Core Viewpoint - Lihua Co., Ltd. reported a decline in net profit and cash flow for the first half of 2025, despite a revenue increase, indicating challenges in maintaining profitability amid market price pressures [1][3]. Financial Performance - Revenue for the first half of 2025 reached 8.35 billion yuan, a year-on-year increase of 7.02% [2]. - Net profit attributable to shareholders was 149 million yuan, down 74.10% year-on-year [2]. - Net profit after excluding non-recurring gains and losses decreased by 72.68% [2]. - Net cash flow from operating activities fell by 17.47% to 559 million yuan [2]. - Basic and diluted earnings per share both dropped by 74.16% to 0.1794 yuan [2]. - The weighted average return on equity decreased from 7.17% to 1.63% [2]. Asset and Liability Management - Total assets at the end of the reporting period were approximately 15.36 billion yuan, an increase of 4.35% from the previous year [2]. - Net assets attributable to shareholders decreased by 1.30% to about 8.94 billion yuan [2]. - The company's debt-to-asset ratio was 41.08%, indicating manageable debt pressure compared to industry averages [3]. Market Conditions and Challenges - The market for yellow feathered chickens faced significant price declines, impacting profitability, with gross profit margin for chicken sales down by 7.66% to 6.21% [3]. - The company acknowledged the cyclical nature of the industry and emphasized the need to enhance operational efficiency and cost control [3][5]. Strategic Initiatives - Lihua Co., Ltd. plans to transition and upgrade its fresh chicken sales to improve resilience against industry cycles and enhance market share [4]. - The company aims to improve overall profitability through cost control, leveraging scale advantages, and extending the industrial chain [5]. - Despite the challenges, the company intends to increase its dividend payout, distributing approximately 83.7 million yuan to shareholders, reflecting confidence in future growth [5].

Investment Rating - The report assigns a rating of "Buy" for the company [4] Core Views - The company is a leading player in the yellow feathered chicken breeding industry, with a market share that continues to rise. The revenue has shown steady growth over the years, with a 10-year CAGR of +15.84% from 2014 to 2024. However, the net profit has experienced significant fluctuations due to the cyclical nature of poultry prices [2][21] - The company has demonstrated significant cost advantages, which help mitigate risks associated with price fluctuations in its products. The complete cost of raising yellow feathered chickens has decreased significantly, providing a buffer against price declines [3][41] - The company has seen a substantial increase in its pig farming business, with plans to reach a pig output of 2 million heads in 2025. The complete cost of pig farming has also decreased, indicating a positive outlook for revenue and profit growth in this segment [7][54] Summary by Sections Company Overview - The company is the second-largest yellow feathered chicken breeding enterprise in China, with a market share exceeding 15%. It has maintained a stable revenue growth trajectory, with total revenue increasing from 4.074 billion to 17.725 billion from 2014 to 2024 [2][21][24] Financial Performance - In the first half of 2025, the company achieved a revenue of 8.353 billion, a year-on-year increase of 7.02%, but the net profit fell by 74.10% to 149 million, primarily due to a decline in yellow feathered chicken prices [1][21] - The company’s revenue from yellow feathered chicken accounted for 81.98% of total revenue in 2024, while the contribution from pig farming has steadily increased from 3.77% in 2019 to 16.51% in 2024 [24] Cost Management - The complete cost of raising yellow feathered chickens has decreased significantly, with the cost dropping to below 11 yuan per kilogram in the first half of 2025. This reduction is attributed to lower feed prices and improved management practices [3][41] - The complete cost of pig farming has also seen a decline, reaching 12.3 yuan per kilogram by June 2025, with expectations to further decrease to 12 yuan by the end of the year [7][54] Market Outlook - The yellow feathered chicken prices have shown signs of recovery since late July 2025, which is expected to improve profits in the third quarter. The company anticipates that the market conditions will favor further growth in both chicken and pig farming segments [8][38] - The company projects revenues of 17.924 billion, 21.016 billion, and 23.589 billion for 2025, 2026, and 2027 respectively, with net profits expected to reach 837 million, 1.829 billion, and 2.338 billion in the same years [8][59]

Core Viewpoint - Lihua Co., Ltd. reported a revenue of approximately 8.353 billion yuan for the first half of 2025, a year-on-year increase of 7.02%, but the net profit attributable to shareholders dropped by 74.10% to about 149 million yuan [1] Group 1: Financial Performance - The company's revenue for the first half of 2025 was approximately 8.353 billion yuan, reflecting a year-on-year growth of 7.02% [1] - The net profit attributable to shareholders was approximately 149 million yuan, showing a significant decline of 74.10% year-on-year [1] - The net profit after excluding non-recurring gains and losses was about 148 million yuan, down 72.68% year-on-year [1] Group 2: Business Segments - In terms of product sales, Lihua sold 260 million meat chickens in the first half of 2025, an increase of 10.37% year-on-year, while the sales of meat pigs reached 949,600 heads, up 118.35% [1][2] - The complete cost of meat pigs decreased to 12.8 yuan per kilogram, contributing significantly to the operating profit [1][3] - The yellow feather chicken segment faced challenges with a significant drop in sales price, leading to losses in chicken, slaughtering, and goose businesses [1][3] Group 3: Operational Strategy - Lihua Co., Ltd. employs a "company + cooperative + farmer" model for its yellow feather chicken business, managing breeding, hatching, and sales while providing technical support [2] - The company has expanded its pig farming operations since 2011, focusing on improving production efficiency and cost optimization [3][6] - As of June 30, 2025, Lihua had 7,730 cooperative farmers, with the majority located in the East China region [3] Group 4: Future Outlook - The company anticipates a recovery in the chicken business in the second half of the year due to seasonal demand and holiday consumption [2] - Lihua aims for a continued annual growth rate of 8% to 10% in yellow feather chicken output and has set a target of 2 million meat pigs for 2025 [7]

