individuals for that year will not be released, and the company will repurchase and cancel them at the grant price plus bank interest [4][5]. - The individual assessment results will determine the percentage of restricted stocks that can be released, with categories ranging from "Excellent" (100%) to "Unqualified" (0%) [4][5]. - The assessment results are confidential and must be archived for at least five years, with the Compensation and Assessment Committee retaining all assessment records [5][6].

Core Viewpoint - The company is focusing on high-quality development by restructuring its business segments, particularly in feed production, pig farming, and slaughtering, while also expanding its overseas market presence [2][3]. Group 1: Business Strategy - From 2024, the company will focus on feed production and pig farming after transferring control of its white feather poultry and food processing segments [2]. - The strategic goals for the feed industry include "steady growth" and restoring competitive advantage, with a focus on enhancing scale, strengthening professionalism, and activating teams [2]. - The overseas strategy aims for "breakthrough growth," concentrating on core markets and expanding production capacity through various methods such as new construction and acquisitions [2]. Group 2: Financial Performance - In Q1 2025, the company achieved a net profit of 450 million yuan, a 123% increase year-on-year, marking its first quarterly profit in three years [3][4]. - The feed business saw both volume and profit growth, while the pig farming segment also turned profitable due to improved cost management and stable pig prices [3]. Group 3: Cost Management - The current cost of pig farming is 12.9 yuan per kilogram, with plans to further reduce costs through better management practices [7]. - The company acknowledges historical burdens affecting profitability but is focused on improving production management and reducing operational costs [4][10]. Group 4: Market Outlook - The company anticipates a gradual increase in supply due to a slow recovery in the breeding sow population, but does not expect significant oversupply due to cautious expansion plans among competitors [7]. - Demand is expected to improve gradually, influenced by macroeconomic conditions and government policies [7]. Group 5: Sustainability and Innovation - The company has made significant strides in sustainable development, focusing on human capital, governance, product responsibility, and ecological farming [5]. - There is a strong emphasis on integrating artificial intelligence in production management to enhance efficiency and reduce costs [44][48]. Group 6: Shareholder Engagement - The company is considering share buyback policies in response to stock price performance and will disclose any plans as required [3]. - The stock price has shown a 6.9% increase year-to-date, despite a 1.54% drop on the day of the earnings call, which is considered within a reasonable range [13][17].