WENS FOODSTUFF GROUP CO.(SZ:300498)2025-08-31 16:21Summary of Wens Foodstuff Group Earnings Call Company Overview - Company: Wens Foodstuff Group (300498.SZ) - Industry: Agriculture, specifically hog and poultry farming in China Key Financial Highlights - 1H25A Performance: - Net profit of Rmb3.47 billion, EPS of Rmb0.522 per share, compared to Rmb1.34 billion in 1H24A - Recurring net profit of Rmb3.67 billion, up from Rmb1.28 billion a year ago, but below expectations due to depressed poultry margins [1][2] - No interim dividend declared, same as last year [1] Earnings Estimates Revisions - 2025E: Recurring earnings estimates revised down by 32% - 2026E: Revised up by 8% - 2027E: Revised up by 6% [2] Market Outlook - Hog Market: - Expected improvement in supply/demand fundamentals in 2026E due to better industry supply discipline - Anticipated hog price of Rmb16.5/kg in 2026E, up from Rmb14.7/kg in 1H25A [2][18] - Poultry Market: - Yellow-feather broiler margin is currently depressed, but improvements expected in 2026E as supply responds to producer feedback [2][33] Cost Management and Profitability - Wens is focusing on cost-cutting measures, including breeding development and optimizing feed formulation, which is expected to support unit profit in hog operations in 2026E [2][33] - Total unit cost for hogs reduced to Rmb12.5/kg in 1H25A, down Rmb1.9/kg year-on-year [20] Revenue Breakdown - Total Revenue: Rmb49.88 billion in 1H25A, a 6% increase from Rmb47.09 billion in 1H24A [28] - Hog Revenue: Rmb32.74 billion, up 16% year-on-year - Chicken Revenue: Rmb15.13 billion, down 9% year-on-year [30] Gross Profit Analysis - Total Gross Profit: Rmb6.89 billion, a 32% increase year-on-year - Hog Gross Profit: Rmb6.57 billion, up 125% year-on-year - Chicken Gross Profit: Rmb74 million, down 96% year-on-year [30] Valuation and Price Target - Current Price: Rmb18.19, with a 12-month price target of Rmb19.00, implying a 4.5% upside [1][2] - P/E Ratio: Current share price implies an 11x P/E on 2026E, within historical range of 10-20x [2] Risks and Challenges - Hog Price Uncertainty: Affected by domestic supply changes and imports [26][34] - Operational Risks: Including bio-security measures and disease control [26][34] - Poultry Pricing Volatility: Influenced by industry supply/demand dynamics and consumer preferences [26][34] Conclusion - Wens Foodstuff Group is navigating a challenging environment with depressed poultry margins but is expected to benefit from improving hog market conditions and effective cost management strategies. The current valuation reflects a cautious outlook on earnings growth in both the hog and poultry segments [33][37]