Core Viewpoint - Muyuan Foods has reported a significant increase in net profit for the first half of the year, with figures ranging from 10.5 billion to 11 billion yuan, marking a tenfold increase compared to last year. However, this performance is still below the peak of the previous cycle, indicating a potential shift in the industry towards a low-profit era due to prolonged pig cycles and increased market competition [2][4][6]. Group 1: Industry Cycle and Company Performance - The pig cycle in China has been disrupted, with the previous cycle lasting six years without signs of reversal in pork prices, contrasting with the historical four-year cycle [6][7]. - The expansion of large-scale pig farming enterprises has led to a market where 70% of production is controlled by large farms, reducing the flexibility of smaller farmers and extending the industry cycle [6][7]. - Muyuan's production capacity has increased dramatically, with the number of pigs raised rising from 10.25 million to 71.6 million from 2019 to 2024, reflecting the aggressive expansion of leading companies [6][7]. Group 2: Challenges Facing Muyuan Foods - Muyuan Foods faces three major challenges: a prolonged wait for the pig cycle to recover, increasing supply from a high number of breeding sows, and rising debt levels that limit future expansion [8][9][11]. - The number of breeding sows in China remains high, with 40.78 million expected by the end of 2024, indicating that supply will not decrease significantly in the near term [9][11]. - Muyuan's debt has escalated from 21.175 billion yuan to 110.112 billion yuan, with a debt-to-asset ratio rising from 40.04% to nearly 60%, constraining its ability to finance further growth [13][15]. Group 3: International Expansion and Market Risks - Muyuan Foods is planning to raise at least $1 billion through an IPO in Hong Kong, aiming to enter overseas markets with its "pig farming solutions" [16][21]. - The company has partnered with BAF in Vietnam to provide pig farm design and biosecurity solutions, but the success of this model in Southeast Asia remains uncertain due to local competition and market conditions [19][21]. - The infrastructure challenges in Southeast Asia may hinder the replication of China's large-scale farming success, limiting the potential for Muyuan's technology and service exports [22][21].