Core Viewpoint - Jiangsu Lihua Food Group Co., Ltd. reported a decline in net profit for the first half of 2025, despite a revenue increase, indicating challenges in the poultry sector while the pork segment showed significant growth [1][2]. Company Performance - In the first half of 2025, the company achieved operating revenue of 8.353 billion yuan, a year-on-year increase of 7.02%, but the net profit attributable to shareholders was 149 million yuan, a decline of 74.10% [1]. - The sales revenue from yellow feathered chickens was 6.335 billion yuan, down 6.76% year-on-year, while pork revenue reached 1.947 billion yuan, up 117.65% [1]. - The gross margin for yellow feathered chicken was 6.21%, while for pork it was 22.46% [1]. Industry Analysis - The yellow feathered chicken market experienced a "drop-rise-drop" price trend, with prices at historically low levels, leading to overall poor profitability in the poultry farming sector during the first half of 2025 [2]. - The company anticipates improved performance in the chicken business in the second half of the year due to higher traditional consumption and increased demand from holidays and tourism [2]. - The pork segment saw a significant increase in sales, with 949,600 pigs sold, a year-on-year increase of 118.35%, attributed to improved capacity utilization and increased stocking [2][3]. Cost and Pricing Trends - The complete cost of chicken production fell below 11 yuan/kg, while pork production costs were at 12.8 yuan/kg due to a decrease in feed raw material prices [3]. - Analysts predict that the yellow feathered chicken prices may enter an upward cycle in the second half of the year, driven by increased demand from school meals and holiday preparations [3].

Sales Performance - In July 2025, the company sold 780,200 pigs, including 741,900 commercial pigs, generating a revenue of RMB 1.427 billion [1] - The average selling price of commercial pigs in July 2025 was RMB 14.21 per kilogram, a decrease of 0.70% compared to June 2025 [1] - For the seven months ending July 31, 2025, the company sold a total of 5,897,500 pigs, with 5,586,200 being commercial pigs, resulting in a total revenue of RMB 11.449 billion [1] Poultry Sales - In July 2025, the company sold 7,382,600 yellow-feathered broilers, achieving a revenue of RMB 204 million [1] - The average selling price of yellow-feathered broilers in July 2025 was RMB 12.04 per kilogram, down by 6.52% from June 2025 [1] - For the seven months ending July 31, 2025, the company sold 50,085,900 yellow-feathered broilers, generating a total revenue of RMB 1.506 billion [1]

Core Viewpoint - The actual controller of Lihua Co., Ltd. plans to reduce its holdings while implementing incentive measures for core employees as the breeding business shows significant recovery [1][2]. Group 1: Shareholding and Reduction Plans - The actual controller Cheng Lili and its action partner, Pentium Animal Husbandry, plan to reduce their holdings by up to 25.12 million shares, accounting for 3% of the total share capital [1]. - The reason for the reduction is to repay equity pledge loans and interest, while also incentivizing long-term employees who have contributed to the company's growth [1]. - Prior to this, Cheng Lili's action partners had multiple reduction plans, including a 5.98% reduction plan in February 2023, followed by a total reduction of 4.24% from March to August 2023 [2]. Group 2: Financial Performance - In 2024, Lihua Co., Ltd. achieved operating revenue of 17.725 billion yuan, a year-on-year increase of 15.44%, and net profit of 1.521 billion yuan, marking a return to profitability [3]. - The chicken breeding segment generated 14.531 billion yuan in revenue, up 8.01%, accounting for 81.98% of total revenue [3]. - The company sold 1.298 million pigs, a 51.80% increase, with the pig segment revenue rising by 76.51% to 292.7 million yuan [3].

Core Viewpoint - The company focuses on enhancing core competitiveness and reducing breeding costs while adapting to changing consumer demands [1] Financial Performance - In Q1 2025, the company achieved a net profit of 206 million, a year-on-year increase of 157.47% [2] - In 2024, the company listed 516 million yellow feather broilers, a 12.95% increase year-on-year; 1.298 million pigs, a 51.80% increase; and 2.0963 million geese, a 21.73% increase [2] - The company reported a total revenue of 17.725 billion, a 15.44% increase year-on-year, and a net profit of 1.521 billion, marking a turnaround from losses [2] Business Segments - The core business of the company is yellow feather broiler breeding, slaughtering, and sales, contributing 81.98% of total revenue with sales of 14.531 billion, an 8.01% increase year-on-year [2] - The pig farming segment generated 2.927 billion in sales, a 76.51% increase year-on-year, accounting for 16.51% of total revenue [2] Industry Insights - The overall pig farming industry has turned profitable in 2024 after a period of losses, with expectations of continued profitability in 2025 despite potential price declines [3] - The industry is expected to see increased concentration, with companies focusing on product development, brand building, and cost control [3] Cost Management - The company has reduced the complete cost of pig farming to below 6.50 per kg and the complete cost of yellow feather broilers to below 5.5 per kg [3] - Effective cost management is deemed essential for achieving good profitability in the breeding industry [3